The Future is Crowdfunded

Crowdfunding beats Amazon at introducing new products, creating sustainable pricing, and offers the best path to True Cost economics.

But I’m getting ahead of myself. If I want to avoid burying the lede I’m going to have to dig up the past, which, as it turns out, was largely crowdfunded as well. In fact, whenever someone has gotten an idea that’s bigger than their pocket book, they’ve turned to crowdfunding in order to make it a reality.

Crowdfunding is not to be confused with crowdsourcing, in which the labor of a task is divvied up across multiple participants with a common goal. Crowdfunding, by contrast, divvies up the capital requirement to help fund what otherwise may not be commercially viable in our mass produced economy.

Crowdfunding Through History

Today’s crowdfunding sites would have you believe that it’s a modern innovation that suddenly came into being in 1997 when the UK band Marillon crowdfunded their reunion tour. Don’t believe them: crowdfunding has its roots long before then.

Some of the earliest ideas around crowdfunding were designed more to defray the risk associated with a venture rather than the costs. Specifically, the overseas trade that flourished out of Italian cities like Genoa and Venice during the 13th and 14th centuries, which were subject not only to the whims of nature, but also the geopolitics and pirates of the time, as well.

Other ideas have centered around philanthropic investments, crowdfunding interest-free loans from the wealthy to help kickstart or support the ongoing ventures of those that lacked either collateral, guarantors or both, as exemplified by the Irish Loan Funds. These have a modern day equivalent in crowdfunded micro-lending platforms like Kiva, as well as the Nobel prize winning Grameen Bank, which provides microcredit loans to those without collateral not only in Bangladesh where it originated, but also in eleven cities across the US.

But the first direct descendant of what most of us commonly understand to be crowdfunding occurred in 16th century England with book subscriptions, in which subscribers paid for a book’s production in return for having their names listed in the front. And just like today, those that subscribed at a premium price could opt for extra rewards, such as quality-paper editions or copies stamped with their coat of arms.

The Modern Crowdfunding Trend

Arguably, the modern trend toward crowdfunding began with WWI’s war bonds, which unlike corporate or government bonds offered a yield below market rate. The incentive for the public was to help fund victory in the war rather than provide a market-value return. It’s reflective of a kind of altruism that recognized victory would never be attainable without blind faith and sacrifice, a sentiment that certainly wouldn’t be out of place on GoFundMe today, but also surprisingly Kickstarter where:

  • Fully funded projects fail to deliver ~10% of the time
  • Failed project backers receive a refund only ~13% of the time
  • Only ~65% of backers felt their reward was delivered on time

Despite these results, crowdfunded projects (excluding equity markets) have grown from ~$500M USD in 2009 to 13.5B in 2021, and are projected to reach 28.2B in 2028 by offering (in many cases) commercially viable products and services at moderate to premium prices.

A 2019 study of 10 years of Kickstarter data showed that, on average, most backers pledge at the $25 level, but the average spend per backer is almost 4x higher at $90. Additionally, it was found that while backers at lower levels preferred materialistic rewards, backers at higher tiers preferred symbolic rewards. In other words, backers are more than willing to pay a premium for crowdfunded goods and services that align with their values and goals, which may also include True Costs.

For those not familiar with True Cost economics versus our current externalization model:

  • True Costs — include a product/service’s impacts on society and the natural environment calculated in monetary terms so they can be incorporated in the price. These previously “hidden costs” of production are typically externalized in today’s markets.
  • Externalities — are generated by producers, but paid for indirectly by society. A typical example might be a river polluted upstream by a factory, but used as a drinking source downstream. The cost to clean the water is borne by the citizens, rather than the factory, allowing the business to post higher profits.

The current externalization model does indeed allow producers to keep their prices artificially low, as repeatedly confirmed by Walmart, Amazon, et al. On the other hand, it has also resulted not only in a race to the bottom for prices and profits as e-tailers/retailers and distributors have consolidated into a single entity (Amazon, Walmart, Costco, Alibaba, etc), but also harmed countries and regions that have offered up their society/environment to cover the costs of these externalities in order to attract jobs.

Crucially, the largest crowdfunding markets have some of the highest per capita carbon footprints, including the US (42%), UK (11%), & Canada (5%), and therefore have the most to gain from a more ethical approach to consumerism. But as long as producers continue to be driven by low prices, things are unlikely to change. Then again, the only thing constant in business is change, which often comes in the form of disruptive new entrants to entrenched markets.

Crowdfunding True Cost Economics

A random search on turns up more than a dozen projects that incorporate a “True Cost” message in their copy, such as:

Carte Blanche: Designer-Quality Dresses Without The Markups

Redefining womenswear with high-quality dresses: crowd-sourced and delivered directly to you at their true cost.

In fact, that specific project was more than 60% oversubscribed at $33,295 from a pledge goal of only $20,000 from just 183 backers.

As awareness of the planet’s environmental precariousness has grown, and younger generations (who know no other reality) have achieved buying power, consumers are beginning to vote with their dollars by showing they are willing to pay a premium for a product that aligns with their values. These include everything from crowdfunding the purchase of an ethically-raised cow in order to be able to enjoy a few pounds of steaks to joining a months-long lineup in order to receive an electric car. Clearly, the times — and demographics — are changing.

When it comes to crowdfunding, millennials are the most likely age group to become backers, followed by GenXers:

  • 18–24: 11%
  • 25–34: 37%
  • 35–44: 28%
  • 45–54: 10%
  • 55–64: 9%
  • 65+: 5%

Kickstarter alone has more than 18 million backers, split 78% men to 22% women, of whom 88% are college educated:


While the number of repeat and new backers has been steadily increasing over the years, crowdfunding backers still represent only about 10% of Amazon’s 95M shoppers in the US alone.

It’s clear that for now, crowdfunding sites can’t compete with high volume retailers/etailers like Amazon, Costco, Walmart or even Superstore. But the more these distributors use their pricing knowledge to disrupt their suppliers by undercutting them with their own branded goods, the more those suppliers will begin to look for alternative channels to market, like crowdfunding. Especially when it comes to introducing new offerings:

“For many, Amazon eats into their profits, making it harder to develop new products. Some worry if they can even survive.” — Prime Power

At the same time, shoppers’ mantra is beginning to change from “buy it today; get it tomorrow” to “you can be proud of what you pay for if you’re willing to wait.” Time will tell if the two trends will presage the perfect storm of disruption.



Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store