Power of the crowd; Then and now

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Taking advantage of the power of the crowd is not a dot com phenomenon.

The earliest story of crowdfunding was recorded in 1885 when the publisher of the newspaper, New York World, Joseph Pulitzer decided to launch a fundraising campaign for funds required to construct the granite base for the Statue of liberty.

In the summer of 1885, the Statue of Liberty was in New York's harbor, in pieces, waiting to be assembled. A diplomatic gift from France, the statue was paid for by the French government, but America was responsible for constructing its granite base—a project that would require $250,000 to complete. 

A private group was tasked to raise the funds for the project but, after a lot of effort, the funds still fell short of what was needed to construct the granite base for the statue.

Joseph Pulitzer decided to take it upon himself to start a public fundraising campaign. I can imagine his campaign must have appealed to the emotions of the general public as they were able to raise the money in 5 months.

This was a different time. There were no online banking apps to simply credit the campaign or do transfers to a collective account. You had to physically walk into a bank to make a donation.

Pulitzer's fundraising campaign solicited donations from more than 160,000 Americans, from business titans to street cleaners, sometimes in large sums, sometimes pennies at a time.

Amazingly, more than three quarters of the donations were less than $1—roughly $25 in today's dollars. Five months later, the fundraising goal was met and the Statue of Liberty could be completed.

Today, the Statue of Liberty is a major tourist attraction in New York.

In 2016, 4.5 million park visitors spent an estimated $263.2 million while visiting the Statue Of Liberty National Monument. These expenditures supported a total of 3.4 thousand jobs, $155.4 million in labor income, $240.7 million in value added, and $364 million in economic output to local businesses surrounding Statue Of Liberty National Monument.

The concept of crowdfunding is not new in Africa or Nigeria as well.

I grew up going to the market with my mother and seeing the market women contribute to an Ajo/Esusu society so they could all access more money for their businesses or personal projects

I have heard stories of women who were able to send their children to school because of the Ajo/Esusu system in place in their local districts.

More recently, we have seen the concept applied innovatively to Nigeria in certain sectors such as agriculture, peer-to-peer lending, and social causes.

It is innovative in the agricultural sector because this sector has always suffered from an acute need for capital in Nigeria. Now, investors can invest to earn returns and also contribute directly to enabling the growth of the sector and the livelihood of the small holder farmers.

However, with innovation comes the need for caution for investors

It seems like there's a new crowdfunding platform popping up everyday. While the regulators take their time to regulate this sector, you need to invest with caution on some of these platforms.

In this week's episode of the millennial investor series, I share some questions you need to ask before you consider investing on any crowdfunding platform in Nigeria

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