How Joseph Pulitzer invented the real estate crowdfunding
Many are surprised when they discover how old the idea of real estate crowdfunding really is. In fact, its history started more than 130 years ago. At that time, money was collected for the first real estate crowdfunding project. Scene of action: New York, USA. Returns promised to investors: zero. The property is known to everyone, whereas the curious story behind it isn’t familiar to many.
How did the first real estate crowdfunding take place?
Many know that the Statue of Liberty was a gift from the French to the Americans. The French designed and built the statue and then also took over transport costs to deliver it to the USA. What the French did not sponsor, however, was the pedestal on which the Statue of Liberty was to stand.
As a result of the global economic crisis of 1873, many cities in the USA had to deal with the effects of Great Depression for more than a decade. Not only the construction of the base for the Statue of Liberty in New York was affected by the financial imbalance. The Washington Monument also suffered from financing problems and was completed only after almost 35 years of construction due to several interruptions of construction. The Statue of Liberty, however, has been spared the fate of such long construction period.
The $100,000 needed to build the 27-meter-tall base could not be collected through various charity appeals and financing projects, which threatened the placement of the Statue of Liberty in New York. Cities such as Boston and Philadelphia offered enough money to finance the project, but only on the condition of building the statue in their cities.
Joseph Pulitzer: father of the real estate crowdfunding
Joseph Pulitzer, founder of the journalist prize of the same name and editor of the then New York World newspaper, had an idea how the base for the statue of freedom could still be financed. In 1885, he launched his fundraising campaign, which was to raise the required 100,000 US dollars.
Since he had not yet been able to use the Internet as iFunded, he used his newspaper as a medium, via which he announced the action and asked the New Yorkers for donations for the pedestal. As an incentive, he promised to mention every contributor in his newspaper, no matter how big or small the donation was. After just five months, the required 100,000 US dollars were collected, thus securing the building of the base.
The works on the pedestal were successfully completed with the collected money and the unveiling of the Statue took place on 28th October 1886 with a great ceremony.
Parallels to today’s crowdfunding
At that time, many small contributors enabled the financing of the pedestal and, in return, had their names mentioned in the New York World newspaper. Nowadays the crowd investors get a fixed interest rate on their investment instead of a mention and thus enable the financing of residential and commercial real estate.
For example, you can currently get 5% interest on the current CALVIN BERLIN project, with a short maturity of only 12 months.
Let’s imagine that a similar project in Germany would have to be financed. Could the idea of Pulitzer have been implemented over here as well? We are looking forward to your comments.