There was a time when crowdfunding was a completely unknown topic for Latin America. That has changed today, after the boom that this phenomenon left in North America and Europe we can now see how it develops in our continent. But it’s important that we know then how crowdfunding works in Latin America.

Understanding crowdfunding in Latin America

To begin, it should be noted that crowdfunding as it’s known today has more than a decade. But it barely arrived in Latin America years later when this phenomenon began to become popular around the world. Some people claim that it was after 2013 in Chile that crowdfunding in Latin America began to be used as a financing method.

However, this isn’t entirely true. When platforms such as Kickstarter and Indiegogo arrived, some Latin Americans began to notice crowdfunding. Especially those entrepreneurs who wanted to create their own business, product or service. So it was to be expected that many of them would create campaigns and succeed.

Some time later, crowdfunding platforms made for specific Latin American countries began to appear. Or to several countries of this continent. The truth is that this method of financing doesn’t work there like in the United States or other countries. Since the different culture of each nation made each one adapt to it differently.

For that same reason, it’s necessary to make a small trip to the past to find out how Latin America adopted crowdfunding. What were their first impressions and which of its countries have managed to make crowdfunding more than just a phenomenon. In order to understand how it works in our continent.

Its history in our continent

As far as in 2007, there were Latin Americans who created their own campaigns but not from their countries. Since the first crowdfunding platforms weren’t available to all countries then, but mainly in the United States. Where everything started.

A particular success story was from Uruguayan Rafael Atijas, who in 2011 created a campaign to finance The Loog Guitar. A small guitar designed for children with only three strings. His project was very well received and he managed to surpass his goal of $15,000, obtaining a total of $65,168. In addition, he was able to market his product and sell 400 guitars worldwide.

Like his, other success stories of Latin Americans in crowdfunding began to occur. However, this influx of entrepreneurs didn’t grow rapidly. Since in fact, many Latin American countries showed resistance to crowdfunding. Since much to their culture, they looked at it as something unsafe, risky or only successful in the United States.

Just certain countries managed to adjust successfully, one of the first to do so was Chile. Being a country with a strong economy and a business-friendly environment, its own government led the creation of Start-Up Chile. An organization that was in charge of promoting this method of financing to support the making of new businesses.

Other countries such as Mexico, Argentina, Peru and Brazil were also incorporated into crowdfunding. It’s easy to find successful campaigns created by people from these countries, both abroad and from their homeland. Taking this into account, the boom in crowdfunding began to expand throughout Latin America.

How does it work here…?

In fact, Latin American crowdfunding works in a very similar way to what’s seen in traditional US models. Someone has an idea, a dream or any need, which can be financed by looking for a crowdfunding platform that suits what you’re looking for. After that, you can choose to create your own campaign to obtain funds.

As we said before, Latin America learned from the model observed in the United States. And simply modified it to apply it in countries that make it up as a continent. The only thing that would change is the accepted payment currency, the laws that regulate the economic funds according to each nation and the language spoken by the users of the website.

In crowdfunding platforms in Mexico and other countries, the Spanish verb “fondear” is used as a synonym for “finance”. This verb is an Americanism that comes from the verb “fund”, which means finance or pay. Terms in Spanish such as “perk/reward system”, “contributions” and “crowdfunding campaign” have also been taken from the English language.

Brigada Multidisciplinaria de Apoyo a las Comunidades de México Crowdfunding Campaign
The Mexican crowdfunding platform Donadora was the one that popularized the use of the verb fondear and the word fondeo (funding) among Latin American Internet users. Source: BMACM

Currently, there are crowdfunding platforms directed specifically for Latin America. As is our case here at Solidaridad Latina, being a platform aimed at financing ideas, dreams and needs through the North American currency. There are also exclusive platforms for certain Latin American countries that work with their local currency.

Slowly but surely, crowdfunding has been integrated in Latin American countries. And although there’s still some people don’t know it or feel reluctant towards it, the results that have been obtained so far are quite good. There are great hopes that in the future, entrepreneurs and dreamers of our continent can count with crowdfunding to achieve their goals.

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Related: The Method To Create A Successful Crowdfunding Campaign

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