This past week there were a lot of articles about the website Kickstarter, an online crowd funding service that provides artists, designers and entrepreneurs a way to raise funds for creative projects. It made headlines because one of the projects on the website, The Veronica Mars Movie Project, surpassed its goal of $2 million dollars in a matter of 10 hours, and was a trending topic alongside the pope. With a mix of social media and online funding, this website seems like it has the ability to be the next big thing for start-ups.
I decided to check out the app for the website, and found that on a lot of the proposed projects I’d be more than willing to pledge some money. Kickstarter project creators upload a video for their page explaining their project. It then has different amounts you can pledge and depending on the amount you pledge, you can get something in return (the product itself, a mention in a book, or just a thank you). Project creators choose a deadline and a minimum funding goal, if the goal is not met, the funds aren’t collected (the funds go through Amazon Payments). The catch is that there are no guarantees that those who post projects will actually deliver, use the money to implement their projects or that the completed project will be what was presented.
So is crowd funding the next big thing in entrepreneurship? According to the Kauffman Foundation, 51% of millennials want to start a business in the next five years, and with a lack of funds why not ask your followers on twitter for some help? Projects on Kickstarter had a total of over $79 million dollars pledged in 2012 and nearly 5,000 projects launched, showing that you no longer need a big company to exclusively fund your project. But with so much money and projects, where are all the new products?
It seems that the next step of actually growing your product and turning it into a company is where projects lose their stride. Kickstarter is just the “kick start” that a project needs but getting it into the mainstream market and having national distribution is whole separate entity. For example, a project that was selling clothing expressed that the demand for their product was more than they were prepared for. They couldn’t take new orders because it took them months to complete the orders that they had promised to those who originally funded the project. It’s also hard to get major retailers, such as Target, to pick up a product if they don’t have confidence the demand or distribution is able to replace an existing product on the shelves.
In my opinion, Kickstarter is going to be a popular website for new entrepreneurs, but they also need the added power of social media supporters who are excited about the product and spread the word. Projects that have reached their funding goal and have been able to get their product sold through major retailers, such as Apple (check out Olloclip, funded by Kickstarter) have credited their success to their supporters who believed in the product and wanted to have it themselves. So is it possible for a product to succeed after Kickstarter without the added support of consumers or is this the main component that some Kickstarter projects are missing?
What do you think of the Kickstarter website?