The greatest artists of history required the financial assistance of the wealthy when they wanted to undertake projects. Fast forward centuries and how do modern-day innovators fund their work? Well, there’s a site for that. That site is the four year old KickStarter. It is the new facilitator in canvassing people for money in backing your proposed project. You create a page with your proposal, the amount you are targeting to collect and date by which you want to collect it by. If visitors to the site have not pledged the complete target amount by your proposed date, then the project is cancelled and the creators receive no money.
The creator who proposed the project retains 100% ownership. Why do people support such projects and initiatives when they do not receive any shareholding in the company themselves? It is quite simple. In most scenarios the pledger may just receive an early copy of the album if they have supported an artist, or a discounted unit of the product if they back an engineer. Sometimes it is products that visitors to the site wish to see created and will gladly support its development in the hope of the product being brought to market. Once such example of this type of project is the Pebble Watch. This watch is the most supported venture ever on the KickStarter site, with the project having over $10,250,000 pledged from 68,928 visitors to the site. This is far greater than the relatively smaller sum of $100,000 that the creators originally targeted to collect.
This new form of crowd sourcing could be the way forward for anyone looking to fund any ideas, but the reach of such sites comes at a cost. Traditionally you may have been able to cross the street if someone was looking for funding, but now they can send you the link anywhere and at anytime. Not only that, but one may also receive a large number of requests from connections in your network that you may not know very well from all over the globe.
There is also the perceived lack of control by site management over what appears on the site and what happens to the money that has been raised. The creator could easily just used the money to go on holidays. There is no assurance that the cash will be used responsibly or efficiently or at all. The site also charges a 5% administration fee, excluding the 3-5% additional charge that Amazon charges to process the money. A 10% collectors fee is still better than the assignment not starting at all due to cash flow difficulties.
With the site’s vices in mind, it is still difficult to ignore the impact it is having and its potential into the future. KickStater claims that over 4.3 million people have pledged over $670 million, but we don’t know what proportion of this figure has been passed onto project creators.
Also striking is the power of the cumulative help of modern day patrons. Similar to Obama’s election fundraising strategy, it may be more beneficial to have many smaller donators rather than a limited number of larger givers.
So it’s the working class helping first time artists and developers? Well, not in all cases. For example Zach Braff , star of the hit TV sitcom Scrubs, raised over $3.1 million dollars for his film “Wish I was Here”. Braff has an estimated net worth of $22 million so it really proves that the site is open to all. Celebrities like Braff, and others with large social media following, can really effectively raise money.
With Braff passionately supporting KickStarter, and with other well-known faces almost certain to utilize the sites tools in the future, it would appear that the sites success and popularity is only set to rise. So why don’t you post that project that you’ve always wanted to complete but never had the support of the cash? If you do, please send us on a link so we can help you in your efforts.
About The Author:
Shane McCarthy Business Information Systems student in University College Cork.
Shane can be found tweeting from @TechShane and is always open to chats about business and technology!
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