Kickstarter.com – community funding of extraordinary projects
You might be one of those people that walks around with a marvelous idea but never found an incentive (or pile of money) to start your project. But what if you could find a small crowd of people that could back your idea. A crowd that doesn’t only give you the needed support but that will actually co-found your dream. That’s exactly what Kickstarter has to offer. First, submit your idea and set a target goal. (e.g. 10.000 dollar). Next you need to convince people to donate a part of your funding. To do this you make a few promises. For instance: You wish to roll out a scarcely-dressed-ladies-sketch-club and you need 3000 dollar. Those who donate 10 dollar will receive a handwritten postcard. But those that donate 1000 dollar will get life-time access to all sketch events. And so on. Make the experience as personal and exclusive as possible. But be careful. If you don’t offer enough value for money to those who pledge, you might not reach your goal within the 1-90 day time limit. Once reached, Kickstarter will pay out the funding and will take 5% commission. Secondly they will earn on the cash that’s been in their possession for a few months*. If the target isn’t reached, the project will be canceled and people will get their money back*. Interesting revenue model isn’t it?
Kickstarter democratizes the funding business. Instead of strolling between friends, family and fools you can now reach out to the masses. Secondly the business model of Kickstarter truly embraces the business building blocks ‘experience’ and ‘exposure’. Paying backers with personalized products and services is a remarkable strategy. A third important aspect is the fact that Kickstarter helps their members to fully reach the different segments within a crowd of funders. Many people will pledge a few dollars while only few want to donate a large sum. This optimization of funding is what makes Kickstarter truly unique. Keep an eye on this start-up because they could really boom in 2010.
* update Feb 10: Andy Baio (CTO Kickstarter) points out in the comments that Amazon takes care of the payments. Thereby nobody is charged upfront so Kickstarter won’t earn on the few month of cash as mentioned above. It’s worth noting that some other companies that focus on selling voucher do strongly rely on these upfront payments. The Belgian company Bongo is such an example.
More revenue model examples and inspiration:
Hey, thanks for the nice words. A couple major corrections to your article:
We never hold funds, and backers aren’t charged at all unless the project hits its goal by the deadline. Transactions are handled entirely by Amazon, transferred directly from backers to project creators.
Also, project creators can create projects anywhere from 1-90 days, they’re not forced into a three-month period.
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RT @lincolnmurphy: the Revenue model of @kickstarter exposed – [link to post] [clever. Very clever. This could go places]
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RT @nickdemey: the Revenue model of @kickstarter exposed – [link to post]
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@sarbogast [link to post]
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@Andy: Thanks for your comment. I missed the Amazon part in your revenue model. I updated the article and changed the visualized business model. You missed an interesting revenue stream although. ;)
Best,
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RT @lincolnmurphy: the Revenue model of @kickstarter exposed – [link to post] [Very clever. This could go places] (via @EghosaO)
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I actually already knew about this concept since some time. I’m wondering if it would also work in the local market of Belgium?
More specifically to support a very-local initiative (a coworking space) supporting the freelancer market.
Hi Nick
There is also one Belgian initiative in the French-speaking part of our dear country. Trying hard to find back what their name is, they had some expose as ‘Starter of the month’ in BIZZ-magzine last year. Would be pleased to get their name again, eager to follow their progress.
I love the corwdsourcing-model for creative/artistic businesses. As Frederik Denkens is pointing out, question is how this would work in Belgium. Unfortunately, we are lurkers :) Also chekc out FanInvest.eu, due to start this year, similar project. Did a presentation on ‘Muzikaal Digitaal’ last year.
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Kickstarter.com – community funding of extraordinary projects :[link to post]
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Kickstarter.com – community funding of extraordinary projects | The Board Of Innovation [link to post]
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So I think for most posts there is simply no reason for a comment, because there is no debate reasons …
I have plans to a new venture, specifically a coffee shop, hence the online research. Your posts have helped give me some new ideas, thanks for the share and I will return hoping to get even better ideas. :)
Speaking of the Belgian market: at http://westartup.eu we’re working towards a similar concept. Our departure point is different, though: we want to first help entrepreneurs-to-be fine-tune their ideas through conversations within the westartup community and mentor feedback, as well as collaboration on business plans.
Nick: perhaps we should schedule that chat soon…
Interesting Model..
Although who gaurantees that the value will be delivered to the fund providers and how?
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