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  • “ We all know that dreaming is free, but converting fantasies into reality can be pretty expensive and that's where a new web site, Kickstarter.com can help.” NPR From its inception in 2008, Kickstarter has provided a platform which targets artists and entrepreneurs who need funding to bring their creative projects to life. Its use of video as a means of sharing projects makes it particularly fun and simple. A project cannot begin, and no credit cards are charged, until enough pledges have been made to reach the funding target, so as to discourage poorly-executed projects (thus, a true representation of market demand). Project creators inspire people to open their wallets by offering rewards, such as “thank you” mentions on their personal blogs, or final products from their projects. Some projects have received donations as high as $200k, and a large portion of the projects are movies. Project Statistics (as of 7/17/2011) Launched Projects: 26,620 Successful Projects: 10,388 Unsuccessful Projects: 13,113 Live Projects: 3,119 Success Rate: 44% Pledge Statistics Total Pledged: $75,262,447 Dollars Collected (successful projects): ~$60 million Dollars Uncollected (unsuccessful projects): ~$9 million Live Dollars (currently funding projects): ~$6 million Backer Statistics Backers: 793,362 Repeat Backers: 118,308 Average Pledge: $71 Most common Pledge: $25 Important Recent Activity: February 9, 2012 saw a number of landmarks set by Kickstarter. A dock made for the iPhone by the third party manufacturer ElevationLab became the first Kickstarter project to be pledged a million dollars. A few hours later, a drive by computer game developers Double Fine Productions to fund a new adventure game reached the same figure having been launched less than 24 hours earlier. This was also the first single day in which Kickstarter raised over a million dollars in pledges. On February 19, 2012 , The Order of the Stick Reprint Drive became the third Kickstarter project to exceed one million dollars. It was the first in a book publishing category and the first by a single creative artist (as opposed to a company) to reach that level of funding. On February 20 , Double Fine Adventure was the first to reach two million.
  • A spin off of “crowd sourcing,” Crowdfunding is the collection of financial contributions from online investors, sponsors or donors to fund for-profit or non-profit initiatives or enterprises. Crowdfunding is an approach to raising capital for new projects and businesses by soliciting contributions from a large number of stakeholders following three types of crowdfunding models: (1) Donations, Philanthropy and Sponsorship where there is no expected financial return, (2) Lending and (3) Investment in exchange for equity, profit or revenue sharing.
  • This was a project that I wanted to “back” A bit about why we are doing this, and why we believe... The invention began as little more than an after school idea, but has blossomed into a product that we believe can throw a new "spin" on bicycle rider safety. On the road, bike lights contribute to rider safety in two ways:  1) lighting -  allows riders to safely navigate at night by illuminating their forward path. 2) sighting - increases the rider's front, back, and side visibility which signals their presence (i.e. i am a bike) and location to those sharing the road. Currently no product on the market provides both lighting and sighting at a functionally high level. Our solution, the Revolights bike lighting system, is a double threat . It represents the first fully functional lighting and sighting solution; more specifically, the first solution based on a spoke/rim/hub mounted design.
  • Raise Funds Online for Creative Projects “ Backers,” or individual philanthropists using the site, may pledge any amount of funds to support a project. The project creator sets the pledge levels. At every level, the project creator must offer a “reward” – copies of the work, limited editions, fun experiences – to their supporters. Only if the final project fundraising goal is reached will any funds or “rewards” exchange from “backer” to creator. However, there is no guarantee that a creative project will be successful (i.e.: collect the total amount of funds specified by the project creator). If a project is unsuccessful, “backers” do not get charged and the creator does not receive any funds. In this sense, individual “backers” do not have negative repercussions; they either participate in a successful project and receive praise and a “reward” in return, or they keep their money. Brand / Project Awareness Kickstarter can be used to fund projects from the creative fields of Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, and Theater. Currently, the company only supports projects from these categories. Kickstarter is about more than just money. Using the Kickstarter platform provides creators an additional forum to connect with their audiences and spread the word about their work. A project cannot begin, and no credit cards are charged, until enough pledges have been made to reach the funding target, so as to discourage poorly-executed projects. Thus, having a project that has clearly defined goals and expectations is key. In effect, if a project is funded, this represents true market demand (i.e.: the project wouldn’t have been funded if the market had no interest in the project/product). Engage with large community of philanthropists Kickstarter makes the typical social media crawler a potential philanthropist. By tying in functionality with Facebook and other social media platforms, Kickstarter typically reaches tens of thousands of people every week (even internationally) Facebook Statistics: 198,409 like this; 5,939 talking about this Twitter Statistics: 1,938 tweets; 476,032 followers
  • World’s Largest Fundraising Platform Typically reaches tens of thousands of people every week (even internationally) Seeing projects increasingly gain momentum and “backers” is motivating. If people want to see a project come to life, they're going to spread the word. New Form of Commerce and Patronage Kickstarter is not about investment or lending. Project creators keep 100% ownership and control over their work. Instead of providing equity in return for funds, project owners offer products and experiences that are unique to each project. “ All or Nothing Funding” A project must reach its funding goal before time runs out or no money changes hands, thus protecting everyone involved. Creators aren’t expected to develop their project without necessary funds, and it allows anyone to test concepts without risk. It is allowed to raise more funds than a project’s goal. In actuality, there is no limit to how much a project can raise – projects continue to accept pledges until time runs out. 94% of successful projects raise more than their funding goal. Project Creators keep 100% Ownership Each and every project is an independent creation, and project creators retain 100% ownership in their projects. Kickstarter does not take any percentage of ownership or intellectual property of things made via their platform. Test Projects without Risk Every Kickstarter project must be fully funded before its time expires or no money changes hands which mean it's less risk for every party involved. Kickstarter allows people to test concepts (or conditionally sell products) without risk. If a project doesn’t receive the support it requests, the project owner is not compelled to follow through. Thus, it is a true test of market demand. Minimal cost Joining is Free. Kickstarter applies a 5% fee to funds raised (only if project is successful) All funds are collected for project creators by Amazon Payments. Credit Card processing fees (3-5%) via Amazon Payments. If funding succeeds, funds go directly from backers’ credit cards to the project creator’s Amazon Payments account, where the funds are held until the creator withdraws them. “ Amazon Payments handles transactions conducted through Kickstarter and will file Form 1099-K to report unadjusted annual gross sales information for people who meet both the following thresholds in a calendar year: More than $20,000 in gross sales, and More than 200 transactions.  (Read more here: http:// www.amazon.com/gp/help/customer/display.html?nodeId =200663310 )
  • Kickstarter Interface Easy-to-use (and easy-to-find) categories of projects Kickstarter accepts (Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, and Theater) Users may “Discover” new project by browsing by category or location, or typing in a direct search. Kickstarter also further categorizes project by: Staff Picks, Popular, Recently Launched, Ending Soon, Small Project, Most Funded, and Curated Pages. Every project has real-time statistics about its progress, including % funded, $ pledged, and number of days left to fund the project. Very easy to use set-up functionality. Kickstarter produces multiple guides and useful tricks on how creators can build engaging and effective project pages: http:// www.kickstarter.com /help/school Video Component Any project creator may upload a video to their page about the project (it’s highly recommended by Kickstarter staff). The use of video is another level of engagement that the creator may use to attract attention for his or her project. Update Audience Each project page has tabs from which creators may update their audience and “backers.” This is especially important as a project gains funding momentum; the more information a project creator can communicate with “backers,” the more engaged their funders are. Kickstarter also integrates with Facebook Connect and Twitter so project creators can easily broadcast their projects to a larger socially engaged audience. Approval Process Must submit proposal first. Once approved (based on Kickstarter’s guidelines), the project creator has the opportunity to begin broadcasting his or her vision/project. This proposal approval process generally takes 1-2 days. Kickstarter states they are not “screening for taste at all,” and that they only take this proposal step to ensure that no one is violating their guidelines (i.e.: falling outside of their creative category requirements). Amazon Payments 18 years of age or older Permanent US resident with SSN US address, US bank account, and US state-issued ID (driver’s license) Major US credit or debit card needed Anyone, anywhere (with a major credit card) can pledge to Kickstarter projects (i.e.: international backers are able to pledge to US-based projects). All funds are collected for Project Creators by Amazon Payments. Kickstarter does not, at any time, receive or hold any monies intended for Project Creators.
  • Competitors RocketHub [www.rockethub.com]: Similar to Kickstarter, except it accepts all the projects that are submitted and removes the ones that are of bad taste. Invested.in [www.invested.in]: Invested.in is an interactive platform built to help anyone raise money for anything, utilizing their existing social network presence. Their grassroots approach to P2P lending allows users to return goods, services, or anything in between for their investments. Seedrs [www.seedrs.com]: Seedrs is a forthcoming platform that will allow direct, on-line investment in the equity of startups. PledgeMusic [www.pledgemusic.com]: PledgeMusic is an online fan-funded music platform that is solely focused on raising fund for the musicians. Venture Bonsai [ www.venturebonsai.com ]: It is a crowdfunding service for European start-ups looking for funding (direct investments) less than 1 M€. Grow VC [ www.growvc.com ]: “A new community funding model for technology startups. Here’s how it works: Grow VC will pool 75 per cent of membership fees into a community fund that gets invested back into ‘promising startups’ which are members of the platform. The fund is managed by Grow VC but all the investment decisions are left to members who determine how to invest their portion of the fund into other startup companies that they feel have the most potential. The most successful decision makers get financially rewarded when the community fund begins earning a return on investment. So, if you promote the best companies you make moola.” (GrowVC.com site) Sprouter [ www.sprouter.com ]: A service very similar to GrowVC
  • Environment Very specialized and differentiated “crowdfunding” environment. Dedicated sites for specific types of projects or required outcomes. Across the board, all competitors offer the same service to customers: streamlining the process of receiving funds electronically through various individual (crowd) sources. Customers Kickstarter only serves emerging artists in creative arts categories However, other competitors serve a range of individuals looking for funding (all type of entrepreneurs) Customers served differ based on their end goal (fund a creative project versus funding a business) Competitive Positioning Kickstarter is ONLY a platform to collect donations (via philanthropy) where there is no expected financial return. “Backers” do not receive an equity/ownership stake in the project they provide funds to. Disruptive Potential Judgment about whether the potential project/product is “good” has shifted from venture capitalists to the wider public. Now, the social atmosphere can determine if, when and how a project gets funded. Gives power to the CROWD. No give-up of project/idea ownership. Not giving away equity in your idea. True realization of market demand: If your product doesn’t “sell” (or raise funds), the public didn’t want it. Saves the project creator worry/stress/hassle/funding to try and get an unwanted project to market. Connecting innovators and content creators directly to their audiences, and cutting out traditional retail and distribution channels.
  • PROS: How Beneficial - Fundraising Made Easy, Proof of Market Demand When Beneficial - In market testing phase, When looking for immediate funding Why Beneficial - Ease of Use, Cost Effective, Powerful, Engaging, and Captivating Medium POTENTIAL CONS: “ If you build it…” doesn’t necessarily mean “they’ll come.” Creators need to actively spread the message, have urgency, be authentic, work hard, deliver and communicate. If customers are unwilling to fund a project, it means the project might not have meant to exist. This is not a platform for charity or cause funding (or “fund my life” projects, i.e.: pay tuition/bills). Examples of prohibited use include raising money for the Red Cross, funding an awareness campaign, funding a scholarship, or donating a portion of funds raised on Kickstarter to a charity or cause. Ownership opportunities in creative projects are not allowed. Small rewards are allowed (i.e.: copies of work, limited editions, fun experiences), but not financial incentives or equity stakes. Offering financial incentives, such as ownership, financial returns (for example, a share of profits), or repayment (loans) is prohibited. Currently Kickstarter projects are only US-based. International “backers” may fund a project, but not create them globally. Replicable model (already competitors with very similar look and feel: www.fundageek.com)

Kickstarter Presentation Kickstarter Presentation Presentation Transcript

  • crowdfunding: “proof of market demand” Jessica Samph, February 27, 2012
  • Executive Summary• What is it: Crowdfunding• Who is it for: Creative Project Owners• Where: Anywhere in the World• When: Anytime• Why should it be used: Fund Generation Cost Savings Ease of Use Idea Awareness
  • Examples of Usage
  • Examples of Usage• Raise funds online for creative projects• Build brand / project awareness• Engage with large community of philanthropists
  • Business Value• World’s Largest Fundraising Platform• New Form of Commerce and Patronage• “All or Nothing Funding”• Project Creators keep 100% Ownership• Test Projects without Risk• Minimal cost
  • Technology Specifications• Kickstarter Interface• Video Component• Update Audience• Approval Process• Amazon Payments
  • Competitive Environment
  • Competitive Environment• Environment• Customers• Competitive Positioning• Disruptive Potential
  • Analysis• How Beneficial? – Fundraising Made Easy – Proof of Market Demand• When Beneficial? – In market testing phase – When looking for immediate funding• Why Beneficial? – Ease of Use – Cost Effective – Powerful, Engaging, and Captivating Medium
  • Bibliography and References• Kickstarter: The Science of Crowdfunding (Infographic)• Kickstarter Statistics• Wikipedia: Crowdfunding• "Crowdfunding” (Time Article) by Kristina Dell• “Scoring Money from an Online Crowd” (BusinessWeek ) by John Tozzi• Crowdsourcing.org: The Industry Website• "Don’t Get Me Wrong, Kickstarter is Great, But…" (The Refined Geek) by David Klemke Jessica Samph, February 27, 2012