A rocket scientist with an outline for a new book needs to travel extensively to check on research with colleagues. With grant money scarce, he turns to Kickstarter, an online funding source that uses small contributions from people who read about the project and choose to donate. He posts a description of his plans and the dollars start rolling in, in $10 and $20 increments with the occasional larger donor. Will he make it in time? Kickstarter puts a clock in the equation: If your project doesn’t hit its goal in a set time, it’s not funded. The clock is ticking …
It’s a new world for raising money and Kickstarter is at the heart of it. The site (www.kickstarter.com) has proven that its crowd-funding model can work. In fact, almost three million people have now put their own money into some 30,000 projects, with $300 million pledged. Come up with an idea for the latest digital device and you might attract enough money on Kickstarter to make it happen. If the project meets its goals, those who have pledged get benefits depending on the size of their donation, often one of the new devices in question.
Some of the projects Kickstarter has funded are the sort of thing that make you wonder why you didn’t think of it yourself. The Impossible Instant Lab, for example, is a device that turns a digital photo on your smartphone into an analog print that can be handed around to the relatives. Its developers set out to raise $250,000 on Kickstarter, and a quick check shows that with 12 days to go, they’ve already pulled in $486,586 from some 2,253 backers. A $149 pledge gets you half off the finished device’s retail price ($299), while those who donate $299 or more get a numbered unit with the donor’s name engraved on the body.
Another winner is Phosphor, which is trying to fund a touch-screen watch called Touch Time. From the Kickstarter description, Touch Time looks like a combination of wrist watch, calculator and app-driven smartphone, with built-in calendar. It’s another success story so far, with over $275,000 pledged, well over the $50,000 its designers initially sought to raise. Gadgets like these, crowd-funded by the likes of you and me, are now being tracked by major media outlets anxious to keep up with the latest tech. Indeed, Kickstarter may be a harbinger of the gadgets that will command the marketplace in just a few years.
But let’s not get too euphoric. For one thing, success at raising money brings with it a lot of obligations, including the need to actually deliver that device to all your enthusiastic backers. After all, these people have ordered something that does not yet exist, and delays or failure can be a problem. One recent study showed that 75 percent of the design and technology-driven products on Kickstarter have failed to meet the deadlines they promised. So donors can expect speed bumps, but on the other hand, they’re investors as much as donors, and they can hope to reap the benefit of a wisely chosen infusion of cash. Keeping them happy (and patient) may require a full-time position for someone on the staff of a Kickstarter-funded startup.
Aware of the delay problem, Kickstarter has just tightened requirements for those looking for funding. You may have an idea that just can’t miss, but the new rules say you need to spell out the risks in your project clearly and present your ideas without hype. That goes not just for high-tech wizardry but for the kind of artistic and entrepreneurial ventures Kickstarter also encourages. Whatever the product, its creators cannot hide the risks and challenges it will meet in the marketplace, nor can they use simulations of future performance that aren’t yet real.
But for many hoping to raise smaller amounts, Kickstarter is proving a supple tool. A San Francisco artist named Matthew Atabet found 33 backers to donate $3800 to cover the printing and mounting costs of a series of paintings for his first solo art show. Calling his work ‘a mythic tale about our shared inner experience,’ Atabet now looks towards a late September show funded by online backers, some of whom will receive signed artwork, depending on their pledge. As for our rocket scientist, the clock is still ticking on his campaign but the financial target is distant, a reminder that fewer than 50 percent of Kickstarter projects reach their goals.
Film, music, books, gadgetry — this is the stuff out of which Kickstarter dreams are made. The company is creating an alternative to traditional venture capital routes for start-ups and offering artists and creators a way to fund edgy projects without looking for grants or taking out a second mortgage. The jury is out on how well all this will work — will crowd-funded projects pay off consistently enough to feed public interest and keep donors happily contributing? The proof will be in the outcomes, finished projects that deliver on their promises and succeed in the marketplace. We’ll know in a few years what kind of percentages Kickstarter can deliver.