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Kickstarter Crowd-funding Hits $1M A Week

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Coming up on its two-year-anniversary, Kickstarter co-founder Yancey Strickler is struck by how little the site has changed. Maybe the biggest difference has been just how many artists and creative types have flocked to the crowd-funding site, helping validate a new form of fundraising that is opening the eyes of not only artists but technology leaders.

New York-based Kickstarter, which launched in April 2009, began with the promise of creating an intersection between patronage and commerce, where artists could enlist the help of supporters, who would in turn pledge their money and help validate the artist’s project. What began as a small endeavor has blossomed into a sizable business, one that now raises $1 million a week in pledges and has hit $35 million pledged overall. So far, Kickstarter has helped 5,000 projects get funded with about 2,500 actively fundraising at the moment. About 250 to 300 new proposals come in a day, hoping to appeal to a pool of supporters of more than 600,000 people. Strickler said the concept for Kickstarter, first conceived by co-founder Perry Chen, has proven to be a powerful tool in helping ideas bloom.

“There are thousands of projects we’ve helped that may not have existed otherwise, and we feel incredibly proud of that,” Strickler said. “I’ve personally backed 340 projects, and I’m thrilled to be involved in all of them. The mood here in the office is one of excitement. We have a sense of wonder about the ways people are using Kickstarter.”

The projects are indeed all over the map. One recent project is aimed at building a Robocop statue in Detroit, similar to the Rocky statue in Philadelphia. Another is aimed at replacing use of the N-word in The Adventures of Huckleberry Finn with the word “robot.” Independent game developer Muse Games is using Kickstarter to launch a limited edition of its game called CreaVures. Strickler said they’re all valid ways to draw support and attention around an idea. 

The start-up has gotten a lot of press in tech circles for helping launch Diaspora, the open-source, social networking project. More recently, the TikTok and LunaTik iPod nano (s aapl) watch kits broke site records, raising close to a million dollars. But for all its success, technology is in the middle of the pack for Kickstarter categories in terms of number of projects. Leading the way are films by a long shot, followed by music and art. While the site has helped other would-be Diasporas and iPod accessories get off the ground, Strickler said Kickstarter is not meant to be a replacement for traditional VC or angel funding. “We don’t want people looking to do a Series A; that won’t work too well with us,” he said.

It comes down to the site’s mission in creating discrete projects supporters can rally around, rather than boosting a start-up or business. Kickstarter, in fact, turns down 45 percent of applications because they don’t fit its requirements. Strickler said Kickstarter succeeds because of its simplicity and limits and because it calls for supporters to be rewarded, often in the form of early access or something produced by the project itself. That ensures everyone benefits, and it helps motivate supporters to spread the word. Projects can raise funds for up to 90 days, but the pledges aren’t collected unless the project hits its stated goal. That helps ensure there’s real demand and interest in the project and reduces the risk for backers.

The site, which makes money by taking a 5 percent cut of raised funds, has evolved modestly in its almost two years. One of the more significant changes was the introduction earlier this month of curated pages, which allows organizations, institutions and soon individuals to organize and manage multiple pages of Kickstarter projects. Strickler said it’s another way to highlight various projects on the site, which can only feature eight of them on its homepage. Overall, he sees more opportunities ahead as different groups discover the power of Kickstarter. He said theater and dance now have the highest success rates, in part, because they have strong communities that haven’t had tools like Kickstarter before. And early success stories are fueling even more projects.

“It’s all very organic,” Strickler said. “When you see one theater project make it, then you see 10 more because of the awareness.”

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12 Responses to “Kickstarter Crowd-funding Hits $1M A Week”

  1. Good article. Although, to be honest, I am a bit weary of Kickstarter hyping the Diaspora, but you did your homework and mentioned some cool projects I had never heard of. That is refreshing reporting!

    There are other crowdsourcing sites out there. I hope you will continue your interesting, informative writing and interview some of them.

  2. Have heard of Audience Productions. Note however if you call it peer-to-peer funding, “crowd-funding” or membership funding. It’s still donating. Audience is an exception in that they are actually providing SEC securities for investors.

    But if you want to know about options for dozens of financing approaches for film, music, TV, etc; try reading

    Remember in 8/07, Variety Magazine gave a “thumbs-down” on crowd-funding as not being credible for professional I.E. Institutional investors who are in the business of profit.

  3. Carl Brent

    I read about Audience Productions on Thrillist on Monday, a company in Seattle that’s selling $10 shares in a feature film. I went to their site and it looks legit (they’re fully registered with the SEC and all), so I bought some shares. I hope it works, but they say I get my money back if they don’t raise the whole budget. Anyone else heard of these guys?

  4. Why do people still confuse crowd funding as investing when it actually is just donating. $10 here and there.
    “No real investor would take it serious” was the reply from an entertainment lawyer in Variety magazine back in 07.
    Then there is the un-escapable fact that to actually offer any fiscal return to anyone requires a securities offering. Offering a copy of a DVD in the event a movie is completed is not a stock dividend.