Kickstarter

Definition

Kickstarter is a popular crowdfunding platform that allows creators to raise funds for their projects by attracting small contributions from a large number of people. It connects artists, entrepreneurs, and innovators with backers who are interested in supporting creative ideas and products. By setting specific funding goals and offering rewards for contributions, Kickstarter has become a significant player in the crowdfunding landscape, enabling projects to gain visibility and financial backing.

5 Must Know Facts For Your Next Test

1. Kickstarter was launched in 2009 and has since helped fund over 200,000 projects across various categories such as technology, art, music, and design.
2. Projects on Kickstarter operate on an all-or-nothing funding model, meaning that if a project does not reach its funding goal by the deadline, no funds are collected.
3. Creators on Kickstarter can set different reward tiers to incentivize backers, allowing them to receive exclusive items or experiences based on their contribution level.
4. The platform takes a 5% fee from successfully funded projects, which is in addition to payment processing fees charged by third-party services.
5. Kickstarter has fostered a community-driven approach to funding, where backers can provide feedback and engage with creators during the campaign process.

Review Questions

• How does Kickstarter's all-or-nothing funding model impact both creators and backers?
  • Kickstarter's all-or-nothing funding model creates a sense of urgency for creators to meet their funding goals within a specified timeframe. This approach minimizes financial risk for backers, as they are only charged if the project is fully funded, ensuring that their contributions are used effectively. It encourages creators to market their projects more actively and engage potential backers to reach their targets.
• Analyze the role of reward tiers in engaging backers and their significance in the success of Kickstarter campaigns.
  • Reward tiers play a crucial role in attracting backers by offering incentives that correspond to different levels of financial support. By providing unique or exclusive items at various pledge amounts, creators can entice more individuals to contribute, enhancing overall funding potential. These structured reward systems also help build a community around the project, fostering loyalty and encouraging backers to share the campaign with others.
• Evaluate how Kickstarter has influenced the traditional financing methods for startups and creative projects.
  • Kickstarter has significantly shifted the landscape of funding for startups and creative endeavors by democratizing access to capital. Traditionally, entrepreneurs relied on venture capitalists or bank loans, which often required established business models or collateral. By enabling direct engagement with potential customers through crowdfunding, Kickstarter allows creators to validate their ideas before investing significant resources. This change not only empowers innovators but also encourages diverse projects that may have previously struggled to secure traditional funding.

Related terms

Crowdfunding: A method of raising money for a project or venture by collecting small amounts of money from many people, typically via the internet.

Backer: An individual who financially supports a project on crowdfunding platforms like Kickstarter, often in exchange for rewards or products.

Reward-based Funding: A crowdfunding model where contributors receive tangible rewards or incentives based on the amount they pledge towards a project.