Kickstarter

Definition

Kickstarter is a popular crowdfunding platform that allows individuals and businesses to raise funds for creative projects, new product ideas, and entrepreneurial ventures. It provides a way for people to connect with a community of backers who can support their ideas and help bring them to life.

5 Must Know Facts For Your Next Test

1. Kickstarter uses an all-or-nothing funding model, where a project must reach its funding goal within a set time frame in order to receive any of the pledged funds.
2. Successful Kickstarter campaigns often offer backers exclusive rewards, such as early access to the product, limited-edition items, or personalized experiences.
3. Kickstarter projects cover a wide range of categories, including technology, design, arts, music, film, and more, allowing entrepreneurs and creators to bring their ideas to life.
4. Backers on Kickstarter are not investors, but rather supporters who contribute to a project in exchange for rewards or the satisfaction of helping to make something happen.
5. Kickstarter's platform provides tools and resources to help creators plan, launch, and manage their crowdfunding campaigns, increasing the chances of reaching their funding goals.

Review Questions

• Explain how Kickstarter's crowdfunding model works and how it differs from traditional investment methods.
  • Kickstarter's crowdfunding model allows creators to raise funds for their projects by appealing to a large number of backers, who each contribute a relatively small amount in exchange for rewards or perks. This differs from traditional investment methods, where a project or business would seek funding from a smaller number of investors who expect a financial return on their investment. With Kickstarter, backers are not investors, and they do not receive equity or ownership in the project. Instead, they are supporting the creation of something they find interesting or valuable, and they are rewarded with exclusive items or experiences related to the project.
• Analyze the benefits and challenges that Kickstarter presents for entrepreneurs and small businesses looking to start their own ventures.
  • Kickstarter offers several benefits for entrepreneurs and small businesses. It provides a platform to connect with a large community of potential backers, allowing them to gauge interest and secure funding for their ideas without the need for traditional financing. Successful Kickstarter campaigns can also generate buzz and build a loyal customer base. However, Kickstarter also presents challenges, such as the pressure to reach funding goals within a limited time frame, the need to offer compelling rewards to attract backers, and the potential for competition from other projects seeking funding. Entrepreneurs must also be prepared to deliver on their promises to backers, which can be a significant undertaking, especially for first-time business owners.
• Evaluate the role of Kickstarter in fostering innovation and entrepreneurship, and discuss its impact on the broader business landscape.
  • Kickstarter has played a significant role in fostering innovation and entrepreneurship by providing a platform for creators and entrepreneurs to bring their ideas to life. By lowering the barriers to entry and allowing individuals to directly fund projects they find interesting or valuable, Kickstarter has enabled the development of a wide range of innovative products and services that may not have been possible through traditional financing channels. This has had a broader impact on the business landscape, as successful Kickstarter campaigns have often led to the creation of new companies and the disruption of existing industries. Additionally, the platform has helped to democratize the funding process, giving a voice to a diverse range of entrepreneurs and creators who may have been overlooked by traditional investors. As a result, Kickstarter has contributed to a more vibrant and dynamic business environment, encouraging risk-taking and the pursuit of novel ideas.

Related terms

Crowdfunding:

The practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the internet.

Backer: An individual who supports a Kickstarter project by pledging money in exchange for rewards or perks.

Reward-based Crowdfunding: A type of crowdfunding where backers receive a tangible reward, such as a product or service, in exchange for their financial contribution.