Kickstarter

Definition

Kickstarter is a crowdfunding platform that allows creators to raise funds for their projects by soliciting small contributions from a large number of people. This platform connects creative individuals, entrepreneurs, and innovators with potential backers who are interested in supporting new ideas and products. Kickstarter has become a vital resource for funding a variety of projects, from films and music albums to innovative technology and social enterprises.

5 Must Know Facts For Your Next Test

1. Kickstarter operates on an all-or-nothing funding model, meaning that if a project does not reach its funding goal, no money is collected from backers.
2. The platform has been used to fund a wide range of creative endeavors, including art installations, tabletop games, and tech innovations.
3. Creators often offer various reward tiers to backers, incentivizing larger contributions with exclusive products or experiences.
4. Kickstarter has fostered a community-driven approach to funding, allowing individuals to support projects they are passionate about while helping bring innovative ideas to life.
5. Many successful startups have launched on Kickstarter, utilizing the platform not only for funding but also for market validation and building an initial customer base.

Review Questions

• How does the crowdfunding model employed by Kickstarter differ from traditional methods of raising capital?
  • Kickstarter's crowdfunding model allows creators to gather small amounts of money from many individuals rather than relying on large investments from a few sources, like banks or venture capitalists. This democratizes the funding process and enables a diverse range of projects to get support. In contrast to traditional financing methods that often involve significant collateral or equity exchange, Kickstarter’s all-or-nothing model ensures that projects only receive funds if they meet their specific funding goals.
• Evaluate the impact of Kickstarter on social enterprises and how it facilitates their growth.
  • Kickstarter has significantly impacted social enterprises by providing them with a platform to access funding while aligning with their mission-driven objectives. Many social enterprises use Kickstarter to showcase their innovative solutions to social problems and attract backers who share similar values. The visibility gained from a successful campaign can lead to increased awareness, partnerships, and customer engagement, ultimately helping these enterprises scale their efforts in creating positive change.
• Discuss the challenges faced by creators when using Kickstarter as a funding source and propose strategies to overcome these challenges.
  • Creators on Kickstarter face challenges such as intense competition for attention among numerous projects, setting realistic funding goals, and effectively marketing their campaign. To overcome these challenges, creators should invest time in building a strong community around their project prior to launching the campaign. Engaging potential backers through social media and updates can create buzz. Additionally, they should craft compelling narratives around their projects and offer well-structured reward tiers that appeal to different backer motivations, enhancing the likelihood of meeting their funding goals.

Related terms

Crowdfunding: A method of raising capital through the collective efforts of friends, family, customers, and individual investors, typically via online platforms.

Rewards-Based Funding: A crowdfunding model where backers receive non-financial rewards, such as products or experiences, in exchange for their contributions.

Social Enterprise: An organization that applies commercial strategies to maximize improvements in financial, social, and environmental well-being.