In days gone by, if you dreamt up what you thought was the next big thing, you’d have to find somebody rich to help you turn that dream into a reality. They’d give you a load of money in exchange for an unreasonably large percentage of your future revenue and rake in the cash from the success of your own hard work. Not ideal, really.
Then came the internet, with its habit of disrupting time-honoured traditions. Kickstarter is its answer to getting brilliant ideas off the ground. It’s a website-based funding platform where people with prospective projects pitch to the internet. If the mysterious people of the interwebs like the idea, they can pledge money in varying quantities to fund the project in return for rewards determined by the pitcher. It’s not your standard “pay this much and get this amount of the company” sort of thing. It’s more along the lines of “pay this much and get first dibs, or get a special t-shirt, or an exclusive colour of the product”. Clever, right?
One of the many success stories of kickstarter is the Pebble Watch. It’s a digital watch with an e-ink display that is about as customisable and funky as a Mr. Potato Head. You can download apps that can link to your phone to show caller ID, facebook notifications, emails and just about whatever else you want. It can also track your runs, control your music and tell you how far you’ve whacked a golf ball. Oh, and it can also tell you the time. Useful.
The idea was pitched on kickstarter in mid-April last year, and five weeks later it had received over 10 million dollars worth of pledges from over 60,000 different sources. In return, these generous people of the internet got early bird orders of the pebble as well as the ability to vote on a new, exclusive colour. It’s this kind of novel approach to rewarding investors that really distinguishes kickstarter from any other sort of crowd-sourcing format, and helps it foster a bit of a community spirit.
But how else is this better than the traditional model? Well, it reduces risk all round. The traditional model requires you to find a rich patron, and then persuade him to shell out a large sum of money. Kickstarter projects spread out that large sum over a huge body, making it cheaper to bear for everyone involved: would you rather shell out a couple of grand or a fiver on someone’s idea? From the perspective of the investor, you’ve reduced your potential losses by investing only a small sum of money, and from the perspective of the pitcher, you’re not permanently indebted to, or reliant on, some rich person in a suit.
It also makes it a lot easier to find potential investors. Anybody can have a good idea, but the majority lack the means to find that patron. Through kickstarter, however, you can connect directly to a group of like-minded people who are looking for something new and interesting to get a hold of.
You might think it sounds too good to be true. You’d be mistaken, though. Almost 90,000 projects have been proposed, with slightly under half getting funded successfully. That’s about £350m of investments, in sums of £5 or £10. It’s even been called ‘the most important tech company since Facebook’. High praise indeed.