The Science Of Crowdfunding
There are many ways to make money online, but Kickstarter has taken things to a whole new level using a technique called "Crowdfunding". Through Kickstarter, artists can raise funding for a variety of projects by asking for pledges
from the Kickstarter community. While some only make hundreds, others have raised millions using the Kickstarter community to fund their projects. So what's the story behind Kickstarter and Crowdfunding, how does it work, and
most importantly... does it work?
How it works?
- Step #1: 1) Artist with an idea. An artist brings an ide/project to the Kickstarter team, and if approved, can setup a project page; 2) Kickstarter team. The original team: Perry Chen; Yancey Strickler; Charles Adler; 3) Steven Taylor
who needed his film financed, receiver 276% more than he requested.
- Step #2: 1) Which category? The project must fit into at least 1 of 15 categories: Art; Comedy; Comics; Dance; Design; Fashion; Food; Film & video; Games; Journalism; Music; Photography; Technology; Theater or writing &
publishing; 2) Most successful Kickstarter campaign in history! Category: technology. The TikTok LunaTik watch kits campaign requested $15.000 and raised $941.718, very successful!
- Step #3: 1) Raise money for your project. The project owner must set a goal amount and deadline for reaching the goal, and if they receive enough pledges to meet the goal, then they keep the money, but if they don't meet the goal,
they don't get any money and pledgers are not changed. This is called "all or nothing funding" or a "threshold pledge system". Set Goals; 2) Successful filmmaking. Diaspora: Filmmakers raised $200.641 which was 2006% more than
their initial request for $10.000.
- Step #4: 1) Set rewards. The project owner sets rewards for various pledge levels, this encourages the community to sponsor various amounts based on the reward they want; 2) Glif creators Tom Gerhardt and Dan Provost raised
$134. 417, which was 1378% more than their goal of $9750 and in return gave investors free Glifs and bought dinner for those in NYC.
- Step #5: 1) Showcase your project. The project owner creates a video to showcase their project and prove that they are who they say they are; 2) Lockpicks by Open Locksport creator Schuyler Towne showcased his easy to use
custom made lock picks, and how they were a little different from what was already out on the market.
- Step #6: 1) Enter the community. The projects enters the community; 2) A successful entry Scott Thomas, the design director of the Obama campaign, produced a book that chronicles of art and design from the historic campaign.
- Step #7: 1) Update your investors. Throughout the project, the project owner must include updates to keep their investors posted on how things are going; 2) The Musopen campaign, which alerted investors on how to provide
copyright free music content, explained how their donations would be used to purchase and release music to the public domain.
- Step #8: 1) Receive funds. If the project owner meets or exceeds their goal, they receive all the funds minus 5% which goes to Kickstarter and 3-5% which goes to Amazon if they are using Amazon payments to receive money.
- These campaigns mentioned above have earned Kickstarter 5% of $1.863.147.0.
- Kickstarter averages 1.1m visitors/month.
- Kickstarter demographics by age: 1) 0-17 - 1%; 2) 18-24 - 8%; 3) 25-34 - 27%; 4) 35-44 - 35%; 5) 45-54 - 16%; 6) 55-64 - 10%; 7) 65+ - 2%.
History of crowdfunding
- 1997. The idea of crowdfunding began in the music industry when American fans underwrote an entire US tour of the British group Marillion. They raised $60.000 through a donation driven internet campaign.
- 2004. The French film "Demain la Veille (Waiting for Yesterday)" raised $50.000 in 3 weeks through online crowdfunding.
- 2005. The term "Micropatronage" was made popular by blogger Jason Kottke, who quit his job for a year and relied on small donations from thousands of readers to his blog.
- 2006. August 12, 2006. The term "Crowdfunding" was coined by Michael Sullivan stating: "Many things are important factors, but funding from the 'crowd' is the base of which all else depends on and is built on. So, Crowdfunding is
an accurate term to help me explain this core element of funda vlog".
- 2009. Perry Chen, Yancey Strickler, and Charles Adler begin Kickstarter in Manhattan's Lower East Side.
- 2010. April 16, 2010 (Backers - 41 ($3.265), Pledged of $3.000 goal). The Miami New Times calls Kickstarter "one of the smartest ideas for a website since Al Gore invented the internet".
Kickstarter | Brought to you by Zippy Cart | Designed by Killer Infographics | Sources: http://en.wikipedia.org/wiki/Crowd_funding; http://en.wikipedia.org/wiki/Kickstarter; http://www.kickstarter.com/help/faq; http://www.google.com/