The Kickstarter Startup: The New Crowdsourcing Approach to Raising Capital.

chrgomes    October 23, 2014

Organization Name: Kickstarter

Industry: Investment/Crowdsourcing

Web References:

Description of how social media is used for business performance:

In the business world, where many aspiring entrepreneurs and early startup companies to start a business in hope that he or she would have something that is groundbreaking, a revolutionary new business idea or product that can change the way to we use and function today. Not every business can succeed without the necessary capital to keep their business from ever-growing or to keep it running. There are many entrepreneurs or early startups look to raise capital for their idea or product, many would embark the challenges of pitching their ideas or products to venture capitalists or reality television shows like Dragon’s Den or Shark Tank for the sake of seeding necessary money for their great ideas or products. However like every venture capitalists or those reality show are simply after one thing, equity.

In order to get the necessary seed money to push your product to the market, you would have to give up a substantial stake of your business in exchange.  Most of these venture capitalist love to be in money-making business, but you have to understand though they will take a substantial as being a large equity of your business for the money that you ask for. But you also have to keep in mind that most startup companies that seek investment seeds from venture capitalist have to realize that their great innovative idea or product has to make money. Once a venture capitalists makes an investment with a startup company, the venture capitalists would expect a return of his investment within a three to five-year timeframe where the initial investment is now worth three times more than it was before.

Some people would say that is a great idea to raise money for a business, but for other they may be wary about giving up equity just for control of their start-up company.

This is were Kickstarter crowdsourcing platform comes in, the days having to pitch your idea or product to venture capitalists or giving up control of your startup company for seed money are over. is a global crowd sourcing platform that allows people from all walks of life to pitch their ideas and products to raise money to bring their concept to life and share among with others.

              What is Kickstarter? (Source: YouTube)

With Kickstarter, anyone can come up with a unique project or product they want to get started on. The process with Kickstarter is very simple to use and for anyone looking to get funding that they need. Every project that is set up on Kickstarter will be allowed to set their project funding goals and deadline. If people like that project itself, they can pledge money to make it happen. If the project succeeds in reaching its funding goal, all backers would be charged for their pledges after the funding goal has been reached. If the project falls short, no one has to pay. Funding on Kickstarter is the all or nothing approach for each project.

Lessons for others:

Since the launch of Kickstarter back in 2009, the crowd sourcing platform has reach new heights of funding for projects that allow many aspiring entrepreneurs and early startups companies to seek investments to bring their project or product to life. To date, 7.2 million people have pledge on Kickstarter to help back the necessary funding to those with a creative visions be brought to life. Over 72,000 creative projects was made possible with the funding by backers that have pledge a little over $1 billion dollars to date.

How Kickstarter Works (Source: YouTube)

All-or-nothing funding approach is a core part of Kickstarter and it has a number of advantages as follows:

  • Less risk for everyone involve: If you need $5,000, it’s tough having $1,000 and a bunch of people expecting you to complete a $5,000 project.
  • Spreads awareness: If people want to see a project come to life, they’re going to spread the word. Amazing effective concept in creating momentum and rallying people around an idea.
  • Successful formula: Of the projects that have reached 20% of their funding goal, 81% were successfully funded. Of the projects that have reached 60% of their funding goal, 98% were successfully funded. Projects either make their goal or find little support.
  • Success Rate: All projects to date on Kickstarter have received an incredible 44% of projects have reached their funding goals.

Where do these backers that pledge the projects on Kickstarter come from? Turns out that majority of the funding initially comes from fans and friends of each project. Using the word of the mouth marketing approach to promote and bring awareness of the project on Kickstarter to friends and their friends as well. Considering we live in a social collaboration and connectivity by networking with the masses, social media engagement is another effective tool that allows projects from Kickstarters to generate traffic and pledges alike.

Five Most Successful Kickstarter Campaigns (Source: YouTube)

With the Kickstarter crowd sourcing platform, their millions of backers that are pledging to support projects to help bring many aspiring entrepreneurs and early startups bring their creative vision to life. Backers are supporting projects to help them come to life, not to just profit financially. Backing a project is not just to give someone else money but to bring their creative vision to exist in the world that we all live in today. Having that entrepreneur spirit to inspire and achieve something greater and being able to think differently on how to make the world a better place.

• Note:  With regards to the YouTube video link for Five Most Successful Kickstarter Campaigns, should note that another project by Ryan Grepper for the “Coolest Cooler” portable cooler container currently holds the largest successful completed Kickstarter project as of 2014. To date, Coolest Cooler project had raised +$13.2 million dollars in pledge funding. Outpaced the previous successful completed Kickstarter project from Pebble Technology for the “Pebble Watch” by a mere $3 million dollars.


6 Tips From Kickstarter on How to Run a Successful Crowdfunding Campaign By Laura Entis                                                                                 (

Kickstarter: How Crowdsourcing Went Mainstream By John Patrick Pullen (

How To: Crowdsource Funds for Causes, Creativity and Startups By Greg Ferenstein (

How To Raise Money on Kickstarter By Salvador Briggman (

Kickstarter: Wikipedia Article                                       (

Submitted By: Chris Gomes – SMBP Student, University of Waterloo.

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