Kickstarter

[gaseousclay]

Have any of you ever used a crowd sourcing site like kickstarter to finance your business? I've always liked the idea of kickstarter but need to read up on their requirements. My understanding is that you can't use kickstarter to actually start a business. I don't know how true this is because I've come across many questionable kickstarter campaigns that looked like individuals trying to start companies. But, I think most of the successful campaigns were for genuinely creative product ideas that simply needed capital to get their idea manufactured.

Any thoughts?

[Paul]

Have any of you ever used a crowd sourcing site like kickstarter to finance your business? I've always liked the idea of kickstarter but need to read up on their requirements. My understanding is that you can't use kickstarter to actually start a business. I don't know how true this is because I've come across many questionable kickstarter campaigns that looked like individuals trying to start companies. But, I think most of the successful campaigns were for genuinely creative product ideas that simply needed capital to get their idea manufactured.

Any thoughts?

Kickstarter and most crowdfunding sites are designed to fund projects, not businesses. Usually artistic or social projects. The problem with crowdfunding is that the "crowd" can not invest, but only donate to a project. The only thing they can receive in return is some form of gift. As examples an auther may be seeking funding to write a book and he will offer a copy of the book, similarly a band may want to fund an album and will send a copy as a gift. if you look through kickstarter you'll see the types of projects and gifts that are offered.

Over the past two years the Government has been working to allow crowdfunding sites to allow actual investments in the form of equity (shares) in start up companies. The concept has been approved but the S.E.C. has not yet finalized all the regulations that will apply. It's a little complictaed because crowdfunding must comply with the general rules that apply to any company that is raising funds from the public.

I am a little familiar with this because I work with an S.E.C. attorney who takes companies public and we have been poised to launch an equity based crowdfunding business once the final regulations are determined. As it stands now you can sell equity via "crowdfund" to "accredited " investers only (those that meet certain financial requirements) but not to the general public.

[gaseousclay]

Kickstarter and most crowdfunding sites are designed to fund projects, not businesses. Usually artistic or social projects. The problem with crowdfunding is that the "crowd" can not invest, but only donate to a project. The only thing they can receive in return is some form of gift. As examples an auther may be seeking funding to write a book and he will offer a copy of the book, similarly a band may want to fund an album and will send a copy as a gift. if you look through kickstarter you'll see the types of projects and gifts that are offered.

Over the past two years the Government has been working to allow crowdfunding sites to allow actual investments in the form of equity (shares) in start up companies. The concept has been approved but the S.E.C. has not yet finalized all the regulations that will apply. It's a little complictaed because crowdfunding must comply with the general rules that apply to any company that is raising funds from the public.

I am a little familiar with this because I work with an S.E.C. attorney who takes companies public and we have been poised to launch an equity based crowdfunding business once the final regulations are determined. As it stands now you can sell equity via "crowdfund" to "accredited " investers only (those that meet certain financial requirements) but not to the general public.

this is the grey area that has me confused. there are plenty of projects on kickstarter that seem to turn into businesses, or projects that are product ideas from existing companies that need funding to get ideas off the ground. for example, you might have someone that has some cool new watch design that he's trying to mass produce but simply doesn't have the funds to do so. how does kickstarter differentiate artistic/social projects from projects that are essentially business ventures?

[Paul]

this is the grey area that has me confused. there are plenty of projects on kickstarter that seem to turn into businesses, or projects that are product ideas from existing companies that need funding to get ideas off the ground. for example, you might have someone that has some cool new watch design that he's trying to mass produce but simply doesn't have the funds to do so. how does kickstarter differentiate artistic/social projects from projects that are essentially business ventures?

I think Kickstarter is fairly strict but there are many other crowdfunding sites that are not. I think it is all in how you present it. Also, they want something that they think will actuall raise money because they are paid a percentage. What are you trying to get funded?

Also keep in mind that just being on a crowdfunding site doesn't mean you are going to raise any money. It is really just a "platform" to post your project BUT you have to drive the traffic. Kickstarter just gets "browsers", they don't actively promote your project. Many many projects barely raise any money at all. You can actually do the same thing (raising donation funds) on your own website.

[phanio]

Starting a business via a crowdfunding platform, is the same as soliciting angel or venture capital as the investors have to be accredited. If you are looking for non-accredited investors, simply get out in your local community and pitch your idea. There are local professionals that love to give back and are always looking for local businesses to partner with.

[trunker]

I had success using Kickstarter for business funding. It will work for anyone if you have a unique product that you will be selling. I offered only four rewards at $300.00, $400.00, $775.00 and $2,250.00. I raised a total of $3,750.00. I know its not a ton of money but I keep growing in baby steps little by little. I did no outside marketing for my project and relied solely on Kickstarter traffic. All of my funding occurred in the last ten days of my project.

I did a second Kickstarter and had no success at all so I thought. I canceled the project and was going to relaunch with a new look. Within 48 hours of canceling I received a good number of emails inquiring about my product and made several pre-order sales.

[Tatjana]

We have recently launched a Kickstarter campaign to raise funds.

So far, I have to say that its been quite an interesting but also challenging experience (although we're doing quite well until now).
The hardest bit is to get some press, which is essential for a successful crowdfunding campaign.

If any of you are planning to launch a campaign on kickstarter, the best advice I can give you - try to make contacts with press and bloggers and secure stories way before you launch the campaign! Do research - who writes about subjects similar to yours and then add them on LinkedIn or Facebook and try to become friends.
That will make your life so much easier when launching the campaign!

Good luck! :-)

[webdesignphx]

I have been thinking of kickstarter for a while now. I want to start a carpet cleaning business and was thinking of offering free carpet cleanings to supporters who donated. But I too saw that it is mostly artists and social projects. Let us know if it works out for you.