Continuing with our recent discussions about angel investors and FFF (friends, family, and fools) money, I just heard about an interesting new way to raise funds for new ventures: Kickstarter (www.kickstarter.com). According to the website, Kickstarter is "…a funding platform for artists, designers, filmmakers, musicians, journalists, inventors, and explorers." Kickstarter leverages the power of online crowdsourcing to gather together potential investors for new creative and business ventures. Current projects include someone building a Bussard fusion reactor ($3,099 pledged from 71 backers), a cinematic exploration of Calvin and Hobbes ($21,369 pledged from 302 backers), a new video game by the name of Glorkian Warrior ($10,417 pledged from 109 backers), and 8-Bit NYC, a map of the city rendered to look like something out of Zelda ($3,374 pledged from 54 backers — pictured at right).
To raise funds on Kickstarter, you first decide how much money you want to raise (a funding goal), and you set a time limit of between 1-90 days in which to raise it. If your funding goal is met or exceeded within the time period you set, then the project is funded (Kickstarter keeps 5% as an administrative fee). If your funding goal is not met, then the project is not funded, and no money changes hands. If you receive funds for your project, YOU retain all ownership and intellectual capital — your "investors" have no claim on your idea or project. Instead, you are encouraged by Kickstarter to craft some sort of creative reward for your funders. For example, rewards for people who pledge to fund the Bussard fusion reactor project range from a simple acknowledgment on the creator’s blog (available for a funding pledge of at least $4) on up to a working 60 watt burning laser (for anyone who pledges funding of at least $2,048).
While Kickstarter may not be the best way to raise millions of dollars for your business idea, it’s a great way to try something new with minimal risk to you or to your funders. And for many entrepreneurs today, that’s just what the doctor ordered.