Crowdfunding site Kickstarter has just passed the milestone of raising over $3bn for startups, founders and creators with dreams. What started as a platform to give struggling artists and filmmakers a chance to realise their vision has burgeoned into a multi billion dollar launch pad for an array of early stage businesses and ideas. Many projects start as unproven concepts from the recesses of the makers’ minds, and yet the platform has a remarkable 91% hit rate of delivering funded projects to ‘backers’. Eight years in, Kickstarter has produced 225 projects over $1m each and can claim to have given life to a film at every one of the last seven Oscars.
A study conducted by the Wharton School at University of Pennsylvania found that almost 9,000 new startups have found life via Kickstarter, while the total economic impact is closer to $5.3bn once you take into the account the afterglow of sales a successful Kickstarter campaign affords a burgeoning business.
The simple beauty of the platform for those with a cult film or niche product idea is that it neatly combines two vital inputs for an early stage business: an investment round and a (huge) marketplace. In the old days, you might have had to test a minimum viable product on your own dime to persuade investors to give you the cash to actually make it. Now you can kill two birds with one stone, raising enough cash to realise your dream creative product, and proving that there’s a hungry market for it. The cost of using the platform is 5% of the capital raise, so businesses cash out the dollars at a far more favourable rate than borrowing it from the bank.
That sweet deal for creative entrepreneurs is at the heart of a model that Kickstarter chief executive Yancey Strickler heralds as a change in the foundation of how consumers are interacting with corporates. Speaking exclusively at the annual D&AD Festival of Creativity in London, Strickler is optimistic about the future but bullish about the responsibility borne by modern business. “To raise $3bn in eight years for independent artists and creative people during one of the worst economic periods we’ve had – that says to me that there’s something to this.” In his view, Kickstarter is built on an invitation to participate and have a greater roll in influencing culture, so backers become active participants rather than passive consumers. The transaction isn’t a binary one – backers feed back via the platform to creators and have a loud voice. Recent robotic drawing board success Joto launched an entire new colour design based on the feedback of backers midway through the campaign – and raised over $500,000 as a result.
For Strickler, this exchange is as political as it is commercial. He uses words like ‘empowerment’ and ‘voting’ to describe the interactions on Kickstarter, and he sees the platform, and its $3bn success, as the heartbeat of a ‘movement’.
“We believe this isn’t a granola throwback to the 70’s, we believe this is the future.” He sees Kickstarter’s recent transition to become a Public Benefit Corporation, a set up that weights social responsibility equally to profit motive, “as the early beginnings of greater momentum around corporations volunteering or being forced to take greater accountability for the world around them.”
He continues: “When we live in a world of VW cheating on emissions tests, it increases cynicism. We just think ‘Ah, they all do it, they’re all rotten,’ which creates more permission for more companies to act poorly. Ultimately you’re digging a deeper and deeper hole. So there has to be a real shift in that story. We hope maybe this can be a turning point.”
According to Strickler, the platform proactively bans the techniques of traditional advertising, eschewing slick presentations in favour of a warts-and-all honestly that forces founders to expose the risks in their ventures. He sees this as the demise of the middleman, enabling a dialogue that traditional commerce conspires to interrupt. This philosophy of balancing optimism and a confessional attitude to potential failure creates the compelling jeopardy at the heart of every campaign, and of Kickstarter itself: “It’s that balance between optimism and determination about what the future could be and fighting the fear that we won’t get there or that we’re incapable of getting there. Both are true and I think an acknowledgement of that is the path forward. Failure is easy [to deal with] because failure is past tense; fear is present so that’s a harder thing to acknowledge. Kendrick Lamar has a song about fear on his new record. A man at the top of his game and his greatest fear is loosing his creativity. If our most important rapper is acknowledging this and exploring this, to me that is a good sign. Maybe others can do the same.”
For the self proclaimed accidental entrepreneur, the focus will now be creative projects, starting with a book this year about anxiety, and how creative businesses can overcome it: “I’m riddled with fear, always. Coupled with a drive to overcome it – but depending on the day, one will win out over the other. So we want to get that out into the open – to say ‘all that shit you feel, listen, everyone else feels that too.”
Liam Fay-Fright is the Founder of Common Industry, which has raised over $2.5m for founders and is an official Kickstarter Expert on kickstarter.com