Crowdfunding with Kickstarter

Note: This post was updated on January 10, 2014.

Last year the videogame industry faced stark financial realities in light of the shift toward free or low-cost games available for download from Apple's App Store and Valve's Steam. Established mid-tier publishers could no longer predict what their revenues would be for a new release and in many cases left developers in the lurch. From the consumer's perspective it made perfect sense: why should I have to pay $60 for the latest Super Mario game when I can download Cut the Rope or Angry Birds for $4.99 (or less)? So the industry took stock of the situation and started looking into crowdfunding solutions. Enter Kickstarter.

Kickstarter, for those who don't know, is a crowdfunding platform that pools together small contributions from many individuals from all over the world who would like to kickstart the funding of a project they would like to see reach the market. Users can log into the web site and pledge however much they like in support of the project. According to the company, 2013 produced some impressive statistics:

• 3 million people pledged $480m toward Kickstarter projects. • Those people haled from 214 countries and territories and 7 continents, including Antarctica. • 807,773 people backed one project; 81,090 backed 10 or more projects; and 975 people backed more than 10 projects. • 19,911 projects were successfully funded.

While videogame projects lead the pack, some of the more interesting projects included a photo exhibit on the Berlin wall, a film project ended up winning an Oscar, and a satellite was successfully launched into space. There are so many interesting and unconventional projects that have been brought to life.

On this platform, you will often find creative individuals looking for start-up capital for various art projects or business ventures. Software developers could easily use this platform to raise money to complete future applications or video game projects. But also engineers have taken to it. I've seen video of a Delorean Hydrofoil (presumably they're still working on the version that travels through time) and a human-powered helicopter that would have fascinated Da Vinci were he alive today.

The way Kickstarter works is quite simple: people are encouraged to back a project financially by contributing as little as 5 dollars, or whatever they can afford. Those who are willing to donate in larger increments are typically rewarded with a gift once the project is completed. For example, if you were developing a video game, you may give donors who provided 50 dollars or more a copy of the finished game.

Kickstarter has certain requirements for posting and getting a project approved. If you have a good business plan, you can probably just scale it down to fit their requirements for a project with a specific focus and deadline. It's important to identify and post the minimum amount that you need. Don't get greedy because Kickstarter has an all-or-nothing policy: if you don't make the minimum funding amount within the time allotted, you don't get any of it. Conversely, if you raise more than the funding minimum, then you do get to apply all of it toward funding your project. The project has to fit nicely into one of their existing project categories and they have a list of of prohibited items (such as anything offensive, polemic, or requiring ongoing maintenance, such as an ecommerce web site). If you think your project might be a good fit, I recommend spending some time on their site to get a feel for successful projects.

Not everyone succeeds on Kickstarter. Chris Taylor managed to raise over $2 million for his game Star Citizen but did not have the same good fortune raising money for another game called Wildman (youtube interview). If you fall short, what do you do? Find a way to continue with less than you budgeted or give the money back? I suggest that you study the terms of use before you launch your fundraising effort on Kickstarter to make sure you don’t find yourself in an awkward position. Gamasutra has published a number of helpful articles about the relative success and failure of Kickstarter in 2013. And it seems from the various contributors that the success is slightly more nuanced than the raw statistics suggest.

Anyone with a good idea and the determination to make it succeed should look into getting their initial funding on Kickstarter. Still, I think someone should check out the investors in Antarctica. I mean, come on, penguins?