{"id":2629,"date":"2015-12-07T21:13:44","date_gmt":"2015-12-08T02:13:44","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/kickstarter-crowdfunding-creative-projects\/"},"modified":"2015-12-07T21:15:12","modified_gmt":"2015-12-08T02:15:12","slug":"kickstarter-crowdfunding-creative-projects","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/kickstarter-crowdfunding-creative-projects\/","title":{"rendered":"Kickstarter: Crowdfunding Creative Projects"},"content":{"rendered":"<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Kickstarter-now-live.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-2624\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Kickstarter-now-live-300x86.png\" alt=\"Kickstarter-now-live\" width=\"1033\" height=\"296\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Kickstarter-now-live-300x86.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Kickstarter-now-live-600x173.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Kickstarter-now-live.png 640w\" sizes=\"auto, (max-width: 1033px) 100vw, 1033px\" \/><\/a><\/p>\n<p><strong><u>What is Kickstarter?<\/u><\/strong><\/p>\n<p>Kickstarter is a funding platform that sources investments from individuals for creative projects in mediums such as film, music, design, technology and games.\u00a0 Investments are sourced from individuals, who choose what they will invest in.\u00a0 Since its founding in 2009, Kickstarter has been the platform through which more than 90,000 creative projects have been funded, for over $2 billion invested dollars<sup>1<\/sup>.<\/p>\n<p>However, investments are not made into companies (which in many cases with an artist is the individual) but rather into specific projects.\u00a0 The criteria for a Kickstarter project is as follows:<\/p>\n<p>1) It must have a clear goal or deliverable that will eventually be finished and have an end product<\/p>\n<ul>\n<li>The end product of the project is very broad \u2013 examples of final products currently funding include a line of natural chocolate bars or a video of dancing around the world<\/li>\n<\/ul>\n<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/chocofuel.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-2621 alignleft\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/chocofuel-225x300.jpg\" alt=\"chocofuel\" width=\"225\" height=\"300\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/chocofuel-225x300.jpg 225w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/chocofuel-450x600.jpg 450w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/chocofuel.jpg 680w\" sizes=\"auto, (max-width: 225px) 100vw, 225px\" \/><\/a><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/India-dancing.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-2622 alignright\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/India-dancing-300x300.jpg\" alt=\"India dancing\" width=\"300\" height=\"300\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/India-dancing-300x300.jpg 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/India-dancing-150x150.jpg 150w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/India-dancing-600x600.jpg 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/India-dancing.jpg 680w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>2) The Creator is responsible for specifying their funding goal and designating \u201crewards\u201d for different donor\/backer tiers<\/p>\n<ul>\n<li>Rewards can be as simple as a thank you note. However, most projects use rewards tied to the product, such as a sample of the product, an inside look at the making of the product, or a one-of-a-kind experience<\/li>\n<li>3) If the funding goal is not reached, no capital is received<\/li>\n<li>Prevents Creators from being left with a commitment to produce a project that is only partially funded<\/li>\n<li>Donors are more likely to help spread the word to get a project they like fully funded<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong><u>Creating and Capturing Value<\/u><\/strong><\/p>\n<p>Kickstarter creates value by acting as a common platform for potential backers.\u00a0 The majority of initial funding for a project is driven by friends and family of the Creator.\u00a0 These first backers often then drive the buzz around a project by promoting it on various forms of social media.\u00a0 Backers are often also attracted by the unique rewards offered.\u00a0 Once a project has enough commitments to surpass the funding goal, it will fund and backers will be charged. If it does not reach the funding goal, backers will not be charged and the project will not receive any Kickstarter funding.\u00a0 Kickstarter receives a 5% fee on funded project dollars collected as well as approximately 3-5% processing fees. Recently, Kickstarter became a B corp for tax purposes \u2013 which is a for-profit company that is also measured by social impact and have specific goals for adding social value<sup>3<\/sup>.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><u>Transforming Assets into Value<\/u><\/strong><\/p>\n<p>Kickstarter is a relatively low overhead business.\u00a0 They are located in one location in Brooklyn with only 118 employees.\u00a0 Of these employees, half are assigned to designing and coding and the other half to working with the community.\u00a0 There is a high emphasis on protecting the community and making sure that any suspicious activity is flagged and followed up on before a project is funded. \u00a0The value of the platform hinges on the company\u2019s ability to protect users and monitor for projects that might be fraudulent or not in compliance with the criteria of projects and the site. \u00a0If Kickstarter loses control over the perceived quality of their site, it could potentially impact the willingness of backers to commit to projects if they are concerned about the legitimacy of the projects. Historically, roughly 9% of funded projects fail<sup>2<\/sup>.\u00a0 Kickstarter is transparent with their data so that Backers know historical funding and project fail rates so that they can best assess the probability of not receiving their reward or the project failing to reach completion.<\/p>\n<p>&nbsp;<\/p>\n<p>Alignment of the business and operating models is highly effective.\u00a0 The competitive advantage of Kickstarter is the community that knows and trusts the Kickstarter brand.\u00a0 The business model is driven off of the dedication to high quality projects and not taking a fee on any capital until the funding of the project occurs.\u00a0 Based on a 5% fee on funded projects since its founding, Kickstarter would have received approximately $100 million in fees. While the business model is arguably very scalable, and scaling up would result in higher fees received over time, the company must be careful to maintain high standards for quality and authenticity of projects and protect the image of the brand in order to maintains backer comfort with the platform.<\/p>\n<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/kickstarter-explanation.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-2623 aligncenter\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/kickstarter-explanation-300x135.jpg\" alt=\"kickstarter-explanation\" width=\"829\" height=\"373\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/kickstarter-explanation-300x135.jpg 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/kickstarter-explanation-600x270.jpg 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/kickstarter-explanation.jpg 750w\" sizes=\"auto, (max-width: 829px) 100vw, 829px\" \/><\/a><\/p>\n<p>Sources:<\/p>\n<ol>\n<li>Company website: <a href=\"http:\/\/www.kickstarter.com\">kickstarter.com<\/a><\/li>\n<li>\u201cNearly 1 in 10 Kickstarter projects fails to deliver rewards,\u201d Dec. 07, 2015. <a href=\"http:\/\/www.entrepreneur.com\/article\/253649\">http:\/\/www.entrepreneur.com\/article\/253649<\/a><\/li>\n<li>\u201cKickstarter Focuses its Mission on Altruism Over Profit,\u201d Sept. 20, 2015. <a href=\"http:\/\/www.nytimes.com\/2015\/09\/21\/technology\/kickstarters-altruistic-vision-profits-as-the-means-not-the-mission.html?_r=0\">http:\/\/www.nytimes.com\/2015\/09\/21\/technology\/kickstarters-altruistic-vision-profits-as-the-means-not-the-mission.html?_r=0<\/a><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>Crowdfunding creative projects in the arts through an online platform.<\/p>\n","protected":false},"author":435,"featured_media":2630,"comment_status":"open","ping_status":"closed","template":"","categories":[504,503],"class_list":["post-2629","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-crowdfunding","category-kickstarter"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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