The idea behind Kickstarter is a great one: you’ve got an idea and you’ve got the fixins of a potential business going but the financial barrier of bringing it to market are keeping you from seeing it through. So you whip up a project on there, promise people rewards or (more commonly) the actual product you’re intending to sell and then wait for backers to pledge some cash to you. For the backers as well its great as if the project doesn’t get fully funded then no one has to donate any money, so your potential risk exposure is limited. Of course Kickstarter take their slice of the action, to the tune of 5% (plus another 3~5% for the payment processing) so everyone comes out a winner.

It’s a disruptive service, there’s no denying that. There are many products that wouldn’t have made it through a traditional venture capital process that have become wild successes thanks to Kickstarter. This of course gets people thinking about how those traditional systems are no longer needed, I mean who needs venture capitalists when I can get my customers to fund my project? Well whilst I’d love to believe that all we need for funding is crowdsourcing tools like Kickstarter I can’t help but notice the pattern of most of the successful endeavours on there.

They’re all done by people who were already successful in the traditional business world.

Take for instance the latest poster child for the success of Kickstarter: The Double Fine Adventure. For gamers the Double Fine name (and the man behind it, Tim Schafer) is a recognizable one, having worked on such cult classics as The Secret of Monkey Island, Grim Fandango and releasing others such as Psychonauts and Brutal Legend. Needless to say he’s quite well known and made his name in the traditional game developer/publisher world. Kickstarter has allowed him to cut the publishers out of this particular project, putting more cash in his pocket and allowing him total control of it, but could someone without that kind of brand recognition pull off the same level of success?

The answer is no.

For all the successes that are seen through Kickstarter only 44 percent of them will ever actually get the funding they require. Indeed in the Video Games category the highest funded game (there are a lot of projects in there that aren’t exactly games) before the Double Fine Adventure managed about $72,000. Sure it’s nothing to sneeze at, it was almost 6 times what they needed, but it does show the disparity between relative nobodies attempting a to crowdfund a project and when a well known person attempts the same thing. Sure there are the few breakout successes, but for the majority of large funding successes you’ll usually see someone who’s already known in that area involved somehow.

Now I don’t believe this is a bad thing, it’s just the way the process works. Nothing has really changed here, except the judgement call is shifted from the venture capitalists to the wider public, and as such many of the same factors influence if, when and how you get funded. Name recognition is a massive part of that, I mean just take a look at things like Color that managed to pull in a massive $41 million in funding before it had even got a viable product off the ground just because of the team of people that were behind the idea. Kickstarter doesn’t change this process at all, it’s just made it more visible to everyone.

Does this mean I think you should keep away from Kickstarter? Hell no, if you’ve got a potential product idea and want to see if there’s some kind of market for it Kickstarter projects, even if they’re not successful, are a great way of seeing just how much demand is out there. If your idea resonates with the wider market then you’re guaranteed a whole bunch of free publicity, much more than what you’d get if you just approached a bank for a business loan. Just be aware of what Kickstarter does and does not do differently to traditional ways of doing business and don’t get caught up in the hype that so often surrounds it.

About the Author

David Klemke

David is an avid gamer and technology enthusiast in Australia. He got his first taste for both of those passions when his father, a radio engineer from the University of Melbourne, gave him an old DOS box to play games on.

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