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How does Kickstarter work



How does Kickstarter work

Ever wanted to crowdfund your start-up or a project which requires immediate cash flows for your working capital requirement? Ever wanted to substitute traditional sales-promotion techniques to optimize acquisition, servicing and upselling propositions to a target consumer?

How about directly raise money from people who resonate with your idea since its inception phase? Want to open an artistic business online with a close touch of your clientele? Then Kickstarter is the website for you.

How Does it Work?

Kickstarter is an online crowdfunding website which enables individual ‘contributors’ from all around the world to pitch in a minimum amount of contribution towards projects. These projects market themselves via well supervised video or a textual marketing pitch to ensure there are a threshold of contributors who can ‘pledge’ some amount of money till the milestone reached.

Before we delve much into the aesthetics, lets investigate the salient features of this website which adds to its brand[i]

  • All or Nothing – Perhaps a key crowdfunding point of parity, started and propagated by Kickstarter is that of ‘all or nothing’. It means that until the amount required by the entrepreneur is not achieved, none of the amount is charged from the individual client till then.
  • In Tranches – Sometimes, creators who come up with the content which it requires funding for, can offer perks to individuals who back their project. Essentially removing the concept of charity from the conversation and aiding individuals with a return gift of sorts for their contribution to your dream is the key.
  • A pilot project validation – What better way to ensure that your product is market ready, than to create a Kickstarter content page. You get a good look at who appreciates your work and the kind of people you can target up front for your project for future sales.
  • Delayed Disbursements- Perhaps, a small disadvantage you might face using Kickstarter is its delayed disbursement cycle. It uses Amazon payments for its payments processing, and as soon as the goal is reached, Amazon Payments, holds it for around 14 days before it is disbursed to the creator. Again, other crowdfunding websites also have the same issue.
  • Charges a fee[ii] – Finally, Kickstarter charges a negligible fee from the funded amount before disbursing it further to the creator. The fee primarily is 5%. It also charges an additional 3.5-5% for processing fee.

Advantages to the Entrepreneur

Kickstarter as a business model has not only changed the bootstrapping phase for a start-up but has also ensured that, it receives a strong customer base to position and further sell stuff on. Secondly, it initiates a customer loyalty platform for creators to experiment on. It also ensures that the ideas that do not get funded are then, not debited or refunded to the contributor or the pledger.

Advantages to the Contributors/Investors

It is also safe in terms of the quality of disbursals it ensures. Kickstarter also successfully shares the content and tries to market it as best as possible. With strong marketing using google analytics it has positioned itself as the top crowdsourcing website in the US and is poised to follow a similar sign in other countries. In a start-up environment, it finds itself most prevalent. From pitching in money for events, social causes to full-proof business models which people believe in, leaves Kickstarter trustable and dependable.



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