Crowdfunding is the process of raising money for a project, usually small amounts from a large number of individuals, via a platform, usually the internet.
Crowdfunding has ballooned in the past decade, mainly because of the platform to society that the internet provides, not only through crowdfunding platforms such as Kickstarter, but also through social networking. The platforms use a system whereby the user submits a business plan and legal documents. The user, whether looking to create a new business, or a new project, or expand on something that is already established, they must create an inviting business plan to attract potential donors.
The audience for these platforms are stakeholders and potential customers, usually the user will offer some sort of product or service in return for a donation at a minimum price. Essentially most of the projects on Kickstarter are products that can be pre-ordered, however, if the project fails you don't receive a refund! These crowdfunding online platforms are extremely successful, by 2012, nearly 3 million people had donated and helped a total of 30,000 projects meet their fund-raising total. Kickstarter up until 2012 had seen around $300million in pledges! Platforms like Kickstarter and Indiegogo are letting designers and creative minds connect with audiences who want to finance their dreams.
A good business plan will usually guarantee you reach the fund-raising target, but after you reach your target with the money is where the problem begins! Once they have the money, they have to get started with their project, with hundreds if not thousands of people watching your every move. The backers are putting their faith in the project leaders and when the project doesn't follow the timeline things can get shaky and backers can get impatient.
One Kickstarter project started by Eric Migicovsky, was creating a new design of watch, it raised more than $10 million in pledges and there were essentially 65,000 who had pre-ordered a watch that did not exist. Mr Migicovsky eventually had to hire someone to manage his inbox and to post updates regarding the project, nearly 9,000 people had emailed him.
The issue regarding the relationship of backer and project leader is still hazy and is something that is being worked on at the moment in time. The donors are not investors, or customers, although they may receive the product, they are not protected by consumer laws. Its extremely unclear and needs to be approached and something put in place.
However, with this in mind, the success of the platforms is undeniable, and the users on these platforms are aware of the risk they undertake. I believe the platforms are a brilliant idea and a creative way of taking advantage of the stage the internet offers.
Crowdfunding has ballooned in the past decade, mainly because of the platform to society that the internet provides, not only through crowdfunding platforms such as Kickstarter, but also through social networking. The platforms use a system whereby the user submits a business plan and legal documents. The user, whether looking to create a new business, or a new project, or expand on something that is already established, they must create an inviting business plan to attract potential donors.
The audience for these platforms are stakeholders and potential customers, usually the user will offer some sort of product or service in return for a donation at a minimum price. Essentially most of the projects on Kickstarter are products that can be pre-ordered, however, if the project fails you don't receive a refund! These crowdfunding online platforms are extremely successful, by 2012, nearly 3 million people had donated and helped a total of 30,000 projects meet their fund-raising total. Kickstarter up until 2012 had seen around $300million in pledges! Platforms like Kickstarter and Indiegogo are letting designers and creative minds connect with audiences who want to finance their dreams.
A good business plan will usually guarantee you reach the fund-raising target, but after you reach your target with the money is where the problem begins! Once they have the money, they have to get started with their project, with hundreds if not thousands of people watching your every move. The backers are putting their faith in the project leaders and when the project doesn't follow the timeline things can get shaky and backers can get impatient.
One Kickstarter project started by Eric Migicovsky, was creating a new design of watch, it raised more than $10 million in pledges and there were essentially 65,000 who had pre-ordered a watch that did not exist. Mr Migicovsky eventually had to hire someone to manage his inbox and to post updates regarding the project, nearly 9,000 people had emailed him.
The issue regarding the relationship of backer and project leader is still hazy and is something that is being worked on at the moment in time. The donors are not investors, or customers, although they may receive the product, they are not protected by consumer laws. Its extremely unclear and needs to be approached and something put in place.
However, with this in mind, the success of the platforms is undeniable, and the users on these platforms are aware of the risk they undertake. I believe the platforms are a brilliant idea and a creative way of taking advantage of the stage the internet offers.
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