Once upon a time, only venture capitalists could invest in projects they deemed worthwhile. But in the brave new world of social networking and “crowd sourcing”, we can all back a creative venture, whether it’s a work of art, a movie, a novel or an invention. This altruistic form of investment has become known as “micro-patronage” or “crowd funding”.
One of the leading “crowd funding” platforms is Kickstarter, which has backed initiatives ranging from a documentary film about jazz to a 360° panoramic video lens for the iPhone. As with similar sites like RocketHub and Sellaband, it works on a simple model: those with an idea that needs backing apply to Kickstarter to have their project posted on the site. They set a minimum target of funds to be raised. Once the project is visible on the site, the public pledge donations (starting at a minimum of US$1) using Amazon Payments. If the funding target is not reached by the deadline, no funds are collected and the backers lose nothing. Kickstarter takes 5% of the funds raised; Amazon charges 3-5%. Kickstarter claims no ownership over the projects, although these remain on the site for viewing after completion.
For the backers, it’s a chance to help creative people bring their ideas to life – as well as a source of inspiration and stories. The most imaginative products inevitably reap the most funding as their backers pass the word about them via blogs, Facebook, Twitter and other social media. Backers often receive rewards depending on how much they pledge – from a DVD or a signed and numbered art edition.
More than anything, Kickstarter is a disruptive way of building a new community of creative individuals who might previously have been locked out due to lack of funding. During the Renaissance, the church, merchants and powerful banking families sponsored artists. But in the digital era, you and me can be a Medici.
For any comments or suggestions, send an email to Ulrich Proeschel.