Who would have thought that a start-up that is geared towards raising money using the crowd for funding other start-ups and events would become so successful?
Kickstarter epitomizes the crowd-funding phenomenon that is helping start-ups bypass the traditional world of venture funding and go directly to users. Other than raising money, Kickstarter provides the opportunity for start-ups to get validity; if users want to drop dollars on your start-up they will also be interested in your service right?
Here’s how it works. A start-up puts out a poster talking about how much funding it needs, and by when it needs it. Users who believe that the start-up has a recipe for success chip in with how much they can. There is a clock ticking with a deadline by which they need to raise the cash.
Kickstarter has become very successful at helping start-ups raise funds Eric Migicovsky for example wanted to raise $100,000 for his Pebble watch. He ended up raising $7.8 million!
Kickstarter maybe the poster child for crowdfunding, but they are not alone, other crowd-funding platforms include Indiegogo, Crowdfunder and Fundable.