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Crowdfunding Grows Up: Kickstarter Hits $1 Billion Milestone

Crowdfunding Grows Up: Kickstarter Hits $1 Billion Milestone
By Seth Fitzgerald

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For businesses looking to receive money through crowdfunding sites like Kickstarter, it appears as though the crowdfunding trend will not be going away anytime soon. According to Kickstarter's announcement, half the $1 billion was pledged in the past 12 months alone, suggesting that the rate of such funding continues to rise.
 


Prior to 2008, crowdfunding was almost completely unheard of and if an individual or group of people was interested in creating something, they had few options outside of getting a loan or venture capital investment. This is no longer the case, thanks to sites like Kickstarter, which just reached $1 billion in pledges from 5.7 million people.

Reaching the $1 billion milestone is not only significant for Kickstarter, but for the entire crowdfunding industry, which has become a useful tool for thousands of individuals and businesses. While many of the early crowdfunded projects only dealt with hundreds or thousands of dollars, new ventures have received millions and in the past few years alone, some of the projects have received as much as $10 million.

A Milestone

There is more than one crowdfunding service available, and in fact, Kickstarter came along after other sites, including Indiegogo. As time has passed however, Kickstarter has become the de facto Web site for people attempting to raise money for an innovative project. Now that the crowdfunding process has become established, game developers are beginning to use sites like Kickstarter to fund entire video games, adding to the total donation figure.

In fact, video games have become the largest funding category on Kickstarter, with $215.75 million in pledges. Included on Kickstarter's "most funded" page are the Ouya game console, Double Fine Adventure and Project Eternity. Those three projects alone received more than $15 million.

The success of Kickstarter and many of its competitors is tied to the fact that they allow regular people to directly contribute to projects that interest them. Unlike traditional investments, a group that receives funding on Kickstarter does not give up any control of its projects. Instead, if a campaign is successful, "backers" receive a variety of rewards from the campaign's creators.

For businesses that are looking to receive money through crowdfunding sites like Kickstarter, it appears as though the crowdfunding trend will not be going away anytime soon. According to Kickstarter's announcement, half the $1 billion was donated in the past 12 months alone, suggesting that the rate of funding continues to rise.

All or Nothing

One caveat to Kickstarter's newly released statistics is that within the $1 billion figure are all the pledges that were never actually given to campaigns. Since the service works with a model that prevents campaigns from receiving any donations unless they get the amount that was originally requested, Kickstarter has included pledges to projects that failed to reach their monetary funding goal.

When removing the money that was pledged but never delivered, Kickstarter has facilitated $859 million in actual cash changing hands. However, Kickstarter has still reached a significantly higher amount of donations than Indiegogo, GoFundMe, or any of its others competitors may ever receive.
 

Tell Us What You Think
Comment:

Name:

PeoplePowerFund.com:

Posted: 2014-03-07 @ 11:36am PT
We congratulate kickstarter for raising One Billion Dollars and see it as the very beginning of a revolution in crowd sourced funding; with the upcoming rules slated for release by the S.E.C.( this summer) for capital raising for equity investing. We, at peoplepowerfund have been working for over a year developing a new web portal for this next generation of crowd sourced funding. A revolution in the making peoplepowerfund!



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