There is nothing an entrepreneur likes more than a little “pain” in the market. It is where new business opportunities often can be found.
Lately, it has been entrepreneurs themselves who have been feeling some “pain” when trying to find seed funding.
The funding model for Kickstarter is known as crowdfunding, which brings together a large number of small investors for commercial ventures or donors for social ventures to fund projects. It works a lot like the micro lending model developed by Kiva. There are a growing number of crowdfunding websites available.
The process of seeking funding is quite simple. From their website:
Every project has a funding goal (any dollar amount) and a time limit (from 1-90 days) set by the project creator. When the deadline is reached, there are either of two results:
1. Funding Successful: If a project has met or surpassed its funding goal, all backers’ credit cards are instantly charged and funds go directly to the project creator. Project creators are then responsible for completing the project and delivering rewards as promised.
2. Funding Unsuccessful: If a project has NOT met its funding goal, all pledges are canceled. That’s it.
Funding projects is also quite simple, using Amazon as the method of payment. “Investors” are not charged unless the project meets its full funding goal.
Like any funding source, Kickstarter focuses on a niche. The deals they support are all various types of creative projects including films, music, publishing, and gaming. Christina Warren profiles a few of the deals funded through Kickstarter in an article yesterday at Mashable.com. Some pretty cool projects are finding life through Kickstarter.
The “investors” often become customers, getting copies of the creative work when it is completed in exchange for their financial support.
Don’t you just love it when free markets are left alone and allowed to work?
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