I'm sure most of you know Kickstarter - The biggest crowdfunding platform on the planet. The common perception is that it is a place where talented young entrepreneurs get the funds to fund their innovative venture - just because the idea is good.
That is surely what it used to be.
Kickstarter was launched in 2009, when the world's economy was in the deepest crysis in years, as a platform, on which creative artists and designers could gather money for their projects. The platform rapidly grew from 2.5 Million dollars pledged in 2009 to almost **$100 million in 2011++ and over half a billion in 2014! As of now, total amount of funds pledged has exceeded 3 Billion dollars!
Figure 2: All time contributions until May 27, 2017. Source: http://kck.st/2qmAcnC
But where does all that money come from? There are almost 13 million backers that have backed a project on Kickstarter. That comes down to over 4000 new backers per day or 3 per minute. Quite impressive, that such a mass of people support innovative minds of tomorrow, right? It surely is, but how do they discover the projects of interest?
Things have changed
However, during the past few years, things have changed a lot. There are more projects than ever on the platform (which is a good thing), but they can be divided in 2 large groups: Those that gather immense amounts of money and those who barely make it (or even fail). You might think that the what tells them apart is the idea/product/service they are offering, but that is sadly not the case (anymore). For most of the products on the platform, the deciding factor is the amount of money invested in MARKETING.
That is, I believe, where the romantic scene, when the most eager entrepreneurs gets the most support, falls apart. To be really successful in crowdfunding today, you have to start with a large sum of money to invest in the video, pictures, PR and marketing, otherwise you might end up being disappointed for not getting the amount of funding you need to proceed.
A decently made video, which will please the ever more demanding backers (or customers!) will most probably cost you over $5000 and for the pictures you can easily be looking at another $1000. Of course one can do both of these thing himself, but the backers tend to choose the most appealing product, no matter who is behind it. The founder's passion does not matter anymore - one can be a lot more successful with a large group of employees, doing the work for him and getting a massive salary for it.
Marketing agencies in the field of crowdfunding charge up to 35% of all the gathered funds. That is A LOT! Imagine gathering $1 million on your project just to give $350k to the agency. Without it, however, you don't really have a chance of a great success. The data says it all; on average 90% of the traffic on projects comes from outside of Kickstarter, while only 10% of pledges come directly from the platform.
Another great way to get some exposure is to be featured on the front page of Kickstarter. While the projects that are picked by the Kickstarter team are extremely interesting, they only tend to pick the ones that are already popular and have already done quite some marketing on their own. Also, only those projects, which have high quality video and photo presentation tend to be picked.
Is there a solution to this?
Sure! I believe that ranking of projects on the platform should not be determined by algorhytims but rather with votes, similar to those on Steemit. The more projects someone has backed or the more he or she has created, the more his vote would count. Why would there not be a reward connected with the votes also, similar to that on Steemit? This would open such great possibilities!
This could actually be implemented directly in Steemit: Someone proposes a project and those, who feel good about it contribute their votes or SBD to it. In exchange for that, they could get a reward, just as they do on Kickstarter.
I have digressed from my topic now - time to conclude. I firmly believe that crowdfunding is a great way of gathering funds for new ventures, yet I don't really like the fact that those with more funds to begin with have such big advantages. Crowdfunding is not what it used to be - perhaps it is time for something new.
What do you think about crowdfunding? Let me know in the comments and please upvote if you liked it.
P.S.: I have had a successful Kickstarter campaign in 2015 and would love to answer any questions you might have about it.