A Kickstarter Crowdfund

An entrepreneur needs adequate money if they want to launch a new business, like publishing a brand-new innovation. In the past, grants, bank loans, government initiatives, venture capital, and technological incubation capabilities were used by enterprises and individuals to raise finance (Pazowski & Czudec, 2014). O'Connor asserts that despite the fact that many beginning businesses have solid ideas, prototypes, and concepts, they are unlikely to advance past the startup stage due to a lack of early funding (2014).
Crowdfunding is a strategy used by recent innovators to generate early capital for commercializing their inventions. Crowdfunding is a mechanism through which an inventor posts their project description on the internet and requests for a minimum amount of pledges from the public before a stated deadline (Pazowski & Czudec, 2014). The following section discusses how to crowdfund at Kickstarter.com.

Kickstarter project of the day

Various websites such as Kickstarter and Indiegogo offer crowdfunding services needed to back up a given invention. Notable projects at Kickstarter include the Coolest Cooler of 2014 in which 62,000 backers raised USD 13,285, against the needed USD 50,000 (Freedman & Nutting, 2015) and the Pebble watch of 2012 where 68,929 backers raised USD 10,266,845. Table 1 below describes various projects at kickstarter.com, the day of project initiation, project deadline, pledge categories, the number of backers for each category, and the total pledges made.

The greatest motivation for high pledges for a project lies in the incentives a funder gets. Each project has pledge categories and an offering for each category. According to Hemer (2011), funder compensation, rewards or acknowledgement forms the crucial aspect of crowdfunding. A project backer can become personally identified with the project's goals and subject or get acknowledgement. For instance, the ""I'm making my first record in 9 years. I'm back & I mean it"" project has a pledge category in which a backer in that category gets their own theme song or is included in the list of executive producers for the project. Another incentive that a supporter may get is the satisfaction of contributing and pioneering a new invention or technology. Even though the Vinci project is not the first AI project to be released to the public, it is the first standalone wireless headphone that is adaptively learning a person's choice of music as well as an all in one fitness tracker. The minimum pledge for the Vinci project was achieved six minutes after the project campaign was started at Kickstarter.com. With more than thirty days left, the pledges for the Vinci project surpassed the minimum pledges more than thousand fold.

Advantages of Crowdfunding for Startup Entrepreneurs

There are many merits resulting from the use of crowdfunding as a source of finance. Crowdfunding is a fast and risk-free mechanism for raising finance fees as there are no upfront fees involved as well as an alternative source of funds. Another advantage of crowdfunding is that based on the number of backers, an entrepreneur already has their first list of customers. Indeed, the investors may turn to be the most loyal customers of your product. Bourgeois terms this form of investors as the early adopters of technology who are willing to risk and join in pushing ahead the technological idea (Bourgeois, 2015).

Additionally, crowdfunding tests the reaction from the public as a way to determine the viability of your invention, idea, or product. Positive feedback implies positive market acceptance. During the campaign period of your project, the investors are able to track your progress and help in promoting your brand to their networks. As well, using an online platform is also a marketing strategy that may capture media attention and attract more investors.

Starting a Campaign at Kickstarter.com

To begin a new campaign at Kickstarter, an entrepreneur requires to click on the ""Start a project"" link that directs them to a page where they fill a number of requirements. First, one chooses the category of their intended project such as technology, art, design, fashion, or theater from the available thirteen categories (Kickstarter, 2017). He then gives his project a title and chooses a country of his permanent residence. The country has to be one in which the entrepreneur has a bank account, primary address, and government-issued identity. The entrepreneur must also be 18 years of age or above.

The entrepreneur then saves his selection and continues to a sign-up page where he provides his name, email address, a password and chooses whether to receive Kickstarter's occasional updates. An entrepreneur is also at liberty to sign up using their Facebook profile account. The entrepreneur is then presented with a project's page having seven tabs namely basics, rewards, story, about you, account, preview, and submit for review. Each of the tabs has requirements that have to be filled before the project can be submitted for review. For instance, the basics tab requires submission of the project's image, description, project location, funding goal, and funding duration. In the reward tab, reward categories are set with each category having a title, pledge amount, description, delivery estimates and shipping details. One can add as multiple reward categories as they may wish. The story tab involves more project description using images, videos, alongside the risks and challenges and ways to overcome them.

To receive pledges for a stated project, the pledges must reach the funding goal before or on the deadline day of funding duration. According to Kickstarter Creator Questions, funds are only debited from backers' cards only when the project is successfully funded before or on the deadline time. The collection of the pledges requires a 14-day window period. Thereafter, the funds are directly credited to the entrepreneur's bank account. Money is not deducted from backers' accounts if the project is unsuccessfully funded (Kickstarter, 2017).

Recommendation

Launching an invention is really frustrating especially when one lacks initial capital. crowdfunding is an effective way through which startups can get backing for their ideas to come live. Personally, I would use Kickstarter as a platform to launch a project or invention first to get project backing and secondly to determine the market response to my idea or project. I would recommend any entrepreneur who has an idea, a product, or an invention but lacks enough funds to launch the product to result in crowdfunding as a way to raise such funds. Indeed, properly crafted ideas with periodic campaign updates have proven to gain more support.

References

Bourgeois D. T. (2015). Information Systems for Business and Beyond. s.l.: The Saylor Foundation.

Hemer, & Joachim. (2011). A snapshot on Crowdfunding . (Series: Working papers firms and region ; No.R2/2011.

Kickstarter. (2017). Creator Questions » Frequently Asked Questions (FAQ) — Kickstarter. Retrieved from https://www.kickstarter.com/help/faq/creator+questions?ref=faq_subcategory#AfteYourProjEnds

Kickstarter. (2017). Create your project — Kickstarter. Retrieved from https://www.kickstarter.com/start?ref=learn_top

O'Connor, S. M. (2014). Crowdfunding impact on start-up IP strategy. Legal Studies Research Paper No. 2013-34. University of Washington School of Law

Pazowski, P., & Czudec, W. (2014). ECONOMIC PROSPECTS AND CONDITIONS OF CROWDFUNDING . Human Capital without Borders Knowledge and Learning for Quality of Life. International Conference 2014 (25-27 June 2014), 1079-1088. Retrieved from http://www.toknowpress.net/ISBN/978-961-6914-09-3/papers/ML14-685.pdf