Crowdfunding certainly doesn’t need any more proof – the concept has been tried and tested. But every so often it’s good to check in with the industry and see how things are faring?
They’re faring well indeed. Yesterday Kickstarter published its first quarter report, in which CEO Yancey Strickler announced the company had seen 4,497 projects during the first three months of the year with total pledges of $112,038,158.
But that isn’t even the most impressive statistic. Strickler notes the site has now lead to seven different Oscar-nominated films, and two music projects which have gone on to win Grammy awards.
They’re impressive statistics, and all the more significant when you realise these projects would have had no other way of being made except for the funding model being taken directly to the audience.
But although Kickstarter and other crowdfunding models have proven effective, it’s not as if the industry doesn’t have any problems. Kickstarters are often abandoned, leaving backers with wasted money. And the relationship between backer and project is still yet to be defined, meaning some participants end up having a deeper view of the relationship than actually exists.
This came to a head last week with backlash targeted at virtual reality company Oculus, which was purchased by Facebook for $US2 billion after a successfion Kickstarter back in 2012. Backers felt the company had betrayed them – and told it so on various social media channels.
These are probably more perception problems than anything else, especially as Kickstarter specifically states no backer is buying equity. But it still represents a lot of challenges to overcome with crowdfunding in general.
Where is this model heading? It’s easy to see massive corporations relying on crowdfunding in order to prove an audience for future projects – the Veronica Mars movie Kickstarter is an excellent example of this. It should be expected this type of thing will happen more.
But participants ought to be careful. While crowdfunding has certainly proven a viable model for some, expectations of quality and consistency will change over time. Deals such as the Facebook-Oculus transaction will make some wary of investing again in large projects with the possibility of acquisition in the future.
At the same time, large organisations using Kickstarter to fund experiments could go either way. Proving an audience for a useful product or service is one thing – but if any backers feel they’re being taken advantage of, they’ll run the other way – and quickly.