This article first appeared in the St. Louis Beacon, Jan. 9, 2013 - Perry Chen, a New York gallerist, was living in New Orleans a decade ago and wanted to put on a show during JazzFest 2002, but he was frustrated by the cost of bringing a pair of DJs into town to spin. So with two partners, he created Kickstarter.
Kickstarter went public in April 2009 and today is among the best known and most successful “crowdfunders,” having helped ordinary people, from artists to inventors, realize their dreams and raise almost $400 million.
In St. Louis, as singer/songwriter Marc Chechik was recording his new CD, “Storylines,” with his band Melody Den, he was able to pleasantly shock his musician friends by handing them modest checks for their session work before the next recording session. He couldn't have done it without Kickstarter, through which fans donated $4,366.
John Wendland, a singer/songwriter with St. Louis' Rough Shop, wanted his band's most recent album, “Beneath the South Side Bridge,” to appeal to a growing base of music fans who buy their albums on new-fashioned vinyl, which costs more to manufacture than CDs. He couldn't have done it without $4,210 raised through Kickstarter.
James McAnally and his wife, Brea, were financing a million-dollar expansion of their Luminary Center for the Arts and a move to Cherokee Street, and they wanted a way to raise enough cash for rehab materials and to involve their friends and supporters in the project. Although they had other, more traditional funding sources, they also raised $22,244 on Kickstarter.
Christopher Badell and his young partners at St. Louis-based Greater Than Games developed a loyal fan base for their comic books and table games. When fans from around the world clamored for more superheroes and expanded game components, the company turned to Kickstarter and, in three campaigns, raised more than $300,000.
More than 80,000 projects have been launched via Kickstarter nationally, and almost 44 percent of them have been successfully funded. In St. Louis, 150 projects have been successfully funded to the tune of $1.3 million.
Kickstarter is an online, for-profit company that employs about 50 people in New York City. It is a platform that dreamers can use to focus and publicize their projects – and raise money. But Kickstarter is not alone. And the money involved runs into the billions globally.
Crowd-funded projects typically offer modest rewards to backers in return for contributions. A Google search turns up dozens, if not hundreds, of similar websites, and the number is expected to grow, especially after crowd-sourcing entrepreneurs are legally able to offer equity in small-business projects. This step beyond the reward-for-donation model, allowed under last year's federal JOBS Act, is awaiting regulations that could be issued by the Securities and Exchange Commission this month.
Kickstarter by the numbers
- Launched projects (as of Jan. 7): 82,050
- Total dollars pledged: $453 million
- Pledged to funded projects: $390 million
- Pledged to unfunded projects: $51 million
- Success rate: 43.62 percent
St. Louis-area projects (as of Jan. 4)
- Successfully funded projects: 150
- Currently funding projects: 13
- Total pledged: $1.3 million
Chen and his partners – former music critic Yancey Strickler and designer Charles Adler – “recognized that there was a perennial problem of not being able to fund artistic ideas, creative ideas,” Kickstarter spokesman Justin Kazmark says. “Ninety-nine percent of the ideas in the world are never going to generate revenue or produce a profit, but that doesn't mean they don't have a right to exist.”
In the Kickstarter model, a band, for example, submits a CD project that must meet Kickstarter rules; sets a goal, with a time limit of up to 60 days; and publicizes it on the Kickstarter website and through email updates and social media. If the goal is reached, donors' credit cards are charged (in the U.S. by Amazon, which sets up a project account).
The money must be used to create the promised projects, not to defray the artist's household bills or nourish his or her lifestyle.
“The whole purpose is to get people to support your project, not to support you,” Chechik says. “That's what a job's for.”
Kazmark says that with Kickstarter, you “immediately get validation of your idea from the Internet, from your fans, your audience, and there are no strings. We're not a gatekeeper. We're a platform where you can launch your idea, and then your friends, family and fans decide whether they want to see this thing move forward.”
Most common projects
1. Film/video 22,385
2. Music 18,999
3. Publishing 9,307
4. Art 7,478
5. Theater 3,992
Top 5 categories by percent funded
1. Dance 70 percent
2. Theater 64 percent
3. Music 54 percent
4. Art 48 percent
5. Comics 46 percent
---data from Kickstarter
So what's in it for a donor? In traditional investing, people get a piece of the company or some other kind of return. That doesn't happen with crowdfunding. Donors get rewards – a copy of a CD, a DVD or a film, a print of an artwork – but also something much less tangible.
“The difference between Kickstarter and just selling the product in a store is that in Kickstarter, you're not just selling a product,” Badell says. “You're selling an experience. You're telling people, hey, I'm going to make this thing, and the process of me making this thing and getting it to you is really cool. So let's all be part of this together and, as we make this thing, we're going to share with you how that process is going and what's going on here.”