Kickstarter is very popular because of the tremendous success that it has achieved in helping companies to crowdfund their projects. As of March 17, 2013 they had raised $439 million for successful Kickstarter projects. Of the 90, 319 projects that had been launched on their site up to that date, 43.63% were successful. While most people focus on how Kickstarter was able to help a number approaching half of those creating Kickstarter projects, I would argue that they helped 100% of the projects that attempted to get funding.
The true value to Kickstarter is in how it validates potential projects. Before the project gets too far along, it allows people to put their money where their mouth is. The 56.37% of projects that don’t achieve funding learn something very important from Kickstarter, as well. Either that their product isn’t very compelling or that they aren’t pitching their product in a compelling way. With that information, they can decide whether to scrap their idea or to make the fixes necessary to make it compelling enough for people to be willing to back it.
While getting the money in advance is a great benefit for those Kickstarter projects that are successfully funded, it’s not the greatest benefit. The greatest benefit is in getting a gauge of how much demand is out there for what they are building. One good example is the Pebble ePaper Watch, which raised over $10 million. If you knew that your product would have that much demand when it came to market, you would definitely bring it to market. What’s more, if you could convince others of that demand, you would be able to get the financing you needed to make it happen. So, while the crowdfunding portion of the Kickstarter value proposition is supremely valuable in getting great projects the money they need to get started, it’s knowing whether or not you have a viable project yet that provides the most value.