I'm hoping it's the former, as I've got a campaign going to print a comic book that's close to being funded, and I'm hoping to have it around as a viable option to repeat this stunt to fund future books, and ultimately maybe even support myself this way. The limited duration makes stuff MOVE which is great.
Kickstarter is based on purchases (or donations), not investments. In other words, I don't think people are paying irrational amounts for your comic book because Kickstarter is so hot right now.
Now, if the pebble watch I just bought turns out to be a POS, I'm probably going to be a lot less likely to buy other new untested products on Kickstarter. So, a few high profile flameouts could damper the whole marketplace, but I don't think could lead to value crushing collapse like when a bubble bursts.
Good luck with your comics!
I'm also pretty hopeful this is just paranoia talking, and that folks quickly realize they need to do a sanity check. Maybe Kickstarter will end up with a tighter TOS and will send lawyers after a huge scam if one happens, I dunno.
While people are definitely paying for my own personal awesomeness rather than Kickstarter's awesomeness, I think the fact that people know and somewhat trust the model and te middleman is helping. Break the trust and it doesn't work.
And thanks for the well wishes, the comic leapt from 80% to 121% around the time you sent them!
But basing kickstarter on just a idea seems extremely risky, and that's why I'm not all that interested in game kickstarters. If somebody wanted to kickstart a boxed copy of a finished game, that would be nice. But just kickstarting a concept gives me an uneasy feeling.
You can't really do that with kickstarter because you don't know if you will really get the money from each supporter.
Due to this, and due to the fact that you need to be an American company (which can be gotten around, but is annoying) we decided to go it on our own with something that was very similar to kickstarter, while not actually using their service, which you can see here: https://www.pathofexile.com/purchase/
Using stripe.com for credit card processing, it was fairly easy to get payment processing up and running.
Really the reason to use kickstarter.com is as an advertising platform. I'm not really sure if having their audience as well as our own would have benefited us in this case or not.
As to paying money for just a concept, it's not really unlike the decision investors make on a smaller scale. Bear in mind that copies of a game on kickstarter are typically lower than the final retail price. Your reduce your risk by "investing" in a diversified portfolio of kickstarter games in the hope that one will turn out to be a gem.
I'm confident that the plateau of productivity will be reached, after the inevitable backlash.
There are a lot of kickstarter projects that never go anywhere because the creator is unknown to the scene. You're going to need some reputation to get the ball rolling. Even the watch guys have a track record.
Of course, it's the scammer with a reputation (think Bernie Madoff) that scares me. But kickstarter addresses that with the social aspects. If someone feels ripped off, they can post about it and the scammer can't hide.
With Kickstarter, some people pay 10$, some 100$ and some 1000$, and they are all very happy about that.
This is achieved by: Giving nice perks for extra money; Buyers understanding that by paying less they only steal from themself.
That said, as a backer of many Kickstarter campaigns from north of the border, it would be nice to be able to tap into their momentum with projects of my own.
I recently spotted this blog post written by a team trying to fund the development of an iPhone app:
http://famnerd.com/2012/02/update-famnerd-rejected-by-kickst...
Direct Kickstarter link: http://www.kickstarter.com/projects/597507018/pebble-e-paper...
Yes because Kickstarter has a high profile now, and there is rather significant amounts of money flowing through it. Angels and VCs sometimes only put in a few k or a few mil. for a company, and now it seems as though you can just go to kickstarter for that amount.
No because kickstarter isn't for everything. The closer your project is to the ideal of a semi-artistic one-off project with a timeline of months that produces a tangible product that the backers can receive the more likely it is to be approved and funded. But not all businesses fit in that model. More so, that model of venture isn't necessarily the sort of thing that is most attractive to an investor. Kickstarter projects are the sort that scale up slowly and carefully. But a lot of the most desirable investment targets are software companies which provide a service who can scale up by a factor of thousands or millions in a matter of months.
Now, there is still a sizable niche that straddles both worlds (such as game development) and you can expect a lot of interesting things to happen in that space in the near future.
When it comes to software/web apps, there's a less definitive end point. Games seem to get through ok, because they reach a pretty clear release point. "Projects" like Instagram would likely not have made it through as a Kickstarter project, because they're designed to be iterated on. Getting to the "first release" is not generally what Kickstarter accepts... unless you're Diaspora... or anything open source.
AngelList
Kickstarter
JOBS Act
Software boom
Open hardware innovations (Arduino, Raspberry Pi, Open 3rd printers, etc.)
I'm not really certain that things at the VC level would be a whole lot different but I would sure be worried if I was an angel or earlier. Pretty soon, we'll be far less dependent on them than they are used to. If you ask me seed stage may have so many options that they'll have to reverse-pitch ;)
When you're raising VC money, especially early rounds, you're trying to prove and build a business model. You're trying to get market awareness and acceptance, develop your product, etc. There is a statistically high probability that you will fail entirely, or will at least fail to achieve the progress intended (meaning you may have to raise more money, affecting valuations and dilutions).
One upside to VC money is that you get to use all of it in almost any way you like.
Kickstarter, especially in this case, is people pre-ordering an already more fully defined and developed product. The money raised is going more or less directly to people purchasing product. It is assumed that there is a profit margin on the product, but it's also reasonable in these early cases to assuming the manufacturing costs may overrun estimates, and that roughly 10-25% of the money raised will actually end up being "profit".
Sure, even 10% of $7M is a nice chunk of money, but $7M of kickstarter money is way less working capital than $7M of VC money.
It's funny because Kickstarter is intended NOT to be pre-purchasing but to be an investment in something that might not pan out. People have gone out of their way to point that out when some of the high profile failures have happened.
Some of these games will deliver something, but that something will disappoint most of the backers. I think in many cases, even if you deliver a good product, it will never live up to the game the backer imagined when you first pitched it. All games have this problem to some extent, even wildly successful ones like Minecraft or Elderscrolls, but I think it will be exasperated by the fact that people are selling game ideas, not actual games, with a few exceptions (FTL had a playable pre-alpha during their campaign).
I'd guess a game will be one of the first big abandoned projects myself.
Also kickstarter takes this to a radical new level with tens of price tiers compared to two or three.
This game is going to be very successful and congrats on building something so awesome.
I would also point out that Kickstarter acts as a trusted escrow service that will refund people's money if the project doesn't hit its funding targets.
I think most project creators would prefer to get the money instantly if they could do it without hurting the formula that makes kickstarter so successful. The escrow part of it being important so that customers not worry about backing a loser.
Don't you have to be in the US to use Stripe?
The way we handle it is by creating a US company that acts as our "publisher" and does a 30%/70% revenue split with us. We need to have an "arms length agreement" with the company to avoid paying double tax, so the reason we use 30%/70% is because we can prove precedent for it with other publishing deals (ie; The app store) which is a requirement for such deals.
We then pay all the expenses that we incur in US dollars (server hosting, bandwidth etc) from the US companys 30%. Doing this actually saves us the currency conversion fees as well (Which are especially nasty from credit cards). Anything left over in that company we can dump into advertising once we are really released.
After that, the 70% that comes to NZ is just normal income with nothing special about it and we can use it to pay our staff and (hopefully) our founders one day!
Could we have used this setup for kickstarter? Perhaps, but after we decided to go it alone, we realised that it was time for our own billing system anyway (as we will need it at release) and having that stuff rock solid before then would have non-trivial value for us.