In the wake of the Great Recession at the end of the noughties, people who wanted to start their own small company, create a new product or launch an innovative new concept needed a way to fund their ideas and really push things hard to get it all off the ground.
The April 2009 launch of crowd-fundraising platform Kickstarter revolutionised business and start-up financing for new businesses, entrepreneurs and all other budding ventures across all sectors ranging from headphones and tech products to new financial brokers and lenders (read more). This ultimately meant cutting out traditional and otherwise well-established middleman in the form of finance providers, lenders and banks.
Kickstarter meant that in the case of the new venture, they could go straight to the most important people for any company, anywhere in the world: their customer base.
What Has Kickstarter Actually Done?
Kickstarter didn’t invent crowdfunding, or even coin the term, but it did take the concept of crowdfunding into the mainstream as previously it was very much an abstract term that most people certainly didn’t deem to be ‘approachable.’ Since Kickstarter’s take off though, huge numbers of entrepreneurs, inventors and now-successful business and brand owners have taken to it to make their ideas a reality.
With people able to pre-order products from the platform through their financing, as well as receiving other available rewards depending on how much money they pledge, Kickstarter have transformed the very concept of crowdfunding.
Still, just like in any online casino around the world, it can be a massive gamble for businesses to rely on crowdfunding sources and platforms on their own. In fact, just over 36% of projects on Kickstarter actually reach their total target amount.
One commentator even said in The Long and Short that: “investing in crowdfunding resembles putting money into a racehorse syndicate.” Even with projects which exceed their targets, there is no actual guarantee that the finished product will be delivered to the potentially thousands, or even millions of backers that have contributed.
This however, has certainly not stopped people pledging in excess of $4 billion (and rising) into Kickstarter projects over the last decade alone. Each campaign calculates and measures its successes and milestones very differently.
Biggest Success Story of Kickstarter: Oculus Rift
Arguably the most lucrative product ever funded through a Kickstarter campaign, Oculus Rift was a monumental virtual reality (VR) progression that has undoubtedly changed the world of tech forever. With the potential to transport users to a super-realistic 3-dimensional world, the Oculus Rift headset beat many of the traditional and well-known tech giants into creating VR technology of the highest quality.
Despite massive corporate interest, Oculus still needed significant financial support to properly develop its underlying and supporting technology. By leveraging popular VR forum MTBS3D and exhibiting the headset at popular gaming conventions, company founder Palmer Luckey caught the attention of some of the biggest names in tech and innovation.
The media soon began promoting the pioneering headset, and within four hours of launching a Kickstarter campaign on August 1st 2012, Luckey had easily reached his initial $250,000 target. By the end of the month-long financing project, Oculus Rift had raised more than $2.4m in total funding which amounted to almost 1000% of its initial target.
While not the most financed crowdfunding project ever, Facebook’s $2bn investment just two years later means it is likely the most lucrative.
This funding helped the first generation Oculus Rift become commercially available in 2016. The Oculus Rift’s eventual release ultimately justified both Luckey’s decision to use Kickstarter and the faith of those who invested.
