Posts from crowdfunding

Kickstarter’s Impact On The Creative Economy

Professor Ethan Mollick of The University of Pennsylvania’s Wharton School has been studying our portfolio company Kickstarter in his research. Late last year, he published his research on how many projects actually ship after getting funding on Kickstarter (answer is roughly 90% ultimately ship). Now he’s back with another piece of research looking at the broader impact of Kickstarter on the creative economy. We know that over $2.5bn has been raised by project creators on Kickstarter to date but what we don’t know is what has happened with all of that money.

Here are the findings from Prof Mollick’s research:

The study finds that Kickstarter projects have:

  • Employed 283,000 part-time collaborators in bringing creative projects to life.
  • Created 8,800 new companies and nonprofits, and 29,600 full-time jobs.
  • Generated more than $5.3 billion in direct economic impact for those creators and their communities.

Filmmakers, photographers, artists, authors, designers, musicians, and others reported that their project led to professional growth, greater earnings, and career advancement.

  • 37% said that their Kickstarter project helped them advance their careers.
  • 21% reported receiving an increase in annual earnings after running a successful project.
  • 19% said they found a new job opportunity as a result of their Kickstarter project.
  • 7% said their project helped them successfully switch careers.

Creators also reported meaningful professional gains within their fields:

  • Filmmakers reported that Kickstarter helped them secure distribution deals.
  • Musicians reported that Kickstarter helped them secure record or publishing deals.
  • Video game creators reported that their Kickstarter project helped them secure a publisher or attention from reviewers.
  • Authors and comic book creators reported that their Kickstarter project led to attention from mainstream publishers.
  • Journalists reported that their Kickstarter project gave them freedom from the external control of editors and publishers, and helped them create work that served an underserved audience.

I remember taking economics growing up and learning that an economy can have a multiplier effect on money. A dollar in can create multiple dollars out.

And it turns out that is the case with the Kickstarter economy. So when you back a Kickstarter project, something I do regularly including yesterday, you are helping way more people than just the project creator.

And, like most things about Kickstarter, that feels really good to me.

Experiment and Scandal

We are living in a time of great experiments. They are not happening in the lab. They are happening in the real world. And they are being financed by real people. We are witnessing the de-institutionalization of experimentation. We are returning to a time when anyone can be an inventor and innovator. Some of this has happened because of the explosion of venture capital, both in the US and also around the world. Some of this has happened because entertainment and culture has embraced the world of experimentation and innovation (Shark Tank, Silicon Valley). Some of this has happened because the tools for innovation and experimentation have become mainstream and anyone can use them.

I am not thinking of one thing. I am thinking of many things. I am thinking of The DAO. I am thinking of Bitcoin and Ethereum. I am thinking of Oculus getting financed on Kickstarter. I am thinking of the launch of equity crowdfunding for everyone in the US last week. I am even thinking of things like Theranos.

All of these things are great experiments that will produce great benefit to society if they succeed. But by their nature experiments often fail. They need to fail. Or they would not be experiments.

And one of the challenges with the de-institutionalization of experimentation is that some of these failures will be spectacular. Combine that with the idea that these experiments are being funded by real people and the idea that the world of media/entertainment/culture has injected itself right in the middle of this brave new world and you have the recipe for scandal. And scandal will naturally result in efforts to put the genie back in the bottle (Sarbanes Oxley, Dodd Frank). And these regulatory efforts will naturally attempt to re-institutionalize experimentation.

I find myself wishing we could keep the dollars invested and hype down when we do these massively public experiments. But the dollar/hype cycle is a natural part of being human. Some dollars are invested. We get excited about this investment. We talk it up. More people find out about it and more dollars are invested. More of us get excited about this investment and we talk it up more. Rinse, repeat, rinse, repeat and you get unicorns and distributed autonomous funding mechanisms entrusted with hundreds of millions before anything has even been funded. Eventually some of that gets unwound and the tape is full of red.

Don’t get me wrong. I am all for distributed autonomous organizations and the innovation behind them and in front of them. There isn’t much out there that I am more excited about. But I am also very fearful that this could end badly. And even more fearful of what may be foisted on us by well meaning regulators when that happens.

So let’s celebrate this incredible phase of permissionless innovation we are in. And let’s all understand that we will have many failures. Some of them spectacular. Money will be lost. Possibly hundreds of millions or billions. Let’s expect that. Let’s build that into our mental models. So when that happens, we can suck it up, deal with it, and keep moving forward. Because an open permissionless world of innovation that everyone can participate in is utopia in so many ways. The good that will come of it will massively outweigh any bad. But bad there will be. I can assure you of that.

Funding Friday: Three Noteworthy Projects

It’s funding friday again. Here are three projects I thought you all should know about.

Black Medicine Iced Coffee – This is an equity raise on CircleUp for a new iced coffee brand. Not only does the product look great but you can get a $1.3mm pre-money valuation for a product that did over $300k in sales last year and is growing rapidly.

Black Medicine

To learn more about this equity crowdfunding opportunity, visit the Black Medicine CircleUp page.

 

Blue Sky Lab – This is a charitable crowdfunding project on Crowdrise. Xibei Li is running a marathon at the North Pole to raise money for a non-profit that works on reducing urban pollution in China.

Blue Sky Lab

To learn more about this fundraise, visit the Blue Sky Lab Crowdrise page.

 

In Search Of Truth – This is a Kickstarter project in which the creator, an artist named Hank Willis Thomas, proposes to take his “Truth Booth” to all 50 states in the US.

Truth Booth

To learn more about this project, visit the In Search Of Truth Kickstarter page.

Funding Friday: William Kentridge On The Tiber River

So I’ve decided to start up another friday theme (fun friday, feature friday, etc) called Funding Friday. I will post projects of all sorts (not just Kickstarter) that are seeking funding that I think are worthy.

We will start with an ambitious art project that is closing today.

The renown artist William Kentridge will create a mural called “Triumphs and Laments” over Rome’s Tiber River and is using Kickstarter to help fund the effort.

Here’s the video:

This is the kind of project that Kickstarter was created to support. Public art is the best kind of art, open, free, and available to all.

I backed this project when it first launched and I urge all of you to join me in helping to get this project over the line and funded.

You can do that here.

The Kickstarter Fulfillment Report

Our portfolio company Kickstarter released a report yesterday that was published by a Professor at the University Of Pennsylvania named Ethan Mollick. Ethan and his colleagues at Penn surveyed nearly 500,000 backers to look at failure rates across the entire Kickstarter marketplace. They did not survey other crowdfunding services so this data is solely about Kickstarter projects.

Here is what Ethan found:

  • 9% of Kickstarter projects ultimately fail to deliver
  • 65% of rewards are delivered “on time”
  • failure rates are fairly consistent across categories

Here’s a chart of failure rates by category from the report

fulfillment-graph-1-ca10f0b9de80442bdcd379ce21409e60849488b7452cd7af6b36d3f62980106b

I really like what Kickstarter had to say about this report:

Is a 9% failure rate reasonable for a community of people trying to bring creative projects to life? We think so, but we also understand that the risk of failure may deter some people from participating. We respect that. We want everyone to understand exactly how Kickstarter works — that it’s not a store, and that amid creativity and innovation there is risk and failure.

Failure is to be expected in a marketplace. But we should also measure it and understand it so funders can “price the risk”. Right now, it seems that roughly one in ten Kickstarter projects fail. We should all understand that when we back a project. Doing so will be good for everyone.

$2 billion in fives and tens

Our portfolio company Kickstarter announced yesterday that it has passed $2bn in total project funding since it launched six years ago.

This page has a ton of stats on the $2bn of pledges.

My favorite is this graphic:

fives and tens

The studio system funds creativity in million dollar increments.

The Kickstarter economy funds creativity in fives and tens.

I love it and I love Kickstarter.

Fun Friday: Funding Silicon City

AVC regulars will recall that I blogged about a Kickstarter that the NY Historical Society is doing to bring the Telstar satellite back to NYC for its Silicon City Exhibit.

The project has four days left and is still a few thousand short of its goal. I’d like to have some fun on AVC today and get this project funded.

So here’s how its going to work. If you go to Kickstarter and back this project, please leave a comment letting me know how much you funded and I will then go to Kickstarter and match whatever you backed. If you do $5, I will do $5. If you do $10, I will do $10. And so on and so forth.

Once the project crosses its $10k goal, I’m out. You all can continue to back it. I am sure they would love to raise more than the $10k goal. But I’m matching all funding that is made on Kickstarter and reported on AVC today until the project reaches it’s $10k goal.

UPDATE: At 10am EST, Larry Erlich backed the project for $250 and I matched it and we are now at the $10k goal. Well done AVC community!!!!!!

In other fun matters, here is AVC community member Jeff Carter wearing a Mets t-shirt (1969 vintage!). This was the result of the bet we made on this blog over the Mets Cubs series.

IMG_2101

Aid Refugees

Kickstarter and the UN Refugee Agency are launching something important this morning. It is called Aid Refugees and its an attempt to leverage the power of the leading crowdfunding community to raise funds to deal with the global refugee crisis.

As many of you know Kickstarter is a USV portfolio company and it has traditionally avoided getting involved in charitable efforts, choosing to stay focused on helping creative projects come to life. But like other big Internet companies, it gets asked from time to time to leverage the scope of its reach and community to tackle big problems. Until now, Kickstarter has chosen to decline those invitations but the scope of the global refugee crisis is so large and the mission is also consistent with Kickstarter’s recently filed public benefit corporation charter in which they committed to fight inequality. So this time they said yes. This doesn’t mean Kickstarter will start allowing charitable projects on its platform. It does mean it will do this sort of thing when the company feels like it can help make a difference.

Here’s how Kickstarter explains this effort on their blog post this morning:

Two weeks ago, the White House reached out to us with an idea: what if you could use Kickstarter to help the millions of refugees seeking safety in the Middle East and Europe?

We immediately told them yes — and at the White House’s invitation, Kickstarter is working with the UN Refugee Agency to raise money and deliver aid to those in need of it. We’ve all seen the images of people fleeing for safety, on foot and in boats, with nowhere to go and precious few resources. It’s not a crisis that can be solved overnight, but the White House, the United Nations, and Kickstarter all believe that a strong outpouring of support can provide crucial assistance for people fleeing their homes and risking their lives to find a safer future.

To learn more about how we can provide that support, just visit this campaign. It’s not a typical Kickstarter project. There’s no all-or-nothing funding goal. The rewards are all about giving, not getting. And we’ll be donating 100% of our usual fee to support these aid efforts. Most days, this site is a home for people working together to create new things, but this campaign is about something else: working together to bring the most basic of necessities to people who need them dearly. Even a little support can give a family dry clothes, fresh water, or a place to sleep — those “small” things that become everything as soon as you’ve lost them. We’d love your help.

Thank you,

Kickstarter

If you have been looking for a way to engage in the global refugee crisis, check out Aid Refugees. I plan to “back this project” and I hope you will too.

Using CrowdRise To Help People In Nepal

When a disaster strikes, caring people all over the world seek ways they can help. Usually that means giving funds to a global relief organization like the Red Cross. But in the age of crowdfunding, giving to relief efforts takes on an entirely new flavor. You can see that in action on our portfolio company CrowdRise’s service this morning.

nepal

Crowdfunding means you can target your giving with more granularity.

You can give to this family in the US raising money to help their relatives in Nepal, who are now living in a temporary tent and are in desperate need for help.

You can give to this campaign where CrowdRise employee Mallory is raising funds to go to Nepal and help.

You can give to this campaign that celebrates Google engineer Dan Fredinburg who was killed while climbing Mount Everest this weekend.

You can give to this campaign that benefits a local relief effort.

The Gotham Gal and I have given to all of these campaigns and I hope you will consider giving to something as well.

All of the Nepal relief efforts on CrowdRise can be seen here.