Kickstarter and crowdfunding
What is kickstarter.com? How does it work? It’s a website that uses crowdfunding to provide startup funds for people and organizations with ideas and projects that they can’t put into motion yet. Take a look at its business model:
As traditional business models go, companies require key partners, activities and resources to provide customer segments with value propositions through channels and customer relationships. Cost structure is taken into account as are revenue streams. However, this company’s business model shows that it has some big differences from other companies. For starters, customers of Kickstarter are project creators who will be receiving the majority of the money raised. On top of that, the main value proposition Kickstarter has to offer is that it’s a platform to raise money. A problem Kickstarter has and will continue to have is that if a project does not reach its funding goal, all of the money donated goes back to the donors which also means Kickstarter makes no revenue off that project.
Can Kickstarter ever become a billion dollar company? It seems unlikely given that its only revenue is around 5% of every project funded and it seems more than half of all Kickstarter project fail to reach their goal. However, Kickstarters business plan seems to indicate that it relies heavily on social media which could help the company reach new heights. Already, Kickstarter has helped a few organizations raise over $3 million in funding. Also, the more money Kickstarter projects raise, the more exposure the company has to larger businesses and entrepreneurship groups that can offer support and partnerships.
works cited
“Crowdfunding Definition | Investopedia.” Investopedia. N.p., n.d. Web. 15 Sept. 2014. <http://www.investopedia.com/terms/c/crowdfunding.asp>.
Kessler, Sarah. “More Than Half of Kickstarter Projects Fail. Does It Matter?.” Mashable. N.p., 12 June 1921. Web. 15 Sept. 2014. <http://mashable.com/2012/06/21/more-than-half-of-kickstarter-projects-fail-does-it-matter/>.
Kosoff, Maya. “The 10 Highest-Funded Kickstarter Projects Of All Time.” Business Insider. Business Insider, Inc, 9 July 2014. Web. 15 Sept. 2014. <http://www.businessinsider.com/highest-funded-kickstarter-projects-2014-7?op=1>.
“The #NewEraBiz.” LumosForBusiness – Blog. N.p., 7 June 2012. Web. 15 Sept. 2014. <http://www.lumosforbusiness.com/blog/792>.
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