Ask HN: Your opinion on Kickstarter as a source of initial funding? | Hacker News Reader

Ask HN: Your opinion on Kickstarter as a source of initial funding?

30 pointskprobst25 comments

My brother and I are currently working on a browser-based MMORPG and today he turned my attention to Kickstarter (http://www.kickstarter.com/). I was wondering how the VC/startup folks feel about that approach, assuming the initial capital needs are relatively small and growth is expected to be as organic as possible. Anyone on HN have experience with Kickstarter? Can you share your thoughts?

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Kickstarter can work, but think of it as a tool for hosting campaigns, not a community you can tap. Unless they decide to feature your campaign it won't even be visible on their site... Not even on the pages for more specialized tags.

It's a good way to gather donations, but go into it assuming you'll bring every single referral to your campaign.

And ask for the minimum amount you could get started with. We had to leave thousands of dollars on the table because we didn't reach our goal.

I'm not too familiar with how Kickstarter operates, but since anyone can "back" a project, why didn't you pay the difference to yourself? Kickstarter doesn't keep a cut, and you could've used those thousands of dollars to start your project even though you set your goal too high.

Kickstarter takes 5% of successful projects: "If a project is successfully funded, Kickstarter will apply a 5% fee to the funds raised. If funding isn't successful, there are no charges."

http://www.kickstarter.com/help/faq#WhatFeesDoesKickChar

That said, it can still make sense to "pay the difference" if the fee you pay (5% of the remaining amount) still leaves with enough money after rewards to successfully complete the project!

I believe that you're not actually allowed to make up the difference under Kickstarter's terms of service. One of the points of the system is that it's supposed to be vaguely like the original Groupon idea -- you only get paid if you get enough pledges to meet your goal. (Backers only have their credit cards charged once the project meets the dollar amount you've set.)

In practice, of course, there are ways around this. Payments all go through Amazon's system, and I believe that they enforce this rule by just making sure that none of the credit cards for backers are under the same name as the Amazon payment account. If you just get a friend to pay for the difference and then write them a check for the amount you could get away with it.

Friends of mine raised $26 thou for expanding and porting a really cool Flash game:

http://www.kickstarter.com/projects/1296948465/no-time-to-ex...

But, I think it's more of a lottery than anything else ... if you browse down the newest projects a while there's a small chance of reaching your goal, and a pretty good chance of not getting enough or not getting anything.

^Typo: from the link, it's $26,000 (!), not $26.

I was thrown off too, but on reading it again I noticed "$26 thou"

Huh. I saw the thou and just mapped it to old english 'thou'/'though' and read on, till i saw the comment..

Give it a try. Raising money via Kickstarter will require you to generate some awareness and excitement around your project - being able to do so in a meaningful way could be proof to future investors (and more importantly yourself, too!) that you're actually able to not only build, but also market your product in an organic way.

As an aside, Kickstarter itself received quite some VC funding: http://allthingsd.com/20110317/kickstarter-fesses-up-the-cro...

EDIT: grammar

Since they added the Games section, Kickstarter has been flooded with game projects. A small portion of them are successfully funded.

It seems that Kickstarter alone isn't enough to get funding - putting your project on Kickstarter and then leveraging some other form of publicity has a much higher change of success.

As a side note:

My company builds html5 multiplayer game technology. I'd love to talk about your project - you can reach me at tom@gameclosure.com

I personally think it's an amazing platform. Having said that, it seems more common for hardware hacks to be successful on kickstarter more than software, especially those that acts as preorders for the hardware. While some software companies have been successful, it's generally more rare from my own observations. Nonetheless, you could try.

My problem with Kickstarter is the approval process, which doesn't cater very well to idea people. I'm also not a fan of giving all of my SEO away to another website, especially if I'm in charge of driving traffic to my campaign.

That being said, it's hard to argue with the success of their model. My problem was that I wanted a way to self-host my own campaigns, as often as I wanted. We're building http://ignitiondeck.com to fulfill our own needs. Who knows, maybe it'll help someone else too. Still a long way to go though.

Profounder looked nice at first glance, but then I realized I had to hit up my friends and family. Last thing I want to do is MLM the people I hang out with on a daily basis.

I definitely agree with nhangen. Also, I would add the process of payment. I believe Amazon Payments isn't the best way to earn payments. PayPal would work better for most people, since a lot of people use PayPal, and this would attract more people to Create their own projects.

But the most crucial thing is the approval process, they are hand approved and take days or a week to get them approved or denied, it's very slow, and very demanding since Kickstarter is getting more users attracted.

I was frustrated to find that Kickstarter is US only if you want to use it to raise funds, though they happily accept money from people outside the US.

No personal experience myself, but the Diaspora team would have some experience with it.

It depends on the project. They declined our website and my friends paper-picture-flower making project. It seems the majority of their projects are in the arts (music, movies, art, etc)

I agree.

Be careful about giving equity via kickstarter -- there are rules about investment solicitation, accredited investors, etc. for private companies.

Because the law is complex Kickstarter's TOS disallow equity as a reward anyway.

ProFounder was set up to cover this case, and gives you guidelines to stay in the clear legally. https://www.profounder.com/

I have been playing in that space since 2008. ProFounder is doing it wrong because technically, people can only invest if they have a pre-existing relationship with the founders, which by definition exludes anyone found through the site. Not good.

No, ProFounder requires users to send non-transferrable email invitations to their friends and family (or "community"), i.e. pre-existing relationships. Afaik they don't provide a way to meet investors on the site, like you're suggesting.

For how they address other potential legal issues, go here: http://www.quora.com/Is-ProFounder-in-violation-of-any-secur...

That's the problem - nobody wants to hit up friends and family members. I think Angel.co does a better job than profounder.

It's actually really hard to get visibility of people for your Kickstarter project.

Thank you everyone for the responses and information! We'll be looking at Kickstarter for sure and I'll try to report back here with our experience, if any.

Thanks again.

i've been working on the same thing. if you want to compare notes or share progress, send me an email: mark@markpneyer.com

Try it then tell us.

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