Originally Posted by pubwvj
"Pledging support for the Kickstarter project is more like an investment"
Wrong answer. Pledges are not investments. They are pre-buys. If the project reaches the funding goal then your credit card gets charged. If the project ships then you receive your product. This has nothing to do with investments. You do not own part of the project. As a backer you do not get a financial return on your money. You get a product. Or as Kickstarter likes to call it, a reward.
We ran a very successful Kickstarter project for our family's on-farm butcher shop. We raise pastured pigs and deliver year round to local stores and restaurants as well as individuals. Initially we had funded our project in part through CSA Pre-Buys of pigs (http://SugarMtnFarm.com/csa
). This spring we did a Kickstarter project to raise $25,000 more in funds to help with construction. We got $33,000 in backing. Some of that (10%) goes to Kickstarter and Amazon. About half of it goes to fulfill rewards which consists of shipments of our pastured pork once the butcher shop is up and running. The remainder is what goes into equipment and concrete to make our project happen.
If you are curious about the outcoming of a successful (Macintosh based no less) project check out:
and you can read more about our butcher shop at:
Monday we make our final structural concrete pour when we'll pour the upper bond beam and ceilings of our building. Then we get to work on the interior during the winter.
It is important to understand that Kickstarter projects are pre-buys of product and they are not investments. This is both a legal and an economic distinction.
Sugar Mountain Farm
The article said it was "like an investment". I doubt anybody took away from that thinking they were getting equity in the company. It's like an investment in the sense that you are giving a company money without a guarantee of any return. In this case, the return is what Kickstarter calls the "reward" or the product.
Point is: it's not a store. You are giving companies money and there's a chance that you will get nothing in return.
I'd like to know what percent of Kickstarters that reach their goal actually wind up paying out the rewards to all their backers.