Crowd Sourcing, Kickstarter and the end of the Bank Loan for Start Up

There’s some mixed messages coming from both government and the banking industry for small firms at the moment.

While it’s recognised that the small and start-up sector could well be a crucial part of the long anticipated economic recovery, funding for small firms has remained elusive. This cautious approach by the banks may well be one that they come to regret in the future as crowd funding becomes the new bank loan of the small business and start-up world.

Investors are doing it for themselves, and the benefits for both companies and investors are considerable. Kickstarter is a growing, and highly successful, example of the crowd funding model, and while the man from the bank may say no, to funding your start-up, there’s a good chance that the man in the street may say yes. 


Yancey Strickler, co-founder of Kickstarter by rexhammock, image courtesy on Flickr

Kickstarter Basic Principles

• Kickstarter is not specifically a start-up funding site but operates on a specific project goal. This allows businesses to present a specific project, with a clear end point and quantifiable completion date.

The specific project can coincide with starting up your firm; i.e. developing a product to the stage that it is marketable. For start-ups this means some clever planning to create a structure in which you can combine the funded project with your launch. A standard business cash advance is available at the banks as well.

• Kickstarter allows you to run a campaign for up to sixty days.If your project and concept is good this should be more than enough time to realise your financial goal. However, this is not the only timescale you need to consider.

Plan the actual time spent on the project with clear deadlines, and reward dates for your investors. While shorter timescales are often the most successful, you need to plan carefully to ensure you can deliver.

• Before starting your campaign, consider all and every cost that you need to cover. If you don’t reach your funding target on Kickstarter you’ll not receive the funding.

This means that it’s not wise to set an impossible amount but you shouldn’t skimp either. Your success, and therefore the rewards for your backers, depends on a realistic budget.

• Kickstarter focuses on creative projects although many of the projects include a strong technical element. Rewards come in a range of forms scaled depending on the investment.

One current campaign is seeking funding to develop an affordable 3D printer. Rewards are scaled from a $1.00 donation, with no return through to $6,000 donation, at the $800 donation the actual printer is the reward. Rewards that you offer are up to you but you’ll need to offer a reasonable reward at all levels.

Kickstarter backers tend to be fans of all things creative and often keen to support innovative projects for small rewards.

Project and Proposal Details

• The Video projects with a video presentation have a higher success rate at achieving their target. Kickstarter provides a simple, excellent guide which tells you what to include. Follow the guidelines and keep it brief; internet users are notoriously easily bored.

• The project page; again this is an integral part of your campaign and, like the video, should be prepared succinctly and with brevity in mind. However, it should also be thorough and clear. Defining the scope of the project and the team behind including relevant experience is essential. To make a clear and relevant speach, you can visit and learn.

• Once you’re ready to go with the project the first point of call for backers should be your own or company Facebook and Twitter communities.

Don’t get too spammy a simple ‘please have a look’ should be enough to get people viewing your project, anything too pushy is likely to work in exactly the way you don’t want it to!

Finishing touches

Updates are essential once the project is underway. Successful Kickstarter projects are underpinned by a high level of planning and as we all know the best laid plans all go the same way; awry.

This is part of the nature of most projects and backers will be surprisingly supportive and understanding if you keep them updated. It’s tempting to think “so what” once you have the cash the bank, but remember many small firms are built one project at a time; keeping backers informed will ensure goodwill for your next project!


Article by Guest Author: Carlo Pandian

Carlo Pandian is a freelance writer on small business tools such as accounting software by Intuit, cloud computing and new collaborative platforms. Kickstarter and other crowd funding sources can offer a viable, dynamic and profitable funding source for start-ups. While the banks remain wary of lending or investing, the public are proving to be more supportive.

The DNetWorks Team

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