How Does Kickstarter Work for Investors?
Kickstarter, founded in 2009, has revolutionized the way people fund creative projects. It provides a platform for entrepreneurs, artists, and innovators to raise funds for their ideas directly from the public. While many people are familiar with Kickstarter as a crowdfunding platform, some may wonder how it works specifically for investors. This article will explain the process and benefits of investing in Kickstarter projects, as well as answer some frequently asked questions.
Investing in Kickstarter projects differs from traditional investing in a few key ways. Firstly, Kickstarter is primarily a platform for crowdfunding, not equity-based investment. When you invest in a Kickstarter project, you are essentially contributing money to help bring an idea to life, rather than directly owning a stake in the project or its future profits. This means that the potential return on your investment is usually in the form of rewards or perks offered by the project creator.
To invest in a Kickstarter project, you start by browsing the platform and exploring the various projects that catch your interest. Each project typically has a funding goal and a predetermined duration within which it aims to reach that goal. If you decide to invest, you can choose a funding tier that corresponds to the amount you want to contribute. Most projects offer a range of tiers, each with different perks or rewards for backers. These rewards can vary greatly, from early access to the product being funded, exclusive merchandise, or even a credit as a contributor in the final product.
When you make a pledge on Kickstarter, your payment information is collected, but your card is not charged immediately. If the project reaches its funding goal by the end of the campaign, your card will be charged, and the project creator will receive the funds to bring their idea to life. However, if the project fails to reach its goal, no funds will be withdrawn from your account, and the project will not receive any money.
Investing in Kickstarter projects can be an exciting and rewarding experience for backers. It allows you to support innovative ideas and creative endeavors that may not receive funding through traditional channels. Additionally, by investing in Kickstarter projects, you become part of a community of like-minded individuals who share an interest in supporting and promoting new ideas.
1. Can I invest in Kickstarter projects with the expectation of financial returns?
No, Kickstarter is not an equity-based investment platform. You invest in projects to help bring ideas to life and receive rewards in return.
2. What happens if a project I invest in does not reach its funding goal?
If a project fails to reach its funding goal, no funds will be withdrawn from your account, and the project will not receive any money.
3. Can I invest in Kickstarter projects from anywhere in the world?
Yes, Kickstarter is open to backers from around the world. However, some projects may have specific shipping limitations for their rewards.
4. What if a project I invest in fails to deliver the promised rewards?
While rare, there is a possibility that a project may not fulfill its promised rewards. Kickstarter does not guarantee the delivery of rewards, but they encourage project creators to fulfill their obligations.
5. Can I increase my pledge amount after I have already invested in a project?
Yes, you can usually increase your pledge amount during the project’s duration. Simply visit the project page and select a higher funding tier.
6. Can I cancel my pledge after I have invested in a project?
Yes, you can cancel your pledge as long as the project’s funding duration has not ended. After that, your pledge is considered final.
7. Can I invest in multiple projects at the same time?
Yes, you can invest in multiple projects simultaneously. Kickstarter allows backers to support as many projects as they desire.
8. How do I know if a project is legitimate and trustworthy?
Kickstarter provides a platform for project creators to showcase their ideas, but it is up to the backers to evaluate the legitimacy and trustworthiness of a project. Review the project’s description, creator’s background, and any previous work or reviews available.
9. What happens if a project raises more funds than its initial goal?
If a project surpasses its funding goal, the project creator may use the additional funds to enhance the project or offer additional perks to backers.
10. Can I invest in a project even if I don’t want the rewards?
Yes, you can choose to support a project without selecting any rewards. Simply select the “No reward, just a pledge” option when making your investment.
11. How can I stay updated on the progress of a project I invested in?
Most project creators provide regular updates to their backers on the Kickstarter platform. You can also communicate with the creator directly through the project’s comment section.
12. Can I invest in a Kickstarter project anonymously?
No, Kickstarter requires backers to provide their payment information and display their name publicly. However, you can choose to use a username instead of your real name.
Investing in Kickstarter projects offers a unique opportunity to support innovative ideas and be part of the creative process. While it may not provide traditional financial returns, the rewards and satisfaction of helping bring a project to life can be invaluable. With a wide range of projects to choose from and a supportive community, Kickstarter has become a go-to platform for investors looking to support the next big thing.