Kickstarter projects awash in funding

The Pebble watch maker sought $100,000 - and received $10.3 million.
The Pebble watch maker sought $100,000 - and received $10.3 million. (MARY ALTAFFER / Associated Press)
Posted: August 19, 2012

NEW YORK - A funny thing happens on Kickstarter, the website where people ask for money to finance their projects. Sometimes, they get more money than they ask for.

Sometimes, they get millions more.

In April, three-person start-up Pebble Technology sought to raise $100,000 to make 1,000 wristwatches that can be programmed with different clock faces. Donors on Kickstarter showered them with more than 100 times that amount: $10.3 million. It would have gone higher had Pebble not put a cap on contributions and ended the fund-raising early.

"We had tried raising money through the normal routes, and it didn't really work," said Eric Migicovsky, Pebble's 25-year-old founder.

Kickstarter is the largest of dozens of sites devoted to "crowdfunding," in which donors contribute small sums of money to get a project off the ground.

Inventors, artists and entrepreneurs post their projects on a Kickstarter page, usually with a video presentation. They set a fixed duration for their fund-raising, from one to 60 days, and a dollar goal for contributions. Anyone can contribute. If the goal isn't reached by the deadline, no money changes hands and the project is canceled.

Usually, contributors get something beyond the satisfaction of knowing they helped turn a dream into reality - like a ticket to a theater production, or in the case of Pebble, a programmable watch.

Designer Casey Hopkins asked for $75,000 to make a luxury iPhone dock out of solid aluminum. He got $1.4 million. When that happened, in February, his was the first Kickstarter project to surpass $1 million. There have been eight more since. Philadelphia artist Rich Burlew asked for $57,750 to put his comic books back in print, and ended up with $1.3 million.

Since launching in 2009, Kickstarter has raised $323 million for projects. Starting a project is free, but Kickstarter takes 5 percent of contributions if a project is funded, and Amazon.com Inc. takes 3 percent to 5 percent for processing the payments. The funds are usually subject to taxes, as well.

Crowdfunding started as a way to fund band tours and albums. Kickstarter wasn't the first site of its kind. It is, however, the most successful. Cofounder Perry Chen has said that the site was born out of his frustration at being unable to organize a concert. But it's becoming a potent launchpad for tangible products, as well, upending in some cases the usual way things get made.

For contributors to take part in a Kickstarter project, all they have to do is ask themselves: Do I want that?

In that sense, Kickstarter is a great way to sell things that don't yet exist. In effect, Pebble sold 85,000 watches, and artist Rich Burlew sold 94,000 books. Now, they just have to make these things.

The company wouldn't comment for this story, and it doesn't release financial data to the public because it's a private company.

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