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In late June, while much of the US sweltered under an early-summer heat wave, things were heating up at the crowdfunding platform Kickstarter, too.
Anker’s eufyMake E1, which is about the size of a microwave oven and claims to be the “first personal 3D-texture UV printer,” enabling consumers to print directly on a range of materials and objects, became the most funded project ever for Kickstarter.
The 60-day campaign, which had a $500,000 goal, ended on June 28 having raised $46.8 million, besting the previous record of $41.8 million by fantasy writer Brandon Sanderson, whose project involved publishing four novels over the course of 2023.
With the popularity of crowdfunding platforms like Kickstarter, Indiegogo, and GoFundMe, you’d be forgiven if you thought these platforms had been around for decades. But not so long ago these funding platforms for startups were themselves upstarts: Indiegogo launched in 2008, Kickstarter in 2009, and GoFundMe in 2010.
Among the brands that launched on Kickstarter are VR headset maker Oculus in 2012, Peloton in 2013, and both Allbirds (then named Three Over Seven) and Brooklinen in 2014.
While the raison d’être for these platforms—raising cash to produce a product or project—is nothing to sneeze at, many brands who turn to them find that a well-run fundraising campaign delivers much more than capital. Founders who’ve had crowdfunding success also laud the direct (and often ongoing) connection they gain to consumers, critical feedback they receive in products’ early stages, and the sort of buzz that can lead to retail distribution.
Games changer
Javon Frazier, founder and CEO of Maestro Media, which specializes in adapting popular IP and pop culture properties into tabletop games, is well known for his numerous successful Kickstarter campaigns.
A 2021 campaign for one Maestro game, The Binding of Isaac: Four Souls Requiem, had a goal of raising $100,000 in 30 days and ended up raising $6.7 million, making it the 30th most funded campaign ever on Kickstarter. In all, Maestro’s Kickstarter campaigns have raised more than $15 million, according to Frazier.
“Kickstarter is a good platform to not only validate demand, but also showcase the product, and then go into retail after,” Frazier told Retail Brew.
While a moderately successful Kickstarter campaign can help get meetings with retailers for distribution, at least one of Maestro’s campaigns have been so successful that it has been retailers contacting them for meetings.
Shortly after that historic 30-day fundraising campaign for The Binding of Isaac: Four Souls Requiem in 2021, for example, “retailers were reaching out directly to us,” Frazier said.
Peak Design, which makes bags and gear for cameras and everyday use, completed its first successful Kickstarter campaign in 2011 and to date has completed 15.
As company founder and CEO Peter Dering told Retail Brew in 2023, the company first used Kickstarter to pay for the production run of its first product (a clip that could attach cameras to numerous items), with backers—as is typical with the platform—essentially pre-ordering it at a discount.
But, like Frazier’s Maestro and many other companies, long after his company was well capitalized and had no need to pass the hat for a production run, Dering found Kickstarter to be an essential marketing and sales channel.
“Kickstarter has been masquerading as something other than a sales channel for a long time, but it is a sales channel—and a great one,” Dering previously told Retail Brew. “Because it also comes with a way of creating closeness between the brand and the consumer that just doesn’t exist in any other sales channel.”
Pumped up kicks
Kickstarter reports that more than 24 million Kickstarter users have backed projects, and more than a third of them have backed more than one project, which suggests that many early-adopter types are using the platform as a marketplace.
“What we’re able to provide for people who are bringing projects to the site is this audience of folks who are just genuinely curious about discovering new things,” Nick Yulman, Kickstarter’s director of outreach, told Retail Brew.
Kickstarter campaigns typically begin with an opening video, often a founder recounting the aha moment for the product, its attributes, and the challenge of bringing it to life, followed by updates about the campaign’s progress, and a stream of comments from backers and would-be backers.
“Kickstarter is a storytelling platform as well as a fundraising platform,” Yulman said. “That [initial] video, and the whole structure of laying out, like, ‘I have an idea, and this is why it’s important, and this is who I am, and this is why I want you to get involved,’ is really powerful.”
Since he’s well known for striking Kickstarter gold, Frazier said about 5% of the emails he gets on an average day are from founders who recently launched campaigns that are falling flat.
However, at that juncture there’s not much to be done because the key is to be strategic and pre-game a crowdfunding campaign, he said.
“The biggest common misconception about the platform is that people just say, ‘I’m just gonna launch on Kickstarter, and it’s gonna be successful,’” Frazier said.
“Having pre-buzz, pre-awareness, PR, the right imagery, the right reviews,” he continued, “all those things are important to be successful.”
He compared it to a movie opening.
“Kickstarter is a box office kind of thing, where you gotta have a big opening, and you gotta have a big closing, and making sure that you’re successful on Day One is part of the strategy.”
The next step: Crowdfunding equity
While the barn-raising ethic is alive and well on crowdfunding platforms like Kickstarter and Indiegogo, and companies have essentially pre-sold untold numbers of products, one thing you can’t do on the sites is offer shares and an ownership stake.
That’s where companies like DealMaker, a platform and consultancy that helps companies raise capital through online crowdfunding, come in. Enabled by the Jumpstart Our Business Startups (JOBS) Act that President Barack Obama signed into law in 2012, the law allows companies to seek investment from so-called “non-accredited investors.”
“We’ve really created the next level of engagement where the customers are saying, ‘Yes, not only do I want to see this product get built, but I want this brand to be a part of my life,’” Rebecca Kacaba, CEO and co-founder of DealMaker, told Retail Brew. “‘I want to back this company; I want to actually be an owner in this company.’”
Unlike Kickstarter, which does not offer equity to campaign backers, DealMaker works with companies to offer shares in their companies.
At cocktail bar chain Death & Co, for instance, a banner at the top of its landing page urges visitors to “Invest in Death & Co and become a part of our future,” and links to a page with several investment tiers that offer perks along with the purchased shares. Invest $200,000, for instance, and you’ll receive myriad VIP perks at the restaurants like priority reservations, drink discounts, special events, and even a cocktail party for up to 50 people.
So far Death & Co has raised $5.6 million through DealMaker, according to Kacaba. Among other retail brands that have raised money through selling shares with DealMaker:
- Ryse, the automated window shade and curtain brand, raised $9.4 million.
- Proven Skincare raised $3 million.
- Leather bag maker Parker Clay raised $1.2 million.
As novel as everyday consumers investing in their favorite brands may seem now, Kacaba predicts it will be commonplace soon enough.
“Three years from now, you’re going to walk into a grocery store, turn over your favorite bag of chips, scan a QR code, and become an investor,” Kacaba said. “We are making investing part of people’s everyday lives, and that is how you interact with the brands that you love.”