Businessmodel of Kickstarter

Customer Segments

Kickstarter has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:

• Creators: Individuals or groups who request funding for a project – a work with a clear goal.
• Backers: People who pledge money for the funding of creators’ projects. ### Value Proposition

Kickstarter offers four primary value propositions: accessibility, risk reduction, performance, and brand/status.

The company provides an alternative source of funding for projects that may have difficulty receiving financial backing. It also gives fans of a given project the opportunity to personally support it.

The company maintains an “Integrity Team” whose purpose is to ensure the security of its users. The team uses automated tools and complex algorithms to identify and examine suspicious project activity. It also collects and reviews concerns reported by the community. If it finds that a creator has abused the system, it levies a suspension. These actions help to reduce the risk of fraud for backers.

The company has a strong performance track record. Among projects that have attained 20% of their funding objective, 81% have eventually been successfully (fully) funded. Among projects that have attained 60% of their objective, 98% have been eventually funded.

The company’s high success rate has led to a strong brand. More than 11 million people have acted as backers for a project, pledging over $2 billion for over 100,000 projects. Over 3 million of those individuals were repeat backers, and over 400,000 people have backed ten or more projects. The site is not only used by everyday citizens, but has also become popular among prominent people seeking funds, particularly in the entertainment industry – high-profile examples include projects by Rob Thomas, Zach Braff, and Spike Lee for their movie efforts. Lastly, the site has received positive attention in the media, with the New York Times calling it “the people’s NEA“  (National Endowment for the Arts) and Time highlighting it as one of the“Best Websites of 2011“ and one of the“Best Inventions of 2010.“

Channels

Kickstarter’s main channel is its website, through which it obtains users. The company also markets its offering through its social media pages.

Customer Relationships

Kickstarter’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the website while having limited interaction with employees.

The site provides a “Creator Handbook” with all the information fund-seekers need to know, with covered topics including funding, fulfillment, promotion, building rewards, and communicating with backers.

Key Activities

Kickstarter’s business model entails maintaining an active platform between two parties: creators and backers.

The platform includes its website and mobile app.

Key Partners

Kickstarter does not have a dedicated partner program, but the company has partnered with various entities for cross-promotional purposes.

The New York Times utilized its community of filmmakers to create Kickstarter-branded documentaries to be published on its webpage and YouTube channel. Also, The Guardian and The Smithsonian have both utilized the company’s crowdfunding platform to support some of their projects.

Key Resources

Kickstarter’s main resource is its technology employees who maintain the platform – half of its staff is involved in designing and coding. The company also depends on customer service employees to address user issues.

Lastly, as a start-up it has relied heavily on outside funding, raising $10 million from 19 investors as of March 2011.

Cost Structure

Kickstarter has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost drivers are likely in the areas of customer support/operations and administration, both fixed costs.

Revenue Streams

Kickstarter has one revenue stream: transaction fees. The company charges a 5% fee on all projects that are successfully funded. It also charges PayPal and card processing fees that can vary in amount from 3% to 5%.