Crowdfunding Grows Up: Kickstarter Hits $1 Billion Milestone

Prior to 2008, crowdfunding was almost completely unheard of and if an individual or group of people was interested in creating something, they had few options outside of getting a loan or venture capital investment. This is no longer the case, thanks to sites like Kickstarter, which just reached $1 billion in pledges from 5.7 million people.

Reaching the $1 billion milestone is not only significant for Kickstarter, but for the entire crowdfunding industry, which has become a useful tool for thousands of individuals and businesses. While many of the early crowdfunded projects only dealt with hundreds or thousands of dollars, new ventures have received millions and in the past few years alone, some of the projects have received as much as $10 million.

A Milestone

There is more than one crowdfunding service available, and in fact, Kickstarter came along after other sites, including Indiegogo. As time has passed however, Kickstarter has become the de facto Web site for people attempting to raise money for an innovative project. Now that the crowdfunding process has become established, game developers are beginning to use sites like Kickstarter to fund entire video games, adding to the total donation figure.

In fact, video games have become the largest funding category on Kickstarter, with $215.75 million in pledges. Included on Kickstarter's "most funded" page are the Ouya game console, Double Fine Adventure and Project Eternity. Those three projects alone received more than $15 million.

The success of Kickstarter and many of its competitors is tied to the fact that they allow regular people to directly contribute to projects that interest them. Unlike traditional investments, a group that receives funding on Kickstarter does not give up any control of its projects. Instead, if a campaign is successful, "backers" receive a variety of rewards from the campaign's creators.

For businesses that are...

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