The InternationalisationStrategy of

KICKSTARTER

2 | Case study Kickstarter

Name of platform Kickstarter

Geographical focus Global

Active since 2009

Crowdfunding model Reward based

Type of crowdfunding All or nothing

Platform website www.kickstarter.com

Executive summary

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Kickstarter is one of the first reward-based crowdfunding platforms launchedin the US in early 2009. Since then it hascreated a global community builtaround creativity and creative projects.Over 10 million people have backed aKickstarter project, raising a total of$ 2.9 billion for 121,778 projects.

However this global expansion has notbeen straight forward. Today Kickstarteris present in 14 European countries: theUnited Kingdom, Denmark, Ireland,Norway, Sweden, the Netherlands,Germany, France, Spain, Italy, Austria,Belgium, Switzerland, and Luxembourg.European creatives based in countrieswhere Kickstarter is not officiallyoperating, can still launch projects ifthey have a collaborator or subsidiary inone of the countries where Kickstarteris officially operating. Such restrictiondoes not apply to backers, and currentlyanyone in the world can back a projecton Kickstarter in return for a reward,allowing creatives to appeal to aninternational backer’s environment.

Kickstarter applies no due diligence tocampaigns launched. This means thatno restrictions apply to the type ofcampaigns, be that they fall under oneof the 15 categories offered: Music, Film& Video, Publishing, Art, Games, Design,Theatre, Food, Technology, Comics,Fashion, Photography, Dance, Crafts,and Journalism. For more informationsee the rules page.

According to data provided to IDEAConsult by Kickstarter, European projectholders have raised a total of€ 357.5 million (US $ 383,071,063)between April 2009 and December2016.

The Kickstarter website allows creatorsand backers to interact with oneanother before, during and after acampaign. Any questions creatives orbackers have, can be asked in theCampus and the community (made ofbackers, campaigners and staff) isencouraged to reply.

By having an interactive and criticalcommunity, the crowd acts as a riskidentifier for fraudulent campaigns.Kickstarter also encourages backers tobe active in pointing out outliers. Ifproject holders fail to address questionsasked by the crowd, then people willautomatically not trust the projectholder and not back the campaign.

Kickstarter: bringing creative projects to life

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Launched in 2009 in the United States,Kickstarter is among the oldestcrowdfunding platforms in the world.With a team of 127 people, Kickstarter isalso one of the biggest platforms interms of size. Today it can host projectsfrom more than 18 countries around theglobe, including Canada, Australia, NewZealand, Singapore and Hong Kong.Kickstarter has an enormous globalcommunity (over 12.5 million peoplehave backed a project) built aroundcreativity and creative projects.

In Europe Kickstarter first became activein the UK (2012), the first internationalcountry outside the US where theylaunched local operations, followed upby the Nordic region (Denmark, Ireland,Norway, Sweden) and the Netherlands.In 2015 Kickstarter had anotherexpansion and started operation inGermany, France, Spain, Italy, Austria,Belgium, Switzerland, and Luxembourg.In total € 2.9 billion have been raisedglobally via this platform, from around121,778 campaigns.

Currently anyone in the world can back aproject on Kickstarter in return for areward. However this global expansionhas not been straight forward, and isespecially restrictive when it comes tothe location of where campaigns can belaunched.

Only creators established in one of theabove mentioned countries can useKickstarter for fundraising. The mainissue a global crowdfunding platformfaces is with regard to the paymentproviders and local rules around banking.In the EU alone this means 28 differentrules.

Difficulties faced in scaling upinternationally

In order to accept donations coming viaKickstarter, creators have to use a localbank account in the countries where theplatform operates as well as have agovernment issued identity in thatcountry. In other words, if you are acreator in Latvia, who only has a Latvianbank account, you cannot launch acampaign on Kickstarter. However, thereare ways around this limitation.European creatives based in countrieswhere Kickstarter is not officiallyoperating, can still launch projects if theyhave a collaborator or subsidiary in theUS or countries where Kickstarter isofficially operating.

When looking at the graph on the rightside, we can see that the number ofcampaigns launched by creatives inEuropean countries where Kickstarter isofficially operating is much higher thanin the countries where collaborators orsubsidiaries are needed.

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Apart from banking regulations taking along time to be set up, platforms likeKickstarter also face other regulativechallenges when scaling up across Europe.The lack of harmonized rules on VAT,consumer protection, data aboutcopyrights and other rules on howcrowdfunding is handled requires moreefforts and local expertise, making cross-EU activities more challenging.

A high number of European creatives haveused Kickstarter to launch their creativeprojects. Between April 2009 and Dec2016 European project holders haveraised a total of € 357.5 million onKickstarter . That is around 1/6 of allamounts raised on Kickstarter. ForEuropean creatives using Kickstarter, VATis the most confusing issue. This isbecause in the US there is no VAT, butonly state tax which is handled at locallevel. If creatives launch campaigns out ofEurope, they should have clarity over thisissues. Apart from creatives, the unclearVAT regulations also affects backers.According to Kickstarter, Europeancreatives also face challenges when itcomes to effectively shipping rewards.More information, resources andguidance is needed.

Reward based crowdfunding

The cultural sector has always facedchallenges in accessing tradition financefrom banks, venture capital or frombusiness angels. In response, the focus inthis sector has always leaned moretowards donations when it came tofundraising activities. With the birth ofreward crowdfunding, an innovative toolof fundraising, creatives and culturalorganisations can now create a deeperand more direct connection with theirdonors.

Kickstarter applies no due diligence tocampaigns launched. This means thatthere are no restrictions to the type ofcampaigns that can use the platform, bethat they fall under one of the 15categories offered: Music, Film & Video,Publishing, Art, Games, Design, Theatre,Food, Technology, Comics, Fashion,Photography, Dance, Crafts, andJournalism (see figure on next page forstats per each category).

Source: IDEA Consult calculations based on Crowdsurfer data

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Projects on Kickstarter in the creativefields have higher success rate (34%) thenthe ones in technology (<20%). Dance,theatre, music are the most successfulcategories. According to Kickstarter, this ismainly because creatives in these sectorsalready have strong local network whichthey mobilise for their campaign.Whereas, campaigns in technology oftenhave very large goal amounts that canprove more difficult to be collected undera small period of time.

The Jobs Act, which came into force in2016, now allows crowdfunding platformsin the US to provide equity services.Although Indiegogo – one of the largestcrowdfunding platform in the US next toKickstarter - was fast to jump on theequity train and provide their memberswith the opportunity to raise equityfinance, Kickstarter decided to continuefocusing only on reward basedcrowdfunding. They believe that equity isless friendly for creatives and it requires ahigher level of professionalism, which thetraditional creative industry, especially theones that have no business experience, donot have.

Source: Data extracted on March 27 2017 from https://www.kickstarter.com/help/stats

Reward based crowdfunding is closer tothe mission of Kickstarter which is notabout maximizing profit (they are apublic benefit cooperation), as entailedby equity crowdfunding. Kickstarter isfocused rather on people supportingprojects just because they want to seethem come to live and not because theywant to make money out of them.

Kickstarter Campus: InteractiveCommunity

The Kickstarter website allows creatorsand backers to interact with one anotherbefore, during and after a campaign. Anyquestions creatives or backers have canbe asked in the Campus and thecommunity (made of backers,campaigner and staff) is encouraged toreply. By having an interactivecommunity, the crowd acts as a riskidentifier for fraudulent campaigns.Backers are encouraged to be critical ofprojects and declare any suspicion ofspam. Kickstarter also encouragesbackers to be active in pointing outoutliers. If project holders fail to addressquestions asked by the crowd, thenpeople will automatically not trust theproject holder and not back thecampaign.

Appeal to US founders

Many creatives in Europe have beenfaced with diminishing funding fromtraditional resources (governmentsupport). Within this reality manycreatives have turned to crowdfundingas an alternative method to finance theirprojects.

At the same time, individuals in Europeare less used to give to culture. Thefrequent use of American platforms byEuropean creatives shows that apartfrom using the crowd for financialsupport, creatives are also looking toreach out to US donors.

Indeed, in the United States there is abig culture of supporting new ideas,entrepreneurship and innovation. Suchsupport is part of the American mind-set. This is different, if compared tocountries in Europe where people areless used to giving for such causes andare more risk adverse.

Many US backers support Europeanprojects. Since 2009 backers based in theUS have supported EU creative projectswith more than € 100 million. Onaverage that comes down to around€ 12.5 million a year.

Kickstarter offers very transparent dataabout each campaign, where apart fromamounts raised and number of backersone can also check the location of thebackers per each campaign.

Although Kickstarter allows creatives toappeal to an international backer’senvironment, some projects remain verylocal and should make use of localplatforms which offer services in locallanguages. Moreover, it is important tothink if the rewards used would bealluring for backers coming from the USor other countries around the world.

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For example if you are crowdfunding forsetting up a theatre play in Germany, therewards of attending the opening nightwould not be as appealing for anAmerican backer as it would be for aGerman one.

Beyond Funding

Although crowdfunding is an interestingnew alternative to raising funds, it is byno mean “easy-money”. Crowdfunding isdifficult, and according to Kickstarter itrequires preparation and could take along time, the equivalents of a full timejob for at least 3 months. Bringing a newidea, project or product into the world ishard. However, the more preparedcreatives are the higher the chance thattheir campaign will be successful.

Kickstarter is constantly working on toolsand resources for educational purposesin order to help creatives learn what ittakes to launch a successful campaignbefore they launch online. All tools andinformation is available in the ResourceCompendium part of the website.

Kickstarter stresses not only the fundingaspect of creative campaigns but alsothe community, ambassadors, feedback,new customers. Creatives find thecommunity building as the mostimportant part of their campaign andreally value the interconnection withbackers on Kickstarter. Moreover, asuccessful campaign can serve as avalidation of the project idea as well asmarket research. Many creatives thathave used Kickstarter have gone off tohave distribution deals or have launchedtheir own labels.

A recent study by the University ofPennsylvania on the economic impact ofKickstarter, finds that Kickstarter projectshave resulted in 8,800 new companiesand non-profits, employed 283,000part-time collaborators and created29,600 full-time jobs, and havegenerated more than $5.3 billion indirect economic impact for thosecreators and their communities.

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Partnership model

Partnerships and Future developments

Kickstarter mainly sees partnerships interms of collaborating with paymentgateways to make its services availableglobally. They aim to be present in everycountry in the world in order to providecreatives from everywhere with theopportunity to raise funds for theirprojects. Expansion in Eastern Europe,especially in countries like Poland andSlovenia is on the radar. However,collaborating with local paymentproviders is a lengthy process.

At the same time Kickstarter hascollaborated with other organisations,but most of its partnerships are focusedon the dissemination of productsresulting out of crowdfundingcampaigns, especially in the category offilm. For instance, since 2010 Kickstarterhas led a yearly Film Festival, featuringfilms and video projects from Kickstartercreators, including features, stop-motionanimation, documentaries, shorts andmore. Whereas their partnership withSundance Institute helps to mentor,advise and provide support for CreativeFunding, Marketing, and Distribution toindependent films. In 2015, Kickstarterteamed up with the New York Times tohost engaging short-form documentariesby Kickstarter creators on its Times Videopage.

In 2016, the partnership with BerlinaleTalents engaged a network of more than6,000 directors, writers, producers andfilm professionals who choose to launchKickstarter campaigns. Alumni alsoengage and work directly withKickstarter’s film team to receivementorship and support for projectslaunched during the partnership.

The only collaboration with a privateorganisation, in terms of direct supportfor the campaigners, was the partnershipwith Codac in April 2016, where filmmakers launching a crowdfundingcampaign would be provided the 35mmor s16mm film for free to creators to use.Kickstarter is also looking intopartnership opportunities with publicand private organisations in terms ofmatchfunding, but this is yet at a veryearly stage of development.

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Funding the Polish documentary “Bogdan’s Journey” on Kickstarter: an interview with the co-director

“Bogdan’s Journey” is a documentaryfilm about the life and work of BogdanBiałek, a trained psychologist who forover thirty years made it his life’s missionto reconcile Poles and Jews over amassacre that took place in his city in1946: the Kielce pogrom. Cuttingthrough the fog of conspiracy theoriesand the unending debate about how andwhy it happened, Bogdan Białektransforms Kielce into a place of dialogueand reconciliation.

The documentary was filmed over aperiod of ten years, with high productioncost. In September 2014 the directorsdecided to launch a crowdfundingcampaign on Kickstarter in order to coverthe last phase of editing. Thedocumentary raised $ 42.093 (€ 39.389)from 208 backers. The reason why apolish campaign was possible to belaunched on Kickstarter is because LarryLoewinger, one of the co-producers andco-directors of the documentary film isAmerican.

Larry Loewinger went to college in NewYork City and graduate school inCalifornia, where he got involved indocumentary filmmaking. He thenreturned to New York and fully enteredthe film business. He has been workingon “Bogdan’s Journey” for the pastdecade.

Crowdfunding4Culture could interviewhim to learn more about the motivationsto launch a crowdfunding campaign onKickstarter, and the experience.

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Why did you decide to use crowdfunding?

The making of a documentary film over aperiod of 10 years inevitably comes withhigh costs. During these years moneywas raised from few private individualsand through trading services. It was somuch about trading services as inacquiring useful services such asproviding translation and transcriptionservices and transportation. Various filmfestivals were approached in the US,Canada while targeting numerousdistributors to get funding and supportcame in also from the Polish FilmInstitute. However, still more money wasneeded to finish the film.

In the United States crowdfunding is awell-established way of fundraising fordocumentary films. During film festivalsthey often came across directors whohad previously used crowdfunding andencouraged it as a practice. In Poland onthe other hand, crowdfunding is rarelyused and we lacked the contacts to domuch in fundraising there. Apart fromraising funds we believed that throughKickstarter, the little know story ofpogrom would find an interestedaudience. Early on in the campaign wefigured out how to reach out to thataudience. The documentary team hired acapable staff who knew how to mount asuccessful fundraising campaign.

Why did you use Kickstarter?

Kickstarter was chosen on the premisesof it being one of the largestcrowdfunding platform. The model ofcrowdfunding (all or nothing) was alsoimportant in their choice of platform.This model was important for 2 reasons,firstly because we really needed theamount of money we pledged for andsecondly because it was a personalchallenge we wanted to take. Differentlyfrom Europeans, Americans areaccustomed to giving to culture andcultural projects, whereas in Polandwhere the film is based, crowdfunding isnot that popular and people are not usedto giving. In order to reach out toAmerican givers a US platform wasbetter placed then a Polish one.

How difficult was it to set up the campaign?

Although the director had experiencewith fundraising there was littleawareness about the use ofcrowdfunding. What they knew howeverwas that crowdfunding is not easy andthat money does not just pour in out ofthe blue. In order to have a successfulcampaign you must plan everything verycarefully. Organisation is key! A team of4 was employed to help with: writing thecampaign, setting up the profile onKickstarter, campaign manages andquality check. This of course added newcosts to the film production, and thesewere out of pocket expenses. The pre-launch took about 3 months, whereas thecampaign was online for 33 days.

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What are the benefits of using crowdfunding for film, beyond the funding?

Crowdfunding is useful especially whenyou want to reach a certain community.In our case this was the American Jewishand Israeli community, since the film isabout a topic that interests them.However, the sense of community comeswith a sense of responsibility.

It was also an important step in helpingus identify donors that were willing togive for our cause. Crowdfunding helpedus build new relationship with newdonors outside of our existing networks.

Now, if ever we need more funding, weknow we can ask those donors again, aswe know they care about our cause.

By donating to the campaign, donorsbecome ambassadors for the film. Thefilm has won awards and is now beingscreened around the country in the US—New York, Chicago, Florida, Californiaand Maine so far. Without crowdfundingwe couldn’t have made the film.

What advice do you have for filmmakers who want to use crowdfunding?

It is important to keep the following inmind:

Crowdfunding inquires a tremendousamount of work, be preparedbeforehand for this.

You need to fully understand yourposition and know how to paceyourself in the film industry and thecommunity at large.

You also need to have part of thefunding in place before you gopublicly online. Identify donors whoare willing to help before launchingthe campaign.

What is important to know is thatyou cannot do crowdfunding alone.Find a good team, with previousexperience on crowdfunding to helpyou set up the campaign.

To be successful in a campaign youhave to see yourself as reaching outto a community, whatever thatcommunity might be.

You need to be prepared for failure.Ask yourself the question: What willyou do if you will not raise themoney?

Make sure you get donationsperiodically so the campaign hasmoney at the moment of launch.

Have a list of potential donors youcan go to in case it proves difficult toreach the target during the lastweek.

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Prepare a communication plan andreach out to the press/online blogs.

Keep the momentum: Keep peopleinterested in your campaign bylaunching updates regularly or byuploading actual shots from the film.

Rewards are important, but they aresecondary to the campaign message.The focus should be on the projectand not on the rewards.

Would you fundraise again?

Absolutely yes! We definitely considerdoing crowdfunding again, perhaps for afuture film. But it should be clear: noteverything can be crowdfunded. Thereshould be community appeal to the workyou decide to crowdfund for.

There needs to be a community urgencyin the work for you to be able tosuccessfully crowdfund. People wouldgive, if there is a subject that the worldneeds to know about. In the beginningwe reached out to family and friends, butthey were happy to support our filmespecially because of the subject wewere dealing with. Many found itimportant to see this film come to life.

I would not be scared to ask them againfor help should I decide to make anotherfilm. In case they would not like tosupport, they would just say no. But youhave to try!

With every campaign you reach out to adifferent community. Such would be thecase if I decide to crowdfund for a futurefilm.

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Case study author: Kleitia Zeqo, IDEA Consult

Layout: Jessie Pieters, IDEA Consult

Photos: Business Insider, Shutterstock

This case study is part ofthe EU funded projectCrowdfunding4Culture.

Project partners:

Do you have questions after reading this case study? Contact our Crowdfunding4Culture project coordinator: Isabelle De Voldere (IDEA Consult), isabelle.devoldere@ideaconsult.be