Entrepreneurship and Innovation Subject Q1 Do You Case Study

Entrepreneurship and Innovation Subject

Q1) Do you think kickstarter is a viable alternative to raising equity funding or debt financing? If so under what circumstances?

The growing popularity of the Internet has spawned crowdsourcing as new model of fund raising, pioneering by www.kickstarter.com. This innovative model is a distributed problem-solving and production model helping entrepreneurs and investors to launch a new product to the market place. From the novelty point-of-view, it is fast becoming a viable alternative to traditional funding models like equity or the debt route. Typically, crowdsourcing for financing is familiar as crowdfunding. Under this model, an innovator makes publicity of his funding requirements through the Internet to individual investors. The individual investors offer financial contribution which are thereafter consolidated by the platform and handed over to the project owner. (Jennifer, 2012)

By far, it has become a viable alternative due to the following circumstances (i) Kickstarter provide a standardised format for entrepreneurs to publicise their project in a wide-ranging manner over the internet. (ii) They permit for small financial transactions to allow broad participation with restricted downside risk. Since Kickstarter permits innovators to source finance from a vast majority of the population, each individual investor is able to contribute according to their wish. (iii) They deliver information regarding investment as also tools for investors to link up with each other. It is seen that popular projects normally reach funding needs in a faster way and are comparatively more popular. As a matter of fact, during 2012, the total amount of contributions raised by Kickstarter crossed the annual funding granted by National Endowment for the Arts. (Jennifer, 2012)

2. Kickstarter is not the first crowdfunding platform, yet it is the most successful. List five reasons that you believe account for Kickstarter's success:

(i) Kickstarter is one of the most popular crowdfunding services which is a website for creative projects wherein more than 26,000 projects have been funded with an investment of $242 million. It has funded a broad array of start-ups ranging from films, music, comics and video games. (ii) Kickstart does a background check to ensure that 80% of the projects that are able to pass the 20% funding part are able to attain their goal. (iii) The commonalties between successful Kickstarter projects are basic sales and marketing tenants' along with a video although optional, helps it to outreach for maximum exposure. (iv) Audience mobilization is done as a prelude through Facebook and Twitter and other social media apps for audience mobilization as a 360 degree tool (Horse Power Marketing. (2012) (v) The primary factor contributing to the success of Kickstarter is its fairness and transparency model which is based on the…