My IMHO on Kickstarter

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Kickstarter is a crowdfunding platform where projects, or "cool" projects can gather capital from people in return for some goodies (but not always). Each project offers whatever compensation they want and it may differ depending on the amount of money invested, I mean, given.

The part where anyone can be part of a project is appealing, especially when the project is interesting and original. People want to be a part of this world and this lets them do just that, this is probably the main reason for Kickstarter's popularity.

The problem is that all backers get is a sticker or some other gift, while the project funded aims to profit as much as any other company. The backer lives in a generosity and result motivated world while the project exists within the constraints of capitalism. If the project doesn't succeed, backers might not even get their promised gift and if everything does work out, then backers can go to the store and buy their product like everyone else.

I call this a "trickle sideways economics", regular people give money to other regular people who have an interesting project. Instead of moving forward together, at the height of each person's investment, only the project initiators do. The backers have no interest nor say in what happens to the project, they're like fans.

To me this economic model is broken by design, it appeals to people, but in the end it's the same old thing. Projects naturally have the incentive to work more on being attractive than on being feasible.

In recent events, Oculus Rift, a Kickstarted project has been bought by Facebook. Many backers fear that the project could go in a direction opposite of what they hoped for, some are even upset. They are learning the hard way how Kickstarter works. Some projects work out, some don't, others may become very successful while deviating from the original goals, but in all cases the backers have no control or profit whatsoever, unlike later investors.

A better idea would be a Crowd-Investing system. Backers should be investors that own a share of the project/company. This would be closer to being fair and could have a more democratic effect.

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Nux

"A better idea would be a Crowd-Investing system" - YES! Absolutely, the Oculus episode just highlighted this problem.

It's only fair the backers get something more consistent out of it!
To quote Notch (of Minecraft fame): "I did not chip in ten grand to seed a first investment round to build value for a Facebook acquisition."
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