NY’s Kickstarter is the largest of dozens of sites devoted to crowdfunding, in which donors contribute small sums of money to get a project off the ground. The startup works by letting inventors, artists and entrepreneurs post their projects on a Kickstarter page, and set a fixed duration for their fundraising, from one to 60 days, and a dollar goal for contributions. If the goal isn’t reached by the deadline, the money goes back to the contributors and the project is cancelled. Though this does happen, often the projects end up raising more money than they hoped for or needed. If the funding is successful, usually the contributors receive either a sample of the product or other form of retribution.
Since donators must decide if the project is something they want, Kickstarter is a great way to get customer feedback with money attached to it, according to The Associated Press. Though some of these projects become full-fledged businesses, the founders have said that the goal was to help smaller projects or artistic endeavors.
Since launching in 2009, Kickstarter has raised $250 million for projects. Starting a project is free, but Kickstarter takes 5 percent of contributions if a project is funded, and Amazon.com Inc. takes another 3 to 5 percent for processing the payments.