Kickstarter is a crowdfunding site to fund entrepreneurial projects in technology, design, film, art, and other creative fields. The video game project Double Fine Adventure has raised two million dollars from over sixty thousand backers, and the funding still has 19 days to go. Within the last two weeks, two other projects -- The Order of the Stick Reprint Drive and Elevation Dock -- have raised over one million dollars.
Kickstarter projects do not sell investment shares or offer financial incentives. Current U.S. law prohibits crowdfunding platforms from offering equity in the projects because of SEC securities registration requirements. Instead, project creators offer rewards to backers, such as pre-sale products and unique project experiences.
Here is a list of the top money-raising projects on Kickstarter. All of the projects, except Double Fine Adventure, have completed their funding. Most overshot their goal by a wide margin. Along with the amount each project raised is the project's original funding goal.
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NOTE: To view the remainder of the Top 15 Kickstarter crowdfunding projects click HERE.
COMMENTARY: I thought that the U.K. crowdfunding site Crowdcube had set the new record for crowdfunding when they annonced that the owner of London's Milk & Honey raised $1.5 million back on November 24, 2011, but it now appears that Kickstarter has regained the crown, as evidenced by the $2,071,778 raised to date by Double Fine Adventure with 19 days to go before that project officially closes.
In a blog post dated January 13, 2012, I reported that Kickstarter had set a new record for a crowdfunding site of $100 million in 2011. Kickstarter also reported that in 2011, 12,000 projects or 46% of the total were funded. That's quite impressive.
In a blog post dated May 21, 2011, I reported that Scott Wilson had set the record for crowdfunding by raising $942,578 for the TikTok + LunaTik Multi-Touch Watch Kits through Kickstarter. Well, a lot has happened since May 2011, three other entrepreneurs raised more than Scott Wilson.
It has become obvious that crowdfunding should be taken seriously and can be very effective in raising capital for what would typically be considered angel projects at the seed stage. I have often predicted that crowdfunding could eventually supplant angel investment. However, I also believed that crowdfunding lacked SEC oversight and scrupulous individuals could se this method of raising capital and defraud investors.
In a blog post dated November 30, 2011, I reported that on November 4, the federal crowdfunding bill, Entrepreneur Access to Capital Act – H.R. 2930, was passed by a nearly unanimous House of Representatives (430-17) in one of the few non-partisan acts of the current Congress. Referred to as ‘the most important financial reform of the decade.” the legislation promises great change. If the bill becomes law, it will transform how businesses raise small dollars.
The concept of ‘crowdfunding’ was originally included within President Obama’s jobs bill. While the job’s bill was encountering fierce opposition by the Republican Party, the concept of stripping the U.S. Securities and Exchange Commission (SEC) of some of its regulatory oversight met with positive reactions. Republican Congressman Patrick McHenry introduced the Entrepreneur Access to Capital Act in the House.
As passed, the House version of the crowdfunding includes the following requirements and limitations on crowdfunding:
- "The [issuer] may only raise a maximum of $1 million, or $2 million if the [issuer] provides potential investors with audited financial statements.
- Each investor is limited to investing an amount equal to the lesser of (i) $10,000 or (ii) 10% of his or her annual income.
- The issuer or the intermediary, if applicable, must take a number of steps to limit the risk to investors, including (i) warning them of the speculative nature of the investment and the limitations on resale, (ii) requiring them to answer questions demonstrating their understanding of the risks, and (iii) providing notice to the SEC of the offering, including certain prescribed information.”
This is going to drive angel investors and venture capital firms, which are at the forefront of seed stage and very early venture capital rounds, up the walls. That limit of $10,000 is a deal killer for them.
As of today, we have not passed any new crowdfunding legislation. The U.S. Senate has written Senate Bill 1791, their own version of the crowdfunding bill, but it is still stuck in the finance committee. The Senate bill has for far more controls than the House version (see comparison below), including an upper limit of $1 million on the amount of funds that can be raised through crowdfunding and caps on individual investors.
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Courtesy of an article dated February 23, 2012 appearing in Practical Commerce
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