The company that showed the world the power of the crowd, Kickstarter, is facing bankruptcy after a fourth consecutive quarter of losses. With all other options exhausted, a crowdfunding campaign has been created to try and save the ailing company.
In an open letter to the public and investors, Kickstarter CEO Yancey Strickler admitted that the 5% fee that is charged on all campaigns run through their website is just not enough to support the company anymore. He states that at the inception of the business, this moderate fee was enough to keep the servers running and the staff paid, but that has changed.
Although the “Start your project” page on the site boasts that $2.3 billion has been raised by 10.6 million people, it does not speak about the immense costs involved in running the business as more projects and backers flocked to the site.
Sure, 5% of $2.3 billion sounds like a lot, but the overheads of the servers, staff, potato salads and a pricey New York headquarters have eaten quite significantly into it.
At present Kickstarter is $20 million in the red, owing money to various private investors and creditors. This is, coincidentally, almost the same amount of money as the most-funded campaign on the site – the Pebble time smartwatch.
As all other lines of credit are now dry, a crowdfunding campaign on Indiegogo has been created with a $20 million goal and flexible funding.
The tiers are varied and you’re able to back the project at almost any income level. At the bottom of the pile is a simple $1 contribution which will get you a “Thank you” email and nothing more.
Further up the chain is a solid $100 contribution for a T-shirt, and the $1 000 tier gets you a full suit branded with Kickstarter decals.
Past this point and your rewards for bailing the company out really get interesting. $10 000 is a tour of the New York HQ ending with a helicopter ride over the Big Apple. Parting ways with $100 000 is probably the best deal here, as you’ll be Ubered between various Silicon Valley startups with a selection of rotten eggs you can throw at their offices.
$1 million gets your name on the company letterhead and, at the top of the pile, is the ability to fully fund the campaign yourself for $25 million. Not only does this automatically make you the new CEO, but you also get a $5 million signing bonus.
Time will tell if the campaign is successful. The company has until June 31st 2016 to raise the money or foreclose at the advice of its lawyers.[Source – Daily Planet]