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No IPO or equity funding for Kickstarter

No IPO or equity funding for Kickstarter

Tue 06 Nov 2012 10:38am GMT / 5:38am EST / 2:38am PST
BusinessDevelopment

Crowdfunding business wants to be an "institution for generations"

The CEO of Kickstarter has said the company has no intention of selling the business, as he intends to build the site as an "institution for generations."

Speaking at the GigaOM Roadmap conference yesterday, Perry Chen also stated there are no plans for Kickstarter to adopt equity crowdfunding, where backers could own a portion of the company they invest in.

"We think the most disruptive aspect is the removal of the investment component," said Chen, reports AllThingsD.

"People are supporting projects because they want to see them happen. It's so different than giving money because you want to make a profit."

Chen said the site is working hard to communicate what exactly Kickstarter is to make it easier to understand for backers. And he also reiterated last month's blog post about Kickstarter, where the founders made it clear that the site is not a traditional store.

"You're supporting somebody at a decently early stage, and you should understand that's what you're getting involved in," he said. "Delays are not infrequent. It's really about the creator setting the expectations for backers, and then if they have trouble, being very transparent."

5 Comments

Andrew Ihegbu Studying Bsc Commercial Music, University of Westminster

463 172 0.4
I'm certain that this is a great move, from both a PR and business standpoint. Kickstarter as a cash cow sounds hypocritical at the very least, and enough to make it a ghost town at the most. KS have to remember how many of their clients use their service as an alternative to profit seeking investors.

Posted:A year ago

#1

Tim Carter Designer - Writer - Producer

578 322 0.6
If Kickstarter became an investment outlet, the SEC would come crashing down on it, anybody who wanted to use it would need to spend $50,000 and hire a team of lawyers to file a prospectus, etc, etc...

My only beef is that it isn't in Canada (yet). Probably that's because the Canadian government is, as usual, ponderous and slow in regulating it.

Posted:A year ago

#2

Jonatan Crafoord Neuron, That Brain

33 55 1.7
I applaud this. An IPO almost always means a complete refocus on profits, as it appears to be the only thing a multitude of investors can agree on. Keeping the company private allows it to maintain its vision and contribute to the overall good even when it is not apparently the most profitable path for the owners themselves.

The decision not to have equity crowd funding reflects this really. The concept is about commissioning and making ideas happen, not about monetary investments. Though money is necessary to keep a company afloat there is so much more that can be accomplished if greed is put aside, and I doubt Kickstarter is doing badly as an organically growing company.

Edited 1 times. Last edit by Jonatan Crafoord on 6th November 2012 5:32pm

Posted:A year ago

#3
Well of course.

ATM they are making money hand over fist. why would they dilute their return?

When the inevitable failed-project backlash truly begins, it will be interesting to see what they might suddenly be willing to consider...

Posted:A year ago

#4

Nicholas Lovell Founder, Gamesbrief

196 198 1.0
@Tim I'm not sure you are right. You are right that the SEC would need to be involved, but I understood the the new JOBS act contained legislation that made crowd-funding for profit allowable at a much lower scale than normal investment.

The argument: most wealth is created in startups in America, but we forbid anyone who isn't a a high net worth individual ($1m in liquid assets, I think) invest, while any bozo is allowed to blow $20k on roulette. Why not allow people to speculate in areas that are more likely to return them money AND help the economy.

I still think Kickstarter is right to avoid equity related schemes though

Posted:A year ago

#5

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