From virtual communities to real-life enterprises … How Kickstarter generated more than $5bn

The Fed Ex guy is always delivering intriguing parcels to Mini Museum’s headquarters in Fairfax, Virginia, but he’s never allowed to see what’s inside.

On Wednesday, it was something very cool from Norway, co-founder Jamie Grove explains – though he can’t say any more. But Mini Museum has the fascinating, rare and bizarre delivered every day; it’s a unique startup that collects scientific and historic artefacts from around the universe, meticulously divides them and presents them encased in clear acrylic as a “mini museum”.

Its first edition included part of the Berlin Wall, some dinosaur dung, part of a palm tree from Antarctica and a sample of the oldest matter ever collected – 4,568,200,000 years old, to be precise. It’s an imaginative and eccentric project, but one that would not have been possible without a funding campaign that began on crowdfunding site Kickstarter.

Hans Fex, the founder who first had the idea at age seven, was in something of a rut in early 2014 but, within a month, a Kickstarter campaign had raised $1.2m from more than 5,000 backers, and the idea propelled him and his co-founders into a new life running a thriving business.

“The community rallied around us,” says Grove. “There are just lots of really excited people and that carried over from the first project into the second. We got lucky.”

Grove is one of three people, including Fex, now working full time on Mini Museum alongside five part-time staff. The second Mini Museum project is now shipping with a new array of of curiosities including a piece of the skin of the Hindenburg airship, part of the Cray-1 supercomputer and a sample from a fallen limb of a “moon tree” – a tree grown from a seed that went to the moon in 1971 on Apollo 14.

Mini Museum might be unique in its quirkiness, but its crowdsourced success is not unusual. Professor Ethan Mollick, assistant professor at the University of Pennsylvania’s Wharton School, has been researching Kickstarter since 2012. His latest research analyzed 61,654 projects from 2009 to 2015 and found that those successfully funded through the platform have created 8,800 new businesses and organizations over those six years.

For every dollar pledged by a project’s backers, another $2.46 is generated in extra revenue for the creator and Mollick estimates that, in total, Kickstarter has generated more than $5.3bn of economic value for project creators.

The site has created 29,600 full-time jobs, Mollick estimates, and 283,000 part-time roles. Nineteen percent of creators said they found a new job opportunity as a result of their Kickstarter project.

“Kickstarter has made a really big difference,” said Mollick. “Crowdfunding conceptually completes the circle. We lead elaborate online lives but they rarely touch the real world – Kickstarter and others let virtual communities affect the real world.”

Mollick pointed to virtual-reality headset Oculus Rift as Kickstarter’s biggest success, which received $2.5m from backers, largely supporters in the video game community. The success led to interest from venture capital firms and eventually Facebook, which bought Oculus for $2bn in March 2014, but it couldn’t have started (or reignited the decades-old-but-tired virtual reality market) without the early support and commitment of its crowdfunders.

“VR was dead until Oculus. It was a 90s dream, a flop – and venture capitalists run from flops,” he said. “It was the same with the Pebble Watch, a category [smartwatches] that had died. Board games. 3D printing. And the resurgence of indie video games – these industries have been transformed by Kickstarter.”

“I teach entrepreneurialism and see people pitching and failing all the time,” he said. “That failure can be down to gender, education or race – it’s a system designed to help entrepreneurs who are white guys from good schools.” He thinks that Kickstarter has become a popular part of the funding ecosystem because it allows creators to bypass those systemic biases, yet he has also identified how existing attitudes towards gender influence funding choices on Kickstarter.

When the gender of the creator is disguised, Mollick found, women’s Kickstarter ideas are 13% more likely to be funded than men’s. When the creator’s gender was shown, he found that one third of women could be identified as “activists”, proactively seeking out and funding projects by other women – yet two-thirds of women were disinclined to vote for other women.

In September 2015, Kickstarter’s board voted unanimously for it to officially become a public benefit corporation, a type of US for-profit organisation obliged to consider the social impact of its business. “It means we operate with the mentality of a public utility,” says Yancey Strickler, Kickstarter’s CEO and co-founder. “[The co-founders] all have the same ethos and came from that kind of creative background in the 90s where selling out what the worst thing you can do. That’s what we were raised in culturally.

“A challenging commercial landscape can push standards lower, introduce bias or encourage short-term decisions.”

Strickler says Kickstarter has hardly changed since it launched in 2009, and that its mission has remained the same. “We’ve made it OK to be an amateur or a semi-professional … Kickstarter gives people the chance to live out a dream or give it a shot. The world can be quite dismissive of creativity, but you don’t have to be rich or famous or crazy to set ideas free into the world.”

Where does Kickstarter go from here? Strickler feels the site has only scratched the surface. It is strong in technology and the arts, but could expand into many more sectors. “In some ways Kickstarter is a new model. But it has its roots in patronage, and that’s how the renaissance happened. It’s our responsibility to do better.”

Grove says creators need to tackle the “App Store” problem – it is hard to get noticed on a site with so many projects vying for the attention of funders. Creators must mobilise their own social-media audience and community, he says, and follow Kickstarter’s own guidelines on how to put a compelling campaign together. “You have to be awesome – and put the work in.”