How Do Kickstarter Pledges Work?

Kickstarter Pledges: A Deep Dive into How Funding Works

Key Concepts:

• Promise Model: Pledges are commitments, not immediate payments.
• All-or-Nothing Funding: Funds are only collected if the campaign reaches its goal.
• Stretch Goals: Additional funding targets that unlock new rewards or features.
• Pledge Manager: A tool used to collect backer information and shipping details post-campaign.
• Risks and Challenges Section: A crucial part of a Kickstarter campaign where creators outline potential issues.

I. The Pledge Process: From Commitment to Collection

Kickstarter operates on a “promise model.” When a backer pledges support, their card isn’t immediately charged. This commitment allows campaigns to gain momentum without prematurely accessing funds. Backers retain the flexibility to adjust or cancel their pledges before the campaign concludes. This system is a key element in establishing Kickstarter as a trustworthy platform. Salvador Brigman, founder of CrowdCrux, emphasizes this as a “smartly designed” aspect of the platform.

II. All-or-Nothing Funding: Backer Protection & Creator Accountability

Kickstarter employs an “all-or-nothing” funding model. This means a backer’s card is only charged if the campaign successfully reaches and exceeds its funding goal before the deadline. If the goal isn’t met, no money is collected, and no rewards are distributed. This model safeguards backers, ensuring creators only proceed when sufficient funds are secured to deliver on their promises. As Brigman states, “you only pay when success is really guaranteed.”

III. Post-Campaign Funding & Reward Fulfillment

Upon successful completion, Kickstarter collects funds from backers, deducts its fees, and transfers the remaining amount to the creator approximately 14 days after the campaign’s end. The creator then initiates the production and shipping of rewards according to their established timeline. Effective communication with backers is paramount during this phase, fostering loyalty and potentially securing support for future projects.

Beyond the initial goal, many campaigns utilize “stretch goals” – additional funding tiers that unlock new rewards or features. Creators may also leverage “late pledges” or platforms like Indiegogo InDemand to extend sales beyond the campaign period. A “pledge manager” is often used to gather detailed backer information, process upgrades, and collect shipping fees, allowing for accurate cost calculation based on fluctuating variables.

IV. Understanding the Risks & Importance of Transparency

Brigman stresses that Kickstarter isn’t a traditional e-commerce platform; creators are seeking funding to bring new ideas to life, inherently involving risk. Delays in production, shipping, or manufacturing are possible, and some projects may not fully deliver on all promised rewards. Therefore, it’s crucial for backers to carefully review the “risks and challenges” section of each campaign. This section outlines potential obstacles and the creator’s mitigation plan.

He highlights the importance of “trust, transparency, and…progress,” urging backers to conduct due diligence and support creators who are forthcoming with updates, FAQs, and risk disclosures. While acknowledging past instances of scams, Brigman emphasizes the platform’s success in fostering “incredible innovations” and supporting dedicated creators.

V. Guidance for Backers & Creators

For backers, Brigman recommends continued engagement with crowdfunding, coupled with thorough research of creators. For creators, he stresses the value of transparency and building a loyal “tribe” of backers through consistent communication and delivering on promises. He notes that this foundation of trust extends beyond Kickstarter to platforms like Indiegogo, Patreon, and even equity crowdfunding.

VI. Recap & Key Takeaways

Brigman summarizes the core principles:

1. Pledges are commitments, not immediate payments, until the campaign concludes.
2. Backers are only charged if the campaign reaches its funding goal.
3. Successful creators receive funds (minus fees) and fulfill rewards at a later date.

He emphasizes that understanding these mechanics fundamentally changes one’s perspective on crowdfunding.

VII. Resources & Further Learning (Offered by Salvador Brigman/CrowdCrux)

• Free Kickstarter Course: Available at crowdcrux.com/kickstarter, offering lessons and insights into launching a successful campaign.
• Kickstarter Launch Formula: A “paint by numbers” blueprint guide available on Amazon and Audible.
• One-on-One Coaching: Personalized guidance offered directly by Salvador Brigman for creators seeking tailored support. He emphasizes this is not provided by a team member, offering direct access to his expertise.

Technical Terms:

• Crowdfunding: Raising capital from a large number of individuals, typically via the internet.
• Stretch Goals: Additional funding targets that unlock new rewards or features.
• Pledge Manager: A software tool used to collect backer information, shipping addresses, and process upgrades post-campaign.
• Indiegogo InDemand: A platform allowing creators to continue accepting pledges after a Kickstarter campaign ends.

Data/Statistics:

While no specific data points were provided in the transcript, the video implicitly highlights the success of Kickstarter as a platform for bringing innovative products to life and supporting creators.

Logical Connections:

The video follows a logical progression: explaining the initial pledge process, detailing the funding mechanism, outlining post-campaign procedures, emphasizing risk management, and finally, offering resources for both backers and creators. Each section builds upon the previous one, providing a comprehensive understanding of the Kickstarter ecosystem.

Notable Quote:

“You only pay when success is really guaranteed.” – Salvador Brigman, emphasizing the safety of the all-or-nothing funding model.