Maturing of an Industry: Amazon Backs Kickstarter

July 29, 2016

3:30 pm

This week Amazon Launchpad announced a new section to their offering, a collection of successful Kickstarter products. At launch, more than 300 products were made available, including Piper, Zivix, Prynt, and MudWatt, among others.

“At Amazon, we work hard to offer the widest possible selection of products so that customers can find anything and everything they might want to buy online. Working with Kickstarter is a great way for us to hear directly from customers what products they care about, since they truly hold the power to bring these products to life,” said Jim Adkins, Vice President, Amazon. “We created the Amazon Launchpad program a year ago to serve creators, inventors, and startups. Our goal is to enable them to reach Amazon’s hundreds of millions of customers and to overcome one of the biggest challenges any startup faces – bringing their product to market successfully.”

Beyond simply listing a product on Amazon’s Launchpad, there are other benefits to support these growing startups, starting with global expansion and extended reach. Just as Kickstarter helps startups to get eyes on their products, Amazon has an even greater reach.

When ready, product owners can also utilize Amazon’s vast supply chain solutions and marketing programs, bringing their products from the country of origin to anywhere that Amazon supports (nearly every country). Startups will also have access to Amazon’s brand development resources, bringing life and custom imagery to their product listings.

Why This Is Important

Launching any business comes with endless, yet manageable, risk, and this only expands when seeking outside funding. For venture funding, regulations put some constraints on who can contribute capital, which in turn turned away less experienced people from spending their money on poor investments. However, technology once again bested regulations, and in the past decade or so crowdfunding has knocked down barriers.

Thanks to crowdfunding, launching products and companies is seemingly easier due to getting small contributions from hundreds if not thousands of backers rather than large amounts of money from a handful of VCs.

The side effect of course is that backers were initially not fully informed, rules may not have been in places to ensure products would ever be completed, and backers could not truly invest due to regulations at the time. This year the SEC is changing the game, and now anyone, regardless of income, can invest up the greater of $2,000 or up to 5 percent of their income in a crowdfunding issuer per year. This is then doubled to 10 percent for those making $100,000 in annual income or net worth each year. It’s of course much more complicated than this, and places constraints on companies as well, but the floodgates for investing have been opened.

Though similar in nature, equity crowdfunding and what most people refer to as crowdfunding may have very different outcomes and constructions, the risks at play may run in parallel for both would be brands and backers/investors.

Success rates crowdfunding

via TheCrowdDataCenter

Even now, the success rate of crowdfunding campaigns is low. For Kickstarter, 30.4% of campaigns are successfully funded, and on Indiegogo 11.9% funded (partially due to there being an opportunity to receive funds without achieving the set goal). And these are only for campaigns that result in some form of reward, and don’t count the amount of campaigns that successfully fulfill them.

On the flip side, some of the successful campaigns have not just resulted in second and third campaigns, but companies to stand on their own. From Pebble to Canary, there are countless examples of businesses that have been kickstarted. Success comes from connecting companies with the resources and funding they need to get out there. And with the partnership between Amazon and Kickstarter, it’s only a matter of time before genius startups start popping up out of nowhere.

 

 

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Elliot is an award winning journalist deeply ingrained in the startup world. He also runs a non-profit, Digital District, which focuses on improving professional digital literacy in DC. You can contact him by email at elliot(@)elliotvolkman.com or follow him on Twitter @thejournalizer.

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