Kickstarter CEO Yancey Strickler has high hopes for his crowdfunding platform, which allows startups to create a market for their projects and gives consumers power to resurrect shows such as “Veronica Mars” that were canceled by Hollywood studios. Kickstarter’s future will not include allowing businesses to sell ownership shares in their startups through the crowdfunding platform, Strickler said, referring to rules being developed by the government.
“We are planning on sitting that one out,” he said during a conference on Monday hosted by TechCrunch. Kickstarter is perhaps the most popular crowdfunding platform along with its rival Indiegogo, so this decision implies it could take a while for equity crowdfunding to become widely used.
The Securities and Exchange Commission is developing rules to legalize equity crowdfunding, which would allow regular people – nonaccredited investors – to fund companies in exchange for ownership shares.
Some regulatory questions remain, including what shareholder voting rights these rules will give to equity crowdfunding investors. Venture capitalists might also see less opportunity investing in a startup if 1,000 crowdfunders already own equity, according to John Taylor, head of research for the National Venture Capital Association.
Since co-founding Kickstarter in 2009, Stricker said he has noticed that “art works by different rules” than other businesses models that limit their possibilities if investors want profit immediately. Despite being founded during the depth of the recession, approximately 6 million people on Kickstarter have pledged $1 billion for projects to help fund projects ranging from drawings to movies, Strickler says.
“I love the idea of opening that funnel of things that exist just because people want them to,” Strickler says. “Art and culture are not a frivolous things. They help us shape the world and comment on it.”
Kickstarter allows startups to seek purchase commitments from consumers with the promise of building them a device or sending some other nonmonetary reward for their investment. This model helped fund development of the Pebble smartwatch and virtual reality goggles designed by Oculus, the latter of which Facebook acquired in March for $2 billion.
This outlet for consumer power also allowed fans of the 1990s TV show “Veronica Mars” to fund a movie version of the show with the original cast that premiered in March. This is the latest example of the Internet giving more power to fans who want to revive their favorite programs, as online video channels through companies such as Netflix or Hulu create an alternative to broadcast networks or movie studios.
“‘Veronica Mars’ suggests that even something like Hollywood could work in a very different way that I think might be more healthy for everyone,” Stricker said.
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