Kickstarter raised almost $120m last year

Company's revenue around $6m

Benjamin Jackson at The Next Web has managed to scrape out some numbers from the crowd-funding site Kickstarter, and estimates the company has raised $119m in successful projects in the last year:

That’s almost three times as much as the amount raised during the company’s first two years. Taking into account Kickstarter’s 5% commission, we can estimate that the company took home just shy of $6m in commission revenue in its third year. And it’s not the only one cashing in: with Amazon’s commission of 2.9% plus 30¢ per transaction, the online retailer pulled at least $3m in fees during the same period.

Adding in the figures from last year, it looks like Kickstarter has helped raise a total of $159M since its inception.

Those figures also exclude any project fully funded but not yet completed – including the Pebble watch, the most successful Kickstarter project to date, which has raised over $6m already and has almost a month until its funding period is over.

Jackson also looks at what we can expect from Kickstarter in the future. It's back-of-a-napkin stuff, but if the company keeps growing at the apparently exponential rate that it is now, it will hit half a billion dollars raised towards the end of next year.

Two questions follow from this: Where now for Kickstarter, and what does this mean for the wider economy?

The number that jumps out at me from the Jackson's analysis is the profit Amazon is making for processing payments. Kickstarter is fairly strongly tied to the retail giant, which runs the only online payment platform that offers the ability to reserve, but not take, a payment. This is crucial for Kickstarter's model, since it relies on being able to guarantee backers that they won't be charged unless a project is successful, while ensuring that when the time comes to ask for the money, people pay up.

It must be sorely tempting to try to drive down Amazon's share of the revenue, but without any potential to switch to an existing competitor, Kickstarter isn't in a position to drive hard bargains. If it had a cash injection, developing its own may become a possibility – but even then, it appears to have higher priorities, like expanding outside of the US (anyone can back a Kickstarter project, but only American citizens can start one).

What about the other way round? Amazon has retail expertise, close ties with the company, and already runs most of its infrastructure (as well as payments, Kickstarter is hosted on Amazon's cloud computing platform). Could Kickstarter be an acquisition target? Maybe, but there is a risk of slaying the golden goose. Amazon already makes millions from Kickstarter for comparatively little effort; unless that money is at risk, Amazon would be well advised to sit back and rake it in.

More broadly, it may seem strange to talk about what a company through which "only" $100m passes annually – a rounding error in the American economy – but that isn't how Congress seems to view it. A key provision in the recent JOBS Act allowed Kickstarter, and companies like it, to give backers not only rewards, but actual equity in the companies they choose to support. The act was subject to a lot a criticism for these measures, including by supporters of the "crowdfunding" model, but even if the implementation was shoddy, there is no doubt that it reflects a broader trend. Soon, we'll all be venture capitalists – and Kickstarter will be the middleman raking in the fees.

The Pebble watch, the highest funded Kickstarter project to date.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
Show Hide image

The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.