A Case Analysis on Kickstarter and Crowdfunding

Submitted by: Jaredsol E. Debsio

S.Y 2021-2022
 Kickstarter and Crowdfunding

I. Introduction

Kickstarter is an American public benefit corporation based in Brooklyn, New York. It was
eventually launched on April 28, 2009, by Perry Chen, Yancey Stickler, and Charles Adler. The New York
Times called Kickstarter "the people's NEA". Time named it one of the "Best Inventions of 2010" and "Best
Websites of 2011". Kickstarter reportedly raised $10 million funding from backers including NYC-based
venture firm Union Square Ventures and angel investors such as Jack Dorsey, Zach Klein and Caterina
Fake.

Kickstarter is a funding platform for creative projects. Everything from film, games, and music to
art, design, and technology. Kickstarter is full of ambitious, innovative, and imaginative projects that are
brought to life through the direct support of others.

Kickstarter is one of the biggest names when it comes to crowdfunding, known for helping tech
and creative entrepreneurs fund their projects before getting a loan or raising money for venture capital.
The company has raised over $6.2 billion with more than 211,000 (as of November 2021) projects funded
since its inception in 2009. Potential funders can browse a number of verticals from arts and film to
publishing.

It's also easy to use on the fundraising side. Begin by setting your goal and then a time period to
complete it. FYI: before your campaign can launch, you'll have to be approved by Kickstarter. For each
level of money raised per individual, you set a small gift or personal experience for your donor.

Kickstarter is an all-or-nothing platform, which means that you don't get your funds unless you
complete your campaign. It also means that the funder's credit card won't be charged unless you meet your
campaign goal. The fee is 5% on top of processing payment charges (3% to 5%) per transaction. There's a
14-day waiting period for funds if you raise enough money.
II. Vision and Mission

Vision Mission
To be and stay world’s largest social GoFundMe is changing the way the
GoFundMe fundraising platform world gives.
Our mission is to help bring creative
Kickstarter (No existing Vision Statement) projects to life.

GoFundMe mission statements differs to Kickstarter. Kickstarter will create tools and resources
that help people bring their creative projects to life, and that connect people around creative projects and
the creative process. Kickstarter will care for the health of its ecosystem and integrity of its systems.
Kickstarter will engage beyond its walls with the greater issues and conversations affecting artists and
creators. Kickstarter campaigns make ideas into reality. It's where creators share new visions for creative
work with the communities that will come together to fund them.

III. Internal Assessment

a. Financial Ratio Analysis
Short-Term Solvency, or Liquidity, Ratios Days ' sales in receivables = 365 days
Current ratio = Current assets Receivables turnover
Current Liabilities
Total Asset Turnover = ___Sales_____
Quick ratio = Current assets - Inventory Total assets
Current Liabilities Capital intensity = _Total assets_
Sales
Cash = Cash_
Current Liabilities Profitability Ratios

Long-Term Solvency, or Financial Leverage, Profit margin = Net income

Ratios Total assets
Total debt ratio = Total assets — Total equity
Total assets Return on Asset (ROA) = Net income
Total assets
Debt-equity ratio = Total debt/Total equity
Equity multiplier = Total assets/Total equity
ROE = Net income x Sales x Assets
Times interest earned ratio = EBIT
Sales Assets Equity
Interest
Asset Management ratios
Market Value Ratios
Inventory Turnover = Cost of goods sold
Inventory Inventory Turnover = Cost of goods sold
Days ' sales in Inventory = Cost of goods sold Inventory
Inventory Price earnings ratio = Price per share
Receivables Turnover = Cost of goods sold Earnings per Share
Inventory EV multiple = Enterprise value
EBITDA
 b. Organizational Structure

Figure 1. Kickstarter Organizational Structure

The organizational chart above is a network organizational structure (also called virtual network
structure) is a temporary or permanent arrangement of otherwise independent organizations or associates,
forming an alliance to produce a product or service by sharing costs and core competencies. In a network
structure, managers coordinate and control relationships that are both internal and external to the firm.

c. Improved Organizational Chart

The structure presented below is a hierarchical organizational chart. The chart is commonly used
structure in organizations because it is easy and understandable compared to Kickstarter that has many
arrows that gives confusions to other people.

Figure 2. Improved Organizational Chart

 d. Market Positioning Map with Firm and Competitors

Figure 3. Market Positioning Map

The figure shows that the location of the firm has a distance between the different firms. And it
makes the right place to the company because there is no huge competition compared to the other companies
that the competition arise into their area which has many risk to encounter. Therefore, the company have a
higher possibility to succeed due to the profitable position of the firm.

e. Marketing Strategy

Kickstarter marketing strategy is cross-promotion, when it comes to crowdfunding campaigns, it is

a form of marketing promotion where a creator promotes another project to his or her backer audience. To
ensure that it is getting a barrage of backer who are willing to support another despite not even knowing
they are using the product of the owner.

f. Map locating the firm’s operations and Value Chain Analysis

The company is based at 58 Kent Street in Greenpoint, Brooklyn, housed in part of the former
Eberhard Faber Pencil Factory.

Figure 4. Kickstarter Location Map

 g. Kickstarter Website and Facebook Page

Figure 4. Kickstarter’s Facebook page

The official website of Kickstarter is www.kickstarter.com . Below is the official Facebook page
of Kickstarter that almost has 1.6 million follows and likes. The account is used by Kickstarter mainly for
promotions and to engage followers. It shares multimedia content including videos and images to promote
new innovations and its products.

h. Value of the firm

Kickstarter is an online crowdfunding platforms that allow entrepreneurs and companies to
showcase their projects to a larger number of potential investors, as compared to conventional forms of
capital raising. The crowdfunding is a great alternative way to fund a venture, and it can be done without
giving up equity or accumulating debt. This crowdfunding has a great impact which includes the ability to
work with other people through the use of online platforms and cost savings. Kickstarter is top of
crowdfunding business where they have to establish innovations and promote and maintain
entrepreneurship in the industry.

i. Strengths and Weaknesses

Strengths Weakness
 Flexibility of platform  Competitive market
 Leadership skills  Project planning
 Teamwork  Reliability of data
 Successful Marketing Strategies  Information disclosure
 Advance knowledge of Management  Devalues professionals
 Internal Communication Advantage  Cash flow statement
 New innovations  Price fluctuations
 Service Quality  Management control
 Firm location  Gaps on Communication
 Analytical Skills  Negotiating disadvantage
 j. Internal Factor Evaluation (iFe) Matrix

.No. Internal Weight Rating Score

a b c=axb
STRENGTHS
1 Capital is very accessible 0.0855 3 0.2565
2 Opportunity to test idea marketability 0.0748 3.5 0.2618
3 Entrepreneurs maintain control over their company's 0.0877 4 0.3508
decisions
4 Benefits for communities both locally and internationally 0.0764 3.5 0.2674
5 Uniqueness of marketing strategies 0.0755 3 0.2265
6 The good relationship of management and investors. 0.0865 3.5 0.30275
WEAKNESSES
1 Weaker investor protection and potential for fraud 0.0549 2 0.1098
2 Internet-based, so investors might lack detailed advice 0.0959 1.5 0.14385
3 Administrative and accounting challenges 0.0757 2 0.1514
4 Ideas and business models presented public can be easily 0.0575 2 0.115
stolen
5 Cash flow statement 0.0866 2 0.1732
6 The fluctuation of price in the market 0.0662 1.5 0.0993
TOTAL 1.0000 2.4583

IV. External Assessment

a. Major Competitors
Kickstarter top competitors includes GoFundMe, Patreon, Indiegogo, Crowdfunder, Tilt,
Crowdwise. GoFundMe is one of the main competitors of Kickstarter. GoFundMe is headquartered in
Redwood City, California and was founded in 2010. GoFundMe competes in the internet software space.
GoFundMe generates 33% of Kickstarter revenue. Indiegogo is the Kickstarter competitor. Indiegogo was
founded in 2008 in San Francisco, California. Indiegogo is in the field of Internet software. Indiegogo
brings in $ 260 million less in revenue than Kickstarter. Indiegogo is a crowdfunding platform for
innovations in tech and design. Crowdfunder is considered one of the main competitors of Kickstarter.
Crowdfunder was founded in 2011 and is headquartered in Venice, California. Crowdfunder
operates in the internet software industry. Crowdfunder employs 126 fewer people than Kickstarter. Patreon
is an American membership platform that provides business tools for content creators to run a subscription
service. It helps creators and artists earn a monthly income by providing rewards and perks to their
subscribers.
 Market shares

8.86%
16.30%

Indiegogo 18.43% 46.84% Market shares

Patreon
GoFundMe
Kickstarter
0.00% 20.00% 40.00% 60.00%

Kickstarter has market share of 46.84% in crowdfunding market. Kickstarter compete with 20
competitor tools in crowdfunding category. Top alternatives for Kickstarter crowdfunding toll are
GoFundMe with 18.43%, Patreon with 16.30% and Indiegogo with 8.86% market share.

b. Competitive Profile Matrix

Competitive Profile Matrix

Kickstarter GoFundMe Patreon
Critical Factors Weight Rating Scores Rating Scores Rating Scores
1. Strong online presence 0.12 4 0.48 4 0.48 4 0.48
2. Superior IT Capabilities 0.12 4 0.48 4 0.48 3 0.48
3. Market Share 0.05 4 0.2 4 0.2 4 0.2
4. Variety of distribution channels 0.01 3 0.03 3 0.03 3 0.03
5. Customer service 0.10 4 0.4 4 0.4 4 0.4
6. Advertising 0.10 3 0.3 3 0.3 3 0.3
7. Global expansions 0.01 3 0.03 3 0.03 3 0.03
8. Liquidity 0.01 2 0.02 2 0.02 2 0.02
9. Management service 0.05 4 0.2 4 0.2 3 0.15
10. Investment returns 0.12 4 0.48 3 0.36 3 0.36
11. Environmental issues 0.01 1 0.1 2 0.02 2 0.02
12. Social responsibility 0.12 3 0.36 3 0.36 3 0.36
13. Profits Margin 0.05 4 0.2 4 0.2 4 0.2
14. Backers satisfaction 0.08 4 0.32 3 0.24 3 0.24
15. Successful promotions 0.05 3 0.15 3 0.15 3 0.15
1.00 3.75 3.47 3.42
 c. Standard & Poor’s Industry Survey and iBiS World information
Political Factors Economic Factors Social Factors
1. Tax policies 1. Stage of business cycle 1. Career opportunities
2. Environmental policies 2. Impact of globalization 2. Lifestyle choices and
3. Labor policies 3. Labor costs attitudes toward socio-
4. Trade policies 4. Inflation rates cultural changes
5. Data privacy and data 5. Current exchange rates 3. Expanding number of online
protection legislation 6. Current economic climate users
4. Job creation
5. Online connectivity
Technology Factors Environmental Factors Legal Factors
1. Innovation 1. Undeveloped countries 1. Regulatory frameworks in
2. Impact of technology 2. Economic changes development
transfer 3. Competition 2. Health and Safety Law
3. Research and development 4. Undeveloped technologies 3. Industry regulations
activities used 4. Employment Law
4. Threats from competing 5. Intellectual property law
technologies
Demographics Socio-Cultural Factors
1. Gender Inequalities 1. Location
2. Age differences 2. Cultural practices
3. Individuals capabilities 3. Population growth rate
4. Languages 4. Changing preferences

d. Opportunities and Threats

Opportunities Threats
 Flexibility of platform  Competitive market
 Leadership skills  Project planning
 Teamwork  Reliability of data
 Successful Marketing Strategies  Information disclosure
 Advance knowledge of Management  Devalues professionals
 Internal Communication Advantage  Cash flow statement
 New innovations  Price fluctuations
 Service Quality  Management control
 Firm location  Gaps on Communication
 Analytical Skills  Negotiating disadvantage
 e. External Factor Evaluation (eFe) Matrix.

.No. External Weight Rating Score

a b c=axb
OPPORTUNITIES
1 Positive effects of crowdfunding on the economy 0.0757 2 0.1514
2 Niche investment opportunity/way to raise capital 0.0959 3.5 0.33565
3 Utilize the power of social networks for promotions, and 0.0866 3 0.2598
connect with crowdfunding
4 Growing demand of technologies 0.0865 2 0.173
5 Increasing rate of interests 0.0877 2.5 0.21925
6 Highly skilled innovators 0.0855 3 0.2565
THREATS
1 Risky nature of small business 0.0748 2 0.1496
2 Current legal restrictions 0.0768 2 0.1536
3 Intensifying competition 0.0764 1 0.0764
4 High labor cost 0.0549 2 0.1098
5 Internet security that controls business 0.0755 2.5 0.18875
6 Regulatory framework changes within the country 0.0575 1 0.0575
Total 1.0000 2.13125

V. Strategy Formulation
a. SWOT Matrix
Strengths Weaknesses
1. Management skills 1. Technology Advancement
2. Marketing strategies 2. Policy Management
3. Technical uniqueness 3. Strategic planning
4. Services 4. Capital Management
Opportunities Threats
1. Easy accessible platform 1. Automated Technology
2. Low competitions, creators and 2. Management control
backers 3. Capital structure
3. Rewards/Positive return

b. Matrix Explanation

The table shows the different factors that affects both internal and external of the firm that
categorizes its Strengths, Weaknesses, Opportunities, and Threats. These factors mentioned would be
a great recommendation to focus enable to avoid breakdowns and assumes the good outcomes that can
helps the firm more competitive with its rivals.
 c. Boston Consulting Group (BCG) Matrix.

d. Grand Strategy Matrix

STRENGTHS WEAKNESS
1. High Quality of Service 1. Funding/Capital
2. Successful Marketing Management
Strategies 2. Price Fluctuations
3. Creativity 3. Management Control
4. New Innovations 4. Negotiating Disadvantage
Development
OPPORTUNITIES S-O Strategy/Analysis W-O Strategy/Analysis
1. Technologies Advancement 1. New Innovations 1. Market Development
2. Increasing Demand of Development 2. Increasing Demand of
Backers 2. Creativity Backers
3. Market Development 3. Successful Marketing
4. Growing demand of Strategies
technologies
THREATS S-T Strategy/Analysis W-T Strategy/Analysis
1. Internet Security 1. Creativity 1. Management Control
2. Regulatory Frameworks 2. New Innovations 2. Funding/Capital
3. Economic Downturn Development Management
4. Competitions 3. Successful Marketing
Strategies
 e. Recommendations Page of Strategies and Estimated Costs

Estimated cost
STRATEGIES for
Implementation
Existing Strategies
New Innovation Development $ 125,000.00
Labor Costs 190,000.00
Management Structuring 156,000.00
Quality And Environmental 143,000.00
Cost
Target Costing 250,000.00
New Strategies
Legal Cost 280,000.00
Advertising Costs 118,000.00
Research and Development 130,000.00
Projects Implementation 100,000.00
Rewards/Investment Return 112,000.00
Total Costs $1,604,000.00

The table shows the Existing to be continued by the firm and new strategies to be started, and its
estimated costs. Based on researches, most of the operations of Kickstarter Crowdfunding Company are
confidential and it has no provided strategic cost. As a result, the recommendation is not accurate.

VI. Strategy Implementation

a. Graph of Earnings Per-Share/earnings before interest and taxes (ePS/eBit
b. Projected Income Statement and Balance Sheet

(In millions)
c. Projected Financial Ratios
VII. Strategy Evaluation
a. Balanced Scorecard

Financial
Goals Measures
Projects profitability Net Margin
Maximize productivity Ratios
Maximize value at least cost Cost to spend ratio

Customer Internal Business

Goals Measures Goals Measures
Service partnership Responsiveness as Improve Performance index
Timeliness response by costumers management Assessment of
Quality of relationship Satisfaction index Accurate effective management
Quality of service data collection Project process rate
Provide new
innovation

Innovation and Learning

Goals Measures
Research for development Strategic competency
Meet present mission goals Self-assessment for
Improved communication continuous improvement
Rate of improvement index
and survey

VIII. Conclusion

Kickstarter campaigns make ideas into reality. It's where creators share new visions for
creative work with the communities that will come together to fund them. The improved strategic plan have
a higher possibility to gain a higher profit compared to existing strategies that makes the backers hard to
decide because of the uncertain financial statement of the Kickstarter that performed as Crowdfunding
organization. It also provides an equal rights policy for both parties while existing plan has a strict policy
that mostly affect the backers of the projects and benefits the organizations shareholders and customers
focusing only to the creators and backers.