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Business Models Business Operations

How Does Kickstarter Make Money (Business and Revenue Model)

The Kickstarter business model

How Does Kickstarter Make Money?
Here’s what you should know:
  • What is Kickstarter, and how does Kickstarter work?
  • How does Kickstarter make money?
  • Commission Fees (On Funded Projects)
  • Kickstarter’s Subsidiaries, Acquisitions, and Exits
  • Kickstarter’s profit and revenue
  • What is the Kickstarter business and revenue model?
  • Kickstarter’s funding and valuation

How does Kickstarter make money? Here is a full, in depth, breakdown of their main revenue stream and services they offer, as well as the Kickstarter business model, their year over year revenue, and how Kickstarter works.

What is Kickstarter, and how does Kickstarter work?

Kickstarter is a for profit crowdfunding platform that allows creators to raise money for their projects in exchange for pledges from the people who financially support these projects. These “pledges” are backed by tangible rewards and or experiences promised by the creator and project.

Founded in 2009 by Perry ChenYancey Strickler, and Charles Adler, Kickstarter has since raised more than $6.6 billion in funds to help projects through its platform.

How Kickstarter works is: For creators looking to raise money, they must first create an account by entering in some details about the project such as the type of project it is, where its country of legal residence is, and how much they would like to raise. Note that Kickstarter will not release any funds unless / until a project meets 100% of its financial goal.

As for pledges, a Kickstarter account must first be created as well. Once created, pledgers can start by simply clicking the green “Back this project” button on any project page they are interested in. From there, they can choose to support the project without a reward or select a reward tier (if the creator has created add-on rewards for their project) – then click the green “Pledge” button.

Some of Kickstarter’s competitors include GoFundMe, Patreon, Wefunder, Indiegogo, FundRazr, Chuffed, and other crowdfunding companies.

Kickstarter App in Apple App Store | Kickstarter Business Model | How Does Kickstarter Make Money? | How Does Kickstarter Work?
Source: Apple App Store | Kickstarter

How does Kickstarter make money?

According to Kickstarter’s stats page, Kickstarter has helped raise more than $6.6 billion from more than 21 million backers to fund over 220,000 projects since its founding back in 2009.

So how does Kickstarter make money off of all those donations?

Below is a breakdown of how much money Kickstarter makes and its revenue model. Including their main revenue stream and how much they charge for their services.

Here is how Kickstarter makes money (in 2022):

Kickstarter has a revenue model that makes money in just one (1) way – commission fees.

#1. Commission Fees (On Funded Projects)

Kickstarter makes its money by taking a percentage, or commission, of the total amount raised from each successfully funded project on its platform.

As noted above, Kickstarter has helped raise over $6.6 billion in funds for projects since its founding in 2009. Of which, Kickstarter collects a commission fee on all of it. Which you can see below.

Kickstarter Fee:

  • 5% of the total funds raised; plus an additional 3% to 5% per pledge (for processing fees)
Kickstarter Fee | Kickstarter Business Model | How Does Kickstarter Make Money? | How Does Kickstarter Work?
Source: Kickstarter

Note: The payment processing fees (between 3% to 5%) are issued by and paid to Stripe, Kickstarters payment processing vendor.

Kickstarter’s Subsidiaries, Acquisitions, and Exits

To date, Kickstarter, PBC has made a total of 2 acquisitions, 20 investments, and 6 lead investments.

Kickstarter Acquisitions| Kickstarter Business Model | How Does Kickstarter Make Money? | How Does Kickstarter Work?
Source: Crunchbase | Kickstarter

Kickstarter’s profit and revenue

Kickstarter has not reported any official reports in regards to company earnings.

Note: Because Kickstarter, PBC is a privately held company, they are not required to make their annual reporting, such as Form 10-K’s, pubic.

What is the Kickstarter business and revenue model?

Kickstarter makes money through a few revenue models that they combine within their company, they are:

  • Commission based business model
  • Mergers & acquisitions (M&A) business model

Kickstarter’s funding and valuation

According to Kickstarter’s Crunchbase profile, GoFundMe’s last reported round of funding took place back on March 17, 2011, where they raised $10 million over 1 round giving them a post-money valuation in the range of $10 million to $50 million at the time.