[trizk]

It should be noted that they have not really raised any equity capital. The $1M are pre-orders for the iPod Nano watch, and hence is revenue. In this sense, Kickstarter is ingeniously being used as a platform for virally marketing the product (concept) and as a sales channel. Kudos to them for their success.

[muhfuhkuh]

Kickstarter is shaping up to be the ultimate R&D/test marketing platform. You have an idea, you can make prototypes, you test market the prototype on Kickstarter, the consumer speaks with their wallet, and you can either take it to the mainstream or gracefully exit whilst giving away some "exclusive" tchotchkes to the people who paid in.

It could also become the manufacturing version of a "pop-up store", where potential buyers are given "exclusive" timed access to a product before it hits the mainstream outlets. This exudes value (like the Humble Game Bundles or Macheist) while focusing laser-sharp on just one product (a la woot) and is compelling to our baser consumer desires for access, urgency, and exclusivity.

Could be an interesting pivot for kickstarter (or perhaps be a nice niche for someone to exploit).

[EGreg]

Actually I have been toying with this idea as a new way to produce art. Books. Movies, etc.

Because if take as an axiom that "once it's out there, it will be copied" then what if all the reliable money to be made was already made before the movie was released, and at the theaters, concerts, and physical books?

You could follow the progress of movies and fund them if you liked what you saw.

But there needs to be more incentive.

[bradleyland]

Thank you for making this point. I've been going mad trying to explain to friends that, in this case, the money isn't "funding" in the traditional sense. Selling pre-orders is entirely different than receiving funding. In normal funding scenarios, the person providing the capital does so in order to receive some financial benefit in return for risking their money on the project. In this case, you're just pre-ordering various product packages. There is no return on your investment.

[joshwa]

I'm guessing that they also secured a credit line based on the pre-orders, so they have enough cash to pay for prototypes, raw materials, molds/tooling, etc...