[brk]

It's really not comparable to VC money in any normal way though.

When you're raising VC money, especially early rounds, you're trying to prove and build a business model. You're trying to get market awareness and acceptance, develop your product, etc. There is a statistically high probability that you will fail entirely, or will at least fail to achieve the progress intended (meaning you may have to raise more money, affecting valuations and dilutions).

One upside to VC money is that you get to use all of it in almost any way you like.

Kickstarter, especially in this case, is people pre-ordering an already more fully defined and developed product. The money raised is going more or less directly to people purchasing product. It is assumed that there is a profit margin on the product, but it's also reasonable in these early cases to assuming the manufacturing costs may overrun estimates, and that roughly 10-25% of the money raised will actually end up being "profit".

Sure, even 10% of $7M is a nice chunk of money, but $7M of kickstarter money is way less working capital than $7M of VC money.

[mason55]

Kickstarter, especially in this case, is people pre-ordering an already more fully defined and developed product. The money raised is going more or less directly to people purchasing product.

It's funny because Kickstarter is intended NOT to be pre-purchasing but to be an investment in something that might not pan out. People have gone out of their way to point that out when some of the high profile failures have happened.

[Retric]

For digital goods you can probably spend 85% of the funding on building the product AND you don't need to give up shares of your company to a VC. As for physical goods I don't think most physical kickstarter projects aim for 25% margins, especially when you look at all the diffident tiers. Many of which end-up as 1,000$ twice what you would get for 200$ but we will say thank you on our website.