[wikiburner]

Does anyone know the back story on why Kickstarter is so restrictive?

Kickstarter can't be used to raise money for causes, whether it’s the Red Cross or a scholarship, or for “fund my life” projects, like tuition or bills.

Indiegogo has no problem with it though.

Kickstarter also requires each project team to sign up for their own Amazon payments account. Why wouldn't Kickstarter just collect the money and then wire it / cut a check to the funding recipient?

Also, why does Indiegogo charge upfront while Kickstarter waits until the campaign is successful?

The whole crowdfunding space seems to operate pretty illogically. Are there legal complexities that aren't apparent to an outsider that force their hand?

[ihuman]

My assumption on why Kickstarter is so restrictive is because they are trying to create an atmosphere of trust between the Backers and the Creators. They are probably choosing projects that are more likely to be funded and finish a product, so that people feel safer pledging their money. On the other hand, Indiegogo is trying to compete with Kickstarter, and has less restrictions in order to get projects that Kickstarter won't accept. This is my assumption, so I may be wrong.

[YanceyKSR]

We're not "so restrictive." Our guidelines ask projects to be on-topic exactly like Hacker News' guidelines for comments do. We're a funding platform for creative projects. We built Kickstarter because we believed that there should be a space for creative ideas to be shared and find support. Every single guideline is there to support and strengthen that mission.

[Ecio78]

Hi YanceyKSR, a question for you:

Kickstarter's FAQ clearly states that you need to be a US, UK (or now Canadian) citizen/business and you should prove it (SSN/government-issued IDs, address etc..) in order to launch a project.

So, can I ask you how this project has been published (and funded) http://www.kickstarter.com/projects/1054394377/idae-the-book... given the fact that the company is Italian, the team members seems to be all Italian judging from their names, the location indicated was "Milan, Italy" and the product was going to be made in / shipped from Italy?

Maybe it's just "ok" to have somebody in the US/UK/CAN that acts as a middleman for the project?

N.B. the above project is just an example, I'm Italian and I've searched from something that seemed to be founded from Italy

[lgeek]

> Kickstarter's FAQ clearly states that you need to be a US, UK (or now Canadian) citizen

I thought the citizen part sounded strange so I did a quick check. According to [0] you only need to be a permanent resident.

[0] http://www.kickstarter.com/help/guidelines

[Ecio78]

Sorry for my poor/wrong usage of the word "citizen", I meant resident with SSN, US address, bank account, ID card, US credit/debit card etc.. as stated in the FAQ [1]. So definitely you shouldn't be able to launch a project by residing in another country and just "faking" a US address using something like those shipping forwarding services used to buy stuff in the USA

[1] http://www.kickstarter.com/help/faq/creator+questions

[InclinedPlane]

Kickstarter has a mission: to enable crowdfunding of projects. Within that mission they've built tools to facilitate that as well as created guidelines and limitations on projects. All of this is designed to create and enhance trust.

As for payments, a big issue is overhead, chargebacks, and failures. Using amazon payments may insulate kickstarter from some of that.

One may ask why kickstarter isn't just geocities with easy to add paypal buttons everywhere, but I think it's obvious that such a site would probably not be as successful as kickstarter.

Edit: some stats: during 2012 Kickstarter had about 18k funded projects with a total of nearly a third of a billion dollars in funding. Indiegogo doesn't release stats for the total amount of project funding in a year but it's quite evident that it is far lower than kickstarter's numbers.

[darkchasma]

Different companies, different business models, different strategies, different risk allowance, different lawyers. Two different companies in similar spaces would be illogical if they didn't have different strategies.

[kanamekun]

The core difference is that Kickstarter only offers "all or nothing" funding, because of their focus on creative sites:

<< All-or-nothing funding is a core part of Kickstarter and it has a number of advantages: It's less risk for everyone. If you need $5,000, it's tough having $1,000 and a bunch of people expecting you to complete a $5,000 project.

It motivates. If people want to see a project come to life, they're going to spread the word.

It works. Of the projects that have reached 20% of their funding goal, 82% were successfully funded. Of the projects that have reached 60% of their funding goal, 98% were successfully funded. Projects either make their goal or find little support. There's little in-between. >> http://www.kickstarter.com/help/faq/kickstarter%20basics

Meanwhile, Indiegogo is more agnostic about the projects they work with. Because their projects aren't all creative, you can set up your projects to either use "all or nothing" funding (aka Fixed Funding) or more "Flexible Funding":

<< If your campaign is set up as Flexible Funding, you will be able to keep the funds you raise, even if you don't meet your goal. If your campaign is set up as Fixed Funding, all contributions will be returned to your funders if you do not meet your goal. Flexible Funding campaigns that meet their goal are only charged 4% as our platform fee, whereas campaigns that do not meet their goal are charged 9%. >> http://www.indiegogo.com/indiegogo-faq

Indiegogo does offer refunds to backers of Fixed Funding projects that don't fully fund... but they don't offer refunds to members of Flexible Funding projects. In fact, they charge 9% to those people... possibly to offset the margin loss they incur for refunds of Fixed Funding projects that don't fully fund.

In any case, there are two ways to program pledges from backers, given these specs:

1) You can charge the backer's credit card right away and then refund if the campaign doesn't fully fund. 2) Or you can auth the card right away and then only charge the credit card if the projects fully fund.

Kickstarter does the latter: their backend (powered by Amazon Payments) authorizes a backer's credit card when someone pledges... but then doesn't charge the card right away. Instead, Kickstarter waits until the project successfully funds before charging the card. If the project doesn't fully fund, then the credit card of the pledger is never charged.

Not a lot of payment processors will support such a model. Amazon Payments is one of the few... although they actually stopped onboarding new crowdfunding sites last year: http://www.wired.com/business/2012/08/crowdfunding-gets-stic...

So in short, it's less of a legal complexity (as far as I can tell) and more of an issue around:

1) Margin risk around refunds of projects that don't fully fund. 2) Making sure the customer experience of pledgers is a good one.