March 23rd, 2017
5 Things You (Probably) Never Knew About Kickstarter
The Motley Fool | Rich Smith | Mar 12, 2017
Here's a bit of trivia for you: Over its lifetime, the popular crowd-funding website Kickstarter has created enough jobs to fill up an entire monthly Bureau of Labor Statistics job report.
Last month, the U.S. Bureau of Labor Statistics trumpeted an increase in American employment of 277,000 new jobs. That was 100,000 more new jobs than analysts had expected -- but it still wasn't as many jobs as Kickstarter has helped create since its foundation in 2009. As Kickstarter brags in its just-released "2016 Benefit Statement," a recent study by the University of Pennsylvania calculates Kickstarter is responsible for the creation of "300,000+ full- and part-time jobs."
Kickstarter: The new engine of American growth
How did Penn come up with this astonishing claim? According to the University, Kickstarter's crowd-funded projects have employed 283,000 part-time collaborators in bringing creative projects to life and spawned the creation of 8,800 new companies and nonprofits. These have included the maker of Pebble smartwatches, later acquired by FitBit (NYSE:FIT), and VR specialist Oculus, which got bought out by Facebook (NASDAQ:FB) in 2014 -- for a whopping $2 billion. In the process, such Kickstarter-spawned businesses also created an additional 29,600 full-time jobs.
Even if you discount the part-time workers, that makes for more than three full-time jobs created for each successful start-up, confirming that Kickstarter "companies" are more than just one lonely nerd working in a garage. At the very least, each of those nerds has two full-time, salary-drawing employees on the payroll -- and a couple dozen collaborators doing piecework on his project.
Growing like a weed
From 2009 through August 2015, when I last looked in on Kickstarter's progress, the company had helped its users attract crowd funding for more than 90,000 projects. That number has since kicked up to well over 120,000, with "19,235 successfully funded projects" in 2016 alone.
Real companies, with real revenues
Every dollar pledged to a successfully funded project resulted in $2.46 in additional revenue for the creator, leading to an estimated $5.3 billion in additional economic activity, says Penn.
That means the contributions people are making to Kickstarter projects are not just one-offs -- pre-payments to get a special goodie advertised on the site. These contributions literally are kick-starting new businesses, and giving them the capital needed to get the ball rolling, gain momentum, and earn new revenue over and above the initial contributions -- 2.5 times over and above.
A kick-start for the economy
In total, the University estimates that Kickstarter has added $5.3 billion to the national GDP over the past eight years. It's also done its part as a responsible taxpayer. In 2016, the company says it paid a "combined effective tax rate of 25%."
That means tiny Kickstarter paid more in taxes last year than did gigantic ExxonMobil (NYSE:XOM). According to data from S&P Global Market Intelligence, ExxonMobil booked a $406 million tax refund in 2016, a year in which Exxon booked $7.8 billion in profits.
A new kind of company
Need more proof that Kickstarter is a different kind of company? How about this: According to its benefit report, last year Kickstarter CEO Yancey Strickler collected a salary only 2.5 times larger than that of the average Kickstarter employee, and his total compensation was still only 5.5 times larger. In contrast, then-Exxon CEO and now-Secretary of State Rex Tillerson was paid $27.3 million. (Exxon doesn't disclose its average employee salary, but The Washington Post notes that Tillerson's salary was "about 500 times the median U.S. household income.")
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.
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