Recently, the number of sites popping up to take advantage of the crowd-sourcing boom has skyrocketed. The breadth and reach of the Internet is enabling crowd-sourcing startups to reach critical mass in a short period of time and get the necessary involvement to sustain their business model. Finance is one market in particular where crowd sourcing is changing the dynamics of the market. One company, Kickstarter, is taking advantage of the crowd-sourcing boom to fund something a little different, creativity.

Kickstarter, a US company based out of New York, was launched in September 2009 by a group of three who wanted to bring the magic of micro-finance to the creative community. It is branded as a “A New Way to Fund & Follow Creativity,” as it allows anyone around the world to chip in some cash (one dollar minimum) to help get a creative project off the ground.

The mechanism for Kickstarter is simple:

Creative types with a project or idea that needs funding (within the established guidelines) can post a project on the site with a required funding level and a timeline to reach that level (from 1 to 90 days). Included within the proposal is a video, description of the project and numerous rewards (non-monetary) that will be delivered to the participants who fund the idea. The process is either an all or nothing deal – either the project gets funded or it doesn’t, there is no partial funding.

Any participants on the site who are wooed by the promise of the project can pledge money towards it. The pledge is essentially a donation, and will only be collected from the participant if the project reaches the necessary funding threshold. There are many incentives for participants to pledge money, other than a warm feeling inside: participants receive unique rewards depending on how much money they donate and in some cases can receive tax write-offs for their donations.

Companies, or individuals, must be based on out of the US to apply for funding, but funders can participate from anywhere in the world. Companies who appear on the website are selected by the Kickstarter employees (for now), who receive about 200 new applications per day.

Thanks to a company like Kickstarter, hundreds and eventually thousands of creative projects have been given the boost of confidence, and capital, that they need. The general categories of projects include film, dance, music, photography, writing, art and technology. For example, if you wanted to help Tom Tom Magazine, a magazine about female drummers, launch its fourth issue, then with a few clicks of your mouse and keyboard you could be pledging cash to the project.

In under a year, Kickstarter has become part of the next generation wave of micro-finance by leveraging the power of the web to crowd source investing, or donating in this case. As they expand their reach beyond US borders, look for a creative project to pop up near you!

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