Kickstarter Success Catapulted to the Big Time with VC Support
Oculus Rift is one of those Kickstarter campaigns that people cite when discussing the power of crowd funding to create something risky but entirely resonant with the zeitgeist. After raking in nearly $2.5 million backer dollars (and successfully delivering on their campaign promises), Oculus, the company behind the Rift virtual reality headset, garnered an additional $16 million in round one venture capital earlier this year to continue development towards a commercial product. This week, TechCrunch reported that Oculus just got an additional $75 MILLION in second round funding, to bring the Rift headset to market.
Oculus is not the only vc-backed company with its roots on Kickstarter. Both the Ouya game console and the Pebble e-paper watch got infusions of vc money after running highly successful campaigns (both raised on the order of $15 million in venture capital), but Oculus remains the only incipient technology company to get second round funding after backing it’s prototype on Kickstarter. That’s pretty cool, and a serious vote of confidence for the device.
So what’s the big deal about second round funding? Well, obviously if investors are willing to risk big money, they must see the Rift as an investment that will pay off. More to the point, second round funding is the next step to gearing up for a major commercial release. That means, barring catastrophe, you’ll soon be able to enjoy a finished, fully commercialized Oculus Rift in your home (or office, or surgical theater, or anywhere else 3D virtuality might be a boon).
The big question that these developments beg of us all is ‘how do you feel about Kickstarter becoming a place for new product companies to get seed funding?’ For my part, I think it is incredibly democratizing to take the seed funding/conceptual validation stage out of the hands of the venture capital/Shark Tank crowd and put it into the hands of the target audience. That isn’t to say that Kickstarter is necessarily preferable to traditional modes of raising venture capital, but one more avenue to help creators realize their good ideas is… well, a good idea.
I, for one, am looking forward to a Rift of my very own, and that dream just got a whole lot closer.
Caffeineforge 
If you go to a VC firm with an idea, their funding may allow them to tell you what they think it should be. Kickstarter funding allows creators to bring a more fully-formed idea or product to the table, and the VC people know that there is interest in it. So, while I’d prefer that Kickstarter funding result in a complete project, I’m not at all willing to begrudge creators from getting further funding elsewhere for development or expansion.
As long as Kickstarters deliver exactly what they promise for the amount they get in a timely manner, I have absolutely zero issue with some products garnering additional attention after some level of proof of concept with a successful Kickstarter.
I think it’s the grayer area where companies intentionally launch Kickstarters to attract venture capitalists that this may become a bigger issue.
This is exactly how Kickstarter should function. The idea is that it should launch a product in front of more eyes and get both that project funded and help the creators expand that project, “kickstart” it if you will. I much prefer this to the getting a project funded, and then launching the 2nd edition, 14 expansions and the paired down version. Shouldn’t you have the contacts to sell your next product, after the first one is successful? perhaps I am being naive? C.T. makes an excellent point about delivering.
Sorry for the delayed reply folks, but this conversation really took off while I was traveling for the holidays (blissfully sans computer). I definitely agree with all of the sentiments shared here, but I do think that Odin raises a good, parallel question: When should creators “graduate” from Kickstarter as a funding mechanism?
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