Startups

Kickstarter received secret $100M investment to pivot to Web3 as it struggles to save its fading brand

Kickstarter, a crowdfunding startup once hailed as the beacon for creative projects and social impact, finds itself at a crossroads, grappling with its fading glory and a quest for reinvention to salvage its brand. A new report from Fortune revealed a surprising turn of events in December 2021 when an investor group expressed interest in acquiring shares from Kickstarter employees.

According to the report, this interest culminated in a $100 million investment led by Andreessen Horowitz’s crypto fund, a16z crypto. However, this windfall came with strings attached — Kickstarter was urged to explore a pivot to blockchain technology, igniting a firestorm of controversy among its creators and users, and casting doubts on the platform’s future trajectory.

The news was unexpected because the Kickstarter team had been holding onto their shares in the company for years, and many had resigned themselves to the idea that they might never be able to sell them.

“The news came as a surprise. While the workers had amassed equity in the firm for years, many had given up hope of ever selling it. The Kickstarter they now worked for was a very different place than the red-hot startup of 2009 that had launched viral projects like Cards Against Humanity and Peloton, Fortune wrote.

The journey to this point was tumultuous. After over a decade in the limelight, Kickstarter had lost its allure and struggled through CEO turnovers, leaving potential investors wary. The proposed blockchain pivot was seen as both a lifeline and a leap of faith.

“But a dozen years after its launch, Kickstarter had lost its cachet of cool and churned through CEOs. The Kickstarter of 2021 had little to offer would-be investors but headaches,” Fortune added.

Sources familiar with the deal revealed that Kickstarter’s board courted venture capitalist Chris Dixon in mid-2021, dangling the blockchain pivot as a tantalizing incentive. For Dixon, the opportunity to usher a household name like Kickstarter into the web3 era was too compelling to ignore.

Under the leadership of Andreessen Horowitz, a16z spearheaded a stealth round totaling $100 million, with aspirations to morph Kickstarter into a web3 powerhouse. The audacious plan entailed migrating the entire platform to Celo, a blockchain in a16z’s portfolio, envisioning an open-source protocol that defied conventional tech paradigms.

Yet, reality failed to match ambition. Amid public outcry, Kickstarter hastily formed a community advisory board, ultimately shelving the blockchain transition. Despite the influx of funds, the foray into blockchain proved fruitless, prompting Kickstarter to pivot once more under the stewardship of its new CEO, Everette Taylor.

However, challenges persist. Fraud concerns loom large, and competitors lurk around every corner in the crowded crowdfunding landscape. Kickstarter’s journey underscores the daunting task of balancing idealism with commercial pragmatism in tech. While its early triumphs reverberated through the industry, sustaining relevance in an ever-evolving landscape remains an uphill battle.

Kickstarter’s genesis epitomized a noble pursuit of creativity and social impact. Yet, as it navigates the murky waters of technological upheaval, its fate hangs in the balance, emblematic of the trials faced by many in the relentless pursuit of innovation.

Launched on April 28, 2009, by Perry Chen, currently serving as Kickstarter’s chairman, along with co-founders Yancey Strickler and Charles Adler, Kickstarter swiftly set itself apart by championing artistic ventures and grassroots backing, diverging from the profit-centric norms. While its initial strides were met with acclaim, Kickstarter encountered its fair share of hurdles along the way, from CEO turnovers to internal discord and growth pains.

At its core, Kickstarter is tailored for the creative spirit, fostering a haven for innovative projects rather than conventional business ventures. Over its decade-long journey, Kickstarter has birthed numerous iconic endeavors, ranging from the groundbreaking Pebble Time smartwatch to the critically lauded game Divinity: Original Sin.


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