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A method of raising capital to launch commercial ventures in which small individual donations are made through an online platform. Instead of equity in the company or project, donors get benefits like being first in line to buy the product or receiving a T-shirt. Among the most successful projects on Kickstarter, the largest crowdfunding site, is the Coolest Cooler, an ice chest that features a built-in blender and stereo. In July 2014, Portland, Oregon, inventor Ryan Grepper posted the project to Kickstarter for the second time. (A 2013 iteration failed to raise the $125,000 that he requested.) This time the Coolest Cooler went viral, netting $13.2 million in funding from 62,642 people, none of whom will make a penny from the product. Around the same time, Zack Brown of Columbus, Ohio, got a potato-salad recipe funded for $55,492, offering backers such incentives as “a bite of the potato salad.”
While it’s easy to knock crowdfunding for sending heaps of cash toward questionable gag projects, it has revolutionized entrepreneurship and enabled the large-scale development of some exceptional niche ideas. Take Peak Design, which in 2011 raised $365,000 for the Capture Camera Clip, a contraption that allows a camera to be clipped onto a belt or pack strap with the same kind of quick-release found on tripods. Subsequent versions of the Clip have netted as much as $819,000, allowing the company’s founders to bring new products to market based on the desire of prospective buyers—and their willingness to throw down a few bucks to see something cool get made.