Why is crowdfunding unpopular outside of the U.S.?
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You won’t see a major Kickstarter from outside North America or Europe any time soon – including Israel.

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The coolest cooler officially became the second most funded Kickstarter campaign on Wednesday, raising more than the 2012 Ouya video game console’s nearly $8.6 million. With spiffy electronics like a rechargeable blender, waterproof bluetooth speaker, and USB charger, Ryan Grepper’s very cool cooler (set for release in January 2015) has far surpassed its $50,000 goal, garnering more than $8.8 million with 12 days left in the campaign. 

At this pace, it may likely beat Pebble’s $10.266 million Kickstarter record. However, there’s one certainty you can be sure of: you won’t see a Kickstarter of this scale from outside North America or Europe any time soon – including Israel. 

Why Israelis aren’t going ga-ga for crowdfunding

Even though Tel Aviv has the second best startup ecosystem around the world and has the most startups per capita of any city globally, just 0.001% of the Israeli population has pledged money on Kickstarter, while .01% of the American population has pledged on Kickstarter: that’s 10 times more than the Israeli per capita on the platform. Of the seven most successful Israeli Kickstarter campaigns (with only one passing the $1 million mark), one was registered in Israel and the rest were registered in the United States.  

Israeli startups historically have been more focused on technological innovation than consumer products becaused Israel is far from its traditional target markets in the U.S. and Europe, both physically and linguistically. So it would make sense that Israelis wouldn’t gravitate towards crowdfunding as a funding strategy since its success relies so much on American marketing tactics: out of the 224 countries that have participated on Kickstarter, around 66% of the pledges have come from the U.S. 

Plus, Israel’s population of 8 million is way too tiny to support Kickstarter campaigns sufficiently, which largely depend on thousands of $25 donations. But what about large BRIC countries such as India (whose population largely speaks English) and China?

No culture of philanthropy and too little trust in India and China

Kick Start Your Journey posits that the United States’ culture of philanthropy largely drives crowdfunding campaigns, which helps explain why the phenomenon is not just about the size of the country, but the culture as well. For example, Indians are not as accustomed to donating both because they do not have as much dispensary income and trust new ventures less, while Chinese investors tend to prefer mature products or Chinese versions of successful concepts rather than untested ideas. 

Realistically, crowdfunding will not blossom in Israel because it’s simply too small: instead, Israelis will keep employing their U.S.-based marketing staff to produce Kickstarter campaigns. And for large BRIC markets, both trust in the platform and dispensary middle class incomes will need to grow before we’ll see crowdfunding take hold in emerging markets. 

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Laura Rosbrow-Telem

About Laura Rosbrow-Telem


I am a social entrepreneurship enthusiast: This is what happens when a former social worker becomes a tech journalist. I mostly write about startups, technology, peace and justice issues, cultural topics, and personal stuff. Before Geektime, I was an editor at the Jerusalem Post and Mic.

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