Kiva Zip vs. Kickstarter: Where should small businesses rally support?

Jan 14, 2016 · 5 min read

Written by Jonny Price, Kiva Zip Senior Director

Photo by Brandon Smith.

Small business owners often ask me why they should crowdfund 0% interest loans on Kiva Zip, rather than raising capital on Kickstarter or Indiegogo. Oftentimes, I tell them that if I were them, I would try Kickstarter first.

That sounds like a strange thing for the head of the Kiva Zip program to say. So let me try to explain…

There are two principal reasons why sometimes Kickstarter or Indiegogo can be better for small business owners:

1) “It’s a donation not a loan”

The most obvious difference between the 2 types of platforms is that at Kiva Zip we make 0% interest loans. The small business owners, entrepreneurs, artisans and farmers that we serve have to pay them back. On Indiegogo or Kickstarter there is no obligation to pay back what’s raised.

Now don’t get me wrong — project owners on Kickstarter need to be aware of the fees on those platforms and careful about the economics of the “perks” they are offering. I have heard many horror stories of project owners who end up under-estimating the costs and of their perks…But for the most part, if small business owners can raise the same amount of money on Kickstarter as on Kiva Zip it’s an advantage because with Kickstarter, they don’t have to pay it back!

2) Millionaires Row

The biggest ever project on Kickstarter raised over $20M! The biggest ever loan on Kiva Zip was only $25,000. Usually loans are capped at $5,000 or $10,000, and the average to-date has been around $5,000. As a small business owner, you can definitely raise more money on Kickstarter or Indiegogo…

But that leads me to the three big advantages of Kiva Zip for small business owners (as I see them):

Photo by Brandon Smith.

1) We are the 95%

In the 4 year history of Kiva Zip, 95% of the loans that have made it to our public website have reached their goal. As you can see from the image below, this compares very favorably to other crowdfunding platforms (data from here). We are proud of this success rate, and are committed to keeping it very high over time.

2) “We do the hard work. So you don’t have to”

One of the best parts of the Kiva Zip model — both for lenders and borrowers, is that it is a loan, not a donation. Every time a “backer” funds a project on Kickstarter or Indiegogo, they have to add new money to the system, and their credit card is charged. With Kiva Zip, because borrowers are making repayments to lenders all the time, these lenders can relend the money in their Kiva Zip account — without adding any more money into the system! Of course, lenders are free to withdraw their repayments as they come in, but the vast majority decide to relend them — to support more and more small businesses over time.

Since we launched Kiva Zip in 2011, I have made 588 loans to borrowers on the website. This represents $18,680 of loans, but I have only deposited $6,046. So my initial deposits have multiplied more than three times — this is the magic of Kiva!

From the perspective of a small business owner, this relending dynamic is very powerful. With many other crowdfunding platforms, the project owner is required to do almost all of the work in aggressively spamming their networks to ensure the campaign is successful. With Kiva Zip, some early promotion on the part of the small business owner is expected (this is actually part of our “social underwriting” approach!)…but the vast majority of the funds raised (on average around 80%) come from Kiva’s generous community of over a million lenders.

3) “Don’t give up the day job”

I have heard from several small business owners that running a Kickstarter campaign can be “a full time job.” Partly, this is due to the significant promotion of their projects that is required of small business owners. But it is also partly due to the logistical complexity that can accompany the various different levels of “perks” that backers expect.

Now I don’t want to over-state this point. In many respects, you could just see these perks as discounted or pre-order sales. And the good news is — if you have hundreds and hundreds of perks to fulfill, that means your campaign is enjoying nice success! But it is another system to track these sales on, and it is possible for small business owners to under-estimate the amount of time and effort it takes to fulfill these perks.

By contrast, once a small business owner receives their Kiva Zip loan, all they need to do is make regular monthly payments — usually $200 to $300 per month. It’s very easy, and hassle-free.

Photo by Brandon Smith.

As I mentioned at the top of this post, on the Kiva Zip team we love Kickstarter, Indiegogo, and all the other great crowdfunding platforms that exist for small business owners. We believe our 0% interest microloans are a great option, and work really well for many types of small business that might not be “glamorous” enough to raise money on other platforms — for example, you don’t see many plumbers, dry cleaners, daycare centers or farmers on Kickstarter!

Photo by David Taliaferro

We welcome more and more, better and better options that enable entrepreneurs in America to raise the capital they need to launch or grow their businesses, and chase after their dreams.

If you want to learn more about Kiva Zip loans, you can visit our website here, or email us at


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