Last year, Eric Migicovsky was scrounging for funding to mass-produce a smart watch. The 26-year-old Canadian and his small company had already built a watch that synced with the BlackBerry, but he was looking to produce a more advanced version to connect with iPhone and Android smartphones. Called Pebble, the smart watch would be able to display call, text and e-mail notifications, and allow the users to control music on their phones. Migicovsky, who relocated to Palo Alto, Calif., after graduating from the University of Waterloo, tried and failed to drum up funding from venture capitalists. Then he turned to Kickstarter, the crowd-funding website.

On Kickstarter, anyone can donate money to entrepreneurs, artists and other creative types seeking to raise funds for their projects. In exchange, backers could receive a finished product (as Migicovsky promised backers of Pebble) or a token of gratitude, such as T-shirts or tote bags. Migicovsky set a goal to raise US$100,000, which he figured would be enough to produce a thousand smart watches, and launched his fundraising drive on April 11, 2012. Within two hours, Migicovsky had already met his goal. By the next day, he hit $1 million. “Right from the day that we launched, it kind of exploded,” Migicovsky recalls. When the fundraising period closed a month later, nearly 69,000 people had donated a combined total of $10,266,845. (There are no funding limits on Kickstarter, which takes a percentage of the cash raised. Massively oversubscribed projects also make for good publicity, and many Kickstarter users anticipate that possibility by offering different rewards for various levels of funding.)

Pebble instantly became the highest-profile Kickstarter project since the website launched in 2009. Along with other crowd-funding websites, such as Indiegogo, Kickstarter has been a boon for musicians, filmmakers and