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Kickstarter Just Did Something Tech Startups Never Do: It Paid a Dividend (bloomberg.com)
Joshua Brustein, reporting for Bloomberg: In early March, Kickstarter quietly sent shareholders a dividend. In the wider world of business, such an action would be unremarkable. More than 80 percent of the companies in the S&P 500 pay dividends, and many smaller companies do, too. But divvying up quarterly profits with shareholders is unheard of among tech startups. People who follow the venture capital industry were hard-pressed to come up with a single example of a VC-backed startup that has ever paid regular dividends. Doing so would be a rejection of the industry's basic math. VCs bet that they can find the few companies that will generate enormous payouts by going public or getting acquired; the rest fail. There's not supposed to be anything in between. "It sounds strange for a VC-backed company as it means they're taking out and distributing money versus investing it in the business," said Anand Sanwal, the chief executive officer of research firm CB Insights. Paying a dividend, which the company didn't make public, is just the latest example of Kickstarter's heterodoxy.
Kickstarter is a tech company? Really? What tech do they manufacture and sell? I was obviously under the misunderstanding that they were a crowd funding company... Guess i was wrong and should be waiting for my new KickStarter OS or phone or something...
Or has the definition of tech company changed to any company that uses 'tech'? By that standard my dads building company is a tech company... He uses a computer too!
Paying dividends also screws shareholders because dividends are taxable immediately
Kickstarter has declared itself a "public benefit corporation": https://www.kickstarter.com/bl...
According to TFA that includes to not exploit tax loopholes. Very sad that companies that "just" pay their taxes are regarded as "public benefit corporation", and are not the norm.
They use the infrastructure, they benefit from the state keeping them secure. And they expect to not pay anything for it.
According to TFA, Kickstarter is going down the "never IPO" path.
Kickstarter has been around since 2009. When is a company no longer considered a "startup"?
All the money they're paying out to investors comes from all those scams projects that earn KS a nice percentage.
Your hair look like poop, Bob! - Wanker.
They serve text and and video, and in exchange they take 5% of the money pledged to projects.
I'm sure they have their servers and a team to maintain and keep their code and design current all covered.
So what exactly do they need capital for?
Do you expect them to branch into unrelated fields, build their own OS inside a browser, explore how 3D-printed IoT VR-goggles can be leveraged for crowdfunding just because they have some spare cash?
More accurately, the US has one of the highest nominal corporate tax rates in the world, which is why US corporations work so hard to exploit (and lobby to create) the many loopholes in the system. The US corporate tax system is an excellent example of a case where it would be far better to lower the tax rate and broaden the tax base by eliminating loopholes.
There's no point in questioning authority if you aren't going to listen to the answers.
A lot of companies don't see the need to grow continuously. When the business is stable and now growing then paying dividends is the common to share profits with the shareholders. Who else do you give profits to other than the owners? Very often the person who started the business is desperate to get some of that money back (legally) to pay off bank loans used to start the business. So there's a mix of putting some profits back into the business and some profits to pay the owners.
A company that gives out dividends is a good sign, it says that the company is confident about profitability. You don't see this much in tech startups because tech startups are usually risky ventures run by risky people who are not funded by banks who want a regular loan payment but by VCs who want to strike it rich also.