Can a donations based business model be viable for a new startup?

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These examples are geared towards software, it’s the only field I can think of where you could possibly do that in, as the barriers and capital costs to market entry are so low.

This has worked in the past, regardless, I do not recommend it.

Generally where I’ve seen this work is with single-developer enterprises, and then typically only with games. The game I’m thinking of is Dwarf Fortress.

You could point to open source software with donate links, but that’s not really a business model.

Off the top of my head, the main difficulty is that the cost to acquire a customer can’t be adequately measured. Businesses require steady, solid sources of income. You put in X man-hours, you get $Y revenue.

If you can build a successful, very visibly-public product or service, then you could possibly fund ongoing maintenance through donations. But really, if you can do this, why not just add a marketing and sales plan, you’ll make a ton more money.

Minecraft is an example of something that could have been funded by donations. Would you really try to tell Notch to forgo hundreds of millions of dollars?

It’s generally foolish to sell yourself short. Especially in the context of running a successful business.

If you just want to support yourself through donations, try Patreon.