When Eric Migicovsky, an engineer, wanted to develop a line of wristwatches that could display information from an iPhone — like caller ID and text messages — he went the traditional route of asking venture capitalists to finance his company.

But he couldn’t even get a foot in the door, let alone secure any money for what he called the Pebble watch.

So he turned to Kickstarter, a site where ordinary people back creative projects. Backers could pledge $99 and were promised a Pebble watch in return.

Less than two hours after the project went up on the site, Mr. Migicovsky and his partners hit their goal of $100,000.

“By that night, we were at $600,000,” said Mr. Migicovsky, who is 25 and a recent engineering graduate of the University of Waterloo. “We went...