Working with innovative businesses has led us to working on numerous crowdfunding campaigns in the tech industry. Crowdfunding creates a unique opportunity for businesses to actively involve their community in their creative projects. Crowdfunding gives anyone the power to start something, and that’s what we love about it.
Every crowdfunding platform is unique, and which one you chose for your project could be a determining factor in your success. Finding the one that is right for you is a game of mix and match. There are important criteria that will lead you down the right path if you ask the right questions when choosing your crowdfunding method. Here are the important aspects of your campaign you’ll need to consider before committing. Only then, can you informatively narrow down your needs and how they will best be met.
INDUSTRY AND REACH
When selecting a crowdfunding platform you can choose between broad platform that funds many different kinds of projects, or a niche specific platform. Kickstarter and Indiegogo are broad based platforms typically targeting creative industries. This is where we do most of our video work in crowdfunding including projects we’ve worked on for iHeart, Tzoa, Sole, and the currently active campaign Spark Blocks. If you are creating a innovative physical product in tech, design, music, dance, or gaming and have a team focusing on a single project with a completion and delivery date looking to exchange goods for those offering their support, these are still our two favourite platforms. If your a non-profit, charity, or social cause, it would make sense to look into platforms like YouCaring, Give Forward, Rally.org, Go Fund Me, Just Giving, or Indiegogo Life. For musicians interested in trying something more targeted, there’s also Pledge Music.
Every crowdfunding video we’ve worked on has followed a rewards based system. What you may not have realized however is there are several additional structures available. This is a really interesting topic for a much longer article, but for now, know that you also have the following options available to you.
1. Equity: Investors can receive stake in your company
2. Donations: Contributions are tax deductible
3. Lending: Investors are paid back over time
4. Monthly Patrons: Supports ongoing creators
KEEP IT ALL VS. ALL OR NOTHING
This is a characteristic of all money for goods, rewards based funding platforms. Before you choose, you must ask yourself, “What happens if your project doesn’t reach its goal?” Do you have an alternate funding strategy? Are you willing to fund your project by yourself if crowdfunding is unsuccessful?
The second question you must ask yourself is, “How much time do you have to put into your campaign to secure its success?” Be realistic with yourself. Running a crowdfunding campaign is a full time job. The platform is important but it’s not the most important thing. If you are committed to doing the research and the following through on your ideas, your odds of success are much higher.
If you don’t have the resources to commit, all or nothing can be risky business. If you’re ready to dive in, all or nothing sites, are designed to create a sense of urgency with your backers and many of them have higher traffic.
All crowdfunding platforms come with three different kinds of fees: platform fees, payment processing fees, and per transaction fees. These can add up to anywhere from 3% to 18% percent. If you are fundraising for a good cause, there are sites available to you that will take a smaller percentage, such as Indiegogo Life which waves the platform fee entirely and only charges 3% for payment processing, and .30 per transaction.
To tie back into the previous question, fees are also correlated to your pay out structure. Traditionally, the “Keep it All” Model will generally take a higher percentage of your total fundraised amount. However, this may be changing. As of July 15th, 2015, the crowdfunding platform most well known for its flexible funding options, Indiegogo, just announced a major pricing structure change very similar to that of Kickstarter. The difference? You can chose between Keep It All or All or Nothing – and the fees stay the same.
Different platforms see more traffic in different countries. Where is your audience based and what crowdfunding platform are they most likely to engage with? Is your target audience local, or world wide? Does your desired platform serve your region?
LAYOUT AND USABILITY
A site’s layout can be a make or break indicator for many potential funders. If they can’t find the information they need, or make donations easily, they will loose interest quickly. Pick a platform that’s easy to use and that you feel good about sharing with your audience.
We hope this helps you navigate the world of crowdfunding and that the ideas you are working on are successful, wherever your launch may be!