So you decided to run a crowdfunding campaign?
You will soon learn that choosing this kind of financing for your development team will bring you many experiences that traditional financing systems lacks.
What platform should you choose for crowdfunding?
Let’s find out!
Which platform to choose?
Since crowdfunding became popular the number of available options for project creators grew substantially. There are many platforms, each offering some unique opportunities and challenges.
There are two basic types of crowdfunding platforms to choose.
The first type is a specialized one, like Figstarter which helps to finance only computer games.
The second one is an all purpose one like Kickstarter, which can help in financing nearly everything.
The choice between the two vary depending on the specifics of your product. The best idea is to compare the performances of projects similar to your own on both platforms and analyze which one fared better in your category.
We will now survey some of the most popular all-purpose crowdfunding sites.
Kickstarter grants you access to the biggest userbase any crowdfunding site can offer. There are thousands people browsing the site everyday looking for projects to back. If you won’t meet your campaign goals the fund will be returned to the users. The platform takes 5% of your funds when the campaign ends.
A very popular platform. You can choose a campaign type in which you get to keep the money even if you don’t meet your goals. You have to pay a fee of 5% of your collected money.
This platform is smaller than two giants from above, but it does not have deadlines and you will keep every donation you receive even if you miss your target goal. The site takes 5 % of money you get by it.
All of the above sites take 3% of money from pledges made using credit cards
You must also decide if you prefer a reward based crowdfunding system, so each of your backers will get your product and maybe a T-Shirt or an equity based system, where backers can become shareholders and get a part of your profits. There are also lending system-based crowdfunding sites where backers get an interest on the money they lend to project creators.
How much money can I expect to get?
There are many variables influencing the amount of money you can collect through crowdfunding. Let’s assume you will have a very good pitch and you will run the whole campaign well. We have already talked about the platforms, so let’s also ignore that aspect.
What other factors will decide the amount of money you will get?
Having a loyal fanbase is something not many businesses have, but the ones that have it can get very far in the world of crowdfunding. Fans will not only help to fund you by backing the project early and giving you a smooth start, but may also spread the world and be engaged during the whole campaign. Having them means you can get quite a good sum of money.
Don’t run your crowdfunding campaign when there is a bigger campaign in the same niche. Most eyes will be fixed on your competition. Many potential backers will have an empty wallet after supporting the bigger company. In other circumstances, they would notice and back you, but because of bad timing you will spend the whole campaign in your competitor’s shadow.
How important is the backers’ enthusiasm for a new project?
If you want to succeed at crowdfunding you will need to offer a product that people want very much and can’t get it through traditional means. It is all well and true, but sometimes people just want something just enough, and sometimes they crave it with every fiber of their being.
Some projects may not have many backers but what they do have is enthusiasm from those backers. Each of them is enthusiastic and pledge on the high level, raising quite a hefty sum.
What is a typical amount of money project of your type brings to the company of your size?
Go browse the crowdfunding platform of your choice. Look at similar projects to yours.
What sum of money have they managed to gather?
Don’t think you will get the same amount the renowned company has made on their project because you plan on doing a product which is just like theirs. Even if your product is very similar and you see some mistakes in that company, which you think you can avoid, you will still gather less than them.
It is far better to compare yourself with the competitors in your league. Is your company just starting? Then look at projects pitched by companies who are just like that. It is very important to not look at record breaking campaigns but to look for typical campaigns.
Your expectation should be based on those typical Campaigns performance, but you should make your pitch based on those who were wildly successful. This way you will have best from both worlds.
I hope this article will make it easier for you to decide what platform to choose. In the next instalment of our series you will learn how to make a successful pitch for your project.
If you have missed our previous entry in the series, in which we explain the basics of crowdfunding, then read more about the benefits of crowdfunding.