Crowdfunding: Choosing a Platform to Empower Your Creative Endeavor
When it comes to crowdfunding and fundraising platforms, you have a myriad of choices available. But knowing which one is right for your project and goals isn't always clear.
Each platform works a little differently, emphasizes different kinds of projects, and overall presents a different experience for users and contributors alike. Some key features when considering which platform to use for launching your own project include:
the fee structure
the kind of campaign options offered
what kinds of projects the platform is primarily geared toward
how your campaign is represented to contributors.
For our purposes, we make a distinction between crowdfunding and fundraising: crowdfunding invites backers to invest in a company or project, often by preordering the product highlighted in the campaign, whereas fundraising is a charitable donation without any direct return to the donor.
Paris Gramann, founder and owner of Empower Creative Agency LLC, has worked with crowdfunding platforms for her own projects and to help her clients get their own projects launched. She has used Kickstarter and GoFundMe, and knows others who have used these platforms, as well as Indiegogo.
She has chosen Kickstarter for the majority of her client projects for several reasons.
“GoFundMe seems to be more charity-based,” Gramann said, which is fine for personal causes and general fundraising but less compelling for launching a business or project.
“Kickstarter and Indiegogo are very much like: you are getting something back from your participation. You're a backer, you're not a donor,” Gramann said.
Kickstarter also markets its platform primarily toward creative projects, which is currently the main fare for Empower Creative Agency LLC.
Of course, a multitude of other crowdfunding platforms exist beyond these three, many targeting specific kinds of campaigns and/or backers. Investopedia has an article highlighting their top six picks for crowdfunding platforms, depending on your particular project.
When Gramann was first exploring crowdfunding platforms, Kickstarter was what most people recommended to her. She used it to fund her example project, Just Be Books LLC, and has used it with clients to launch similar book and business projects over the years. She has found it to be an easy-to-use platform that her clients can utilize to successfully raise money. Her campaigns have raised up to $14,500 dollars for a single client, though most of her clients pursue a goal of $4,000 to $8,000.
Researching the Platforms
Like so many other things, choosing the right crowdfunding platform can be overwhelming. How many should you research? When should you call enough, enough? Several factors can feed into this decision, but perhaps one of the most important is how well-known, and thereby credible, your platform is.
If the bulk of your network and anticipated supporters haven't heard of the platform you're using, they may be wary of contributing to your campaign—at least through the platform. When they share your campaign with people who don't directly know you, those people may also be wary of an unknown platform. In that sense, then, name recognition can be an important factor to consider.
Fee structure (we'll discuss below) is another important consideration. But so is the kind of campaign you run. Kickstarter offers only one campaign option: an all-or-nothing run where backers pledge the specified amount and are only charged if the campaign is fully funded during its run. Indiegogo and GoFundMe offer a second campaign option that lets you keep the money you raise, even if you don't reach your full financial goal.
When entrepreneur Abhishek Singh decided to use a crowdfunding campaign for his robotics project, he chose Kickstarter because he had more familiarity and connections with the platform, and because he believes it has a little more credibility and name recognition, he said.
Kickstarter’s all-or-nothing campaigns lends a degree of credibility to a project, according to Singh. Backers may be more willing to commit to a project when they know that they'll either get the promised perks from a successful campaign or their money back.
Another consideration when choosing a platform is the ease of use for your community. For example, is it easy to find your campaign with or without a direct link? Do backers have to create an account to make a pledge? These may seem small to you but could stand as big hurdles for your network of potential backers. Gramann has seen this play out as a real hurdle when working with her clients and their networks. People don't want to make a new account on a website they aren't familiar with, especially when a personal connection makes it easy to back a campaign through private means.
Finally, before committing to any platform or campaign option, look at online forums sharing “oops” stories and things people wish they had known before campaigning (and be sure to check the date on the post—something from years back may not be relevant to your experience today). These forums and stories may give you extra insight and ideas on how to make your campaign the best it can be, regardless of which platform you choose to run it on.
“A crowdfunding platform is a place to put all your efforts and showcase what you've been doing and what you are planning to do,” Gramann said. Wherever you choose to run your campaign, it's a chance to offer proofs of concept and market to potential backers.
“And, at the end of the day, you'll have proof that X amount of people have purchased your product and that there is interest,” Gramann said.
Fees For Funding
Fee structures play an important role in a fundraising or crowdfunding endeavor.
Kickstarter and Indiegogo each charge a 5 percent platform fee and an additional transaction fee on each contribution. GoFundMe does not charge a platform fee, only a transaction fee on each donation.
Your knee-jerk reaction may be to ignore all else and go with GoFundMe for your campaign. But this is where you want to consider how your campaign is represented.
Although you may not bank on backers or donors who aren't connected to you in some way, the better you present yourself and your project as a viable endeavor, the more external attention it may garner. And the simple fact is, many people want to invest in a business or a project, not make a donation to a person or group hoping to make a product. Your choice in platform can be seen as a difference between trying to scrape together whatever money you can get versus launching a campaign with confidence in your business or project.
It boils down to this: people with an entrepreneurial bent are more likely to browse platforms such as Kickstarter or Indiegogo to look for products and projects that align with their interests and passions. And even within your own network, your contacts are likely to rate your commitment and passion higher if your campaign is run on an entrepreneurial platform that entails an ecommerce trading of goods and services, versus one that is more charitable in reputation.
There's nothing wrong with GoFundMe, it just may not be right for many entrepreneurial projects that include a real product for sale or pre-sale.
Do-it-Yourself Funding Campaigns
Today's society is all about do-it-yourself. Often marketed as cheaper than paying to have it done, DiY is appealing to those who are looking to save money or avoid extra fees. When it comes to funding a project, running a campaign yourself without having to worry about platform fees sounds really great.
Gramann has been experimenting with exactly that with some of her clients, learning how to run funding campaigns directly through the client's existing website. Although these trials are still in the early phases, Gramann said she plans to keep pursuing it as a funding option.
One big benefit of running a campaign through the client website instead of a crowdfunding platform is the ability for nonprofits to offer tax deductions and write-offs to backers and sponsors-- a feature most crowdfunding platforms don't offer, Gramann said. Additionally, the overall fees on the funding is somewhat less when a campaign is run through a client's website versus a platform, she said.
One downside, of course, is that a DiY campaign requires you to help people discover your website and campaign. You still have to do a huge marketing and PR push to get people to your website.
DiY campaigns also remove the chance that your campaign will be highlighted or promoted by your chosen platform, Singh said. Crowdfunding platforms will often highlight successful or exciting campaigns or recommend them to backers of similar projects.
If you already have a strong network and base for your project, though, a funding campaign through your own website can be a good option to get that extra percentage, Singh said.
Perhaps one of the most crucial factors in doing your own campaign is making sure that the payment options you offer on your website are secure, Gramann said. Even if it means paying money for additional cyber-security, it's worth it to ensure that your backers information is secure.
Additionally, a DiY campaign on your own website eliminates some potential backer confusion about who is running the campaign platform (“who is Kickstarter?”) and confusion or hesitation over creating yet another web account.
Empowering Your Campaign for Success
Building a successful crowdfunding campaign requires early and quality marketing, achievable but empowering funding goals, and transparency and communication during the process. Using a crowdfunding platform can help guide you through the process, but even with the tools and assistance they provide, you may sometimes want additional help.
Empower Creative Agency LLC has helped eight clients successfully run crowdfunding campaigns for a variety of endeavors, including self-published books and small business start-ups. You can book a complimentary discovery call with one of the project managers here.
