Kickstarter: Benefits & Drawbacks
There are quite a few major platforms for crowdfunding your product idea. We recommend that you choose between Indiegogo and Kickstarter. The lion’s share of funding is made on these two sites, you’ll find all the features you need between them.
Kickstarter and Indiegogo are better platforms relative to the others for several reasons: lower failure rates, more active communities, greater familiarity, and more straightforward payment options. For the sake of simplicity, we recommend that you use these rewards-based platforms rather than jump into equity-based platforms. While equity-based platforms will be available as regulations ease, it remains a fairly complex process.
So stick with Kickstarter and Indiegogo. We spend the next two chapters diving deep into their features and their respective merits. In addition we compare all the platforms together in a table so that you can see the differences in features and fees very easily.
The Guide to Kickstarter
Kickstarter is known as the “Apple” of crowdfunding: There are more rigorous rules for what can and can’t be posted on to Kickstarter, and therefore the projects that are posted are regarded as of a slightly higher quality.
Successful projects funded on Kickstarter include: the Pebble Watch, which raised $10 million; Veronica Mars, $5.7 million; and Oculus Rift, which raised $2.4 million, and was acquired later by Facebook for $2 billion.
Kickstarter or Indiegogo?
Kickstarter positions itself mostly as a community for creative projects. It has explicitly disavowed the claim to be a marketplace with a blog post called: “Kickstarter Is Not a Store.” In spite of its many successfully funded products, Kickstarter still positions itself as a platform for the creative arts first. Perry Chen, one of Kickstarter’s co-founders, has declared: “Kickstarter is about creative projects and art, not investing or shopping.”
That’s quite different from the attitude of Indiegogo. Indiegogo prides itself as a neutral platform giving anybody’s ideas a market test, fully embracing the efforts of entrepreneurs. Kickstarter takes projects the extra step to ensure they're set up for success on the platform. Some entrepreneurs like the perceived openess of Indiegogo while others value the project quality focus of Kickstarter.
Indiegogo embraces testing out products. Its founder, Danae Ringelmann is proud to say that: “We allow entrepreneurs to prove themselves in a merit-based way.” In fact, Indiegogo allows you to swap in new perks and change required giving levels and is more flexible than Kickstarter in all sorts of ways. In general, Indiegogo has a platform more friendly towards early business ideas, and may be better suited for launching a product. The trade-off is that Kickstarter attracts a higher number of pledges due to its project quality focus. It's also important to take into consideration the category you're launching in as well as the audience you're talking to. Kickstarter is strong in technology, games and the design community while Indiegogo excels in its flexible funding options and campaign guidelines.
Still, you won’t go wrong on either platform. Both offer fundamental features and act as ways to drive traffic to new business' sites. In fact, Kickstarter drives 40-75% of new traffic to its campaign's websites. And consider also that Noah Dentzel, who has run campaigns on both Kickstarter and Indiegogo says that both platforms have worked very well for him.
So don’t sweat too much about having to choose between either. Their core functions, fees, and pages aren’t significantly different. Still, do your research and figure out which has the better community for your product, and consider whether you have a better chance of being featured as a “Projects We Love” on Kickstarter, or get picked up by Indiegogo’s “Gogofactor.”
Funding Products on Kickstarter
Certain areas of Kickstarter are especially robust for product funding. Bill Trammel of Catan Boards did his homework before he launched, and discovered that the gaming community is very active on Kickstarter. At that time, 11 out of the 20 most funded projects on Kickstarter were related to gaming. Recently; however, technology is taking over in terms of money raised.
Kickstarter has 15 project categories: Art, Comics, Crafts, Dance, Design, Fashion, Film & Video, Food, Games, Journalism, Music, Photography, Publishing, Technology, and Theater.
Chances are, your product is going to land in Design, which has had $154 million pledged to 2739 projects, or Technology, which has had $137 million pledged to 1389 projects, all figures cited at the time of this writing. These will surely increase and possibly shift in the future.
Kickstarter keeps 5% of total funds raised. A further 3% + $0.20/pledge is paid to Stripe, Kickstarter's payment processing partner. Depending your country and the size of the pledge, these rates can vary slightly.
You do not get charged if your campaign does not reach its funding goal.
Here are some numbers from Kickstarter’s Stats page (at the time of this writing).
- About 115,000 projects have been successfully funded on Kickstarter.
- Approximately 35% of all projects are funded.
- Of all unsuccessful projects, 85%, were not able to surpass 20% of total funding requested
The Kickstarter stats provided offer deeper insight to category success rates based on campaign goals. Use these numbers to inform your efforts. Do projects in your category tend to succeed when raising this much money? Should you focus on repositioning your product within another category for greater possibility for success?
Can your Project be Posted on Kickstarter?
Kickstarter is by far the most restrictive platform on projects. Consult this handy guide to check whether your project is likely to get approved.
1. Your project must have a clear end, which means that it must result in a product, experience, event or shop. It can’t help launch an online store selling all sorts of products. And you can’t raise money for causes. For that, you have to go to Generosity, Fundrazr, or GoFundMe.
2. It must fit into one of fifteen categories: Art, Comics, Crafts, Dance, Design, Fashion, Film, Food, Games, Journalism, Music, Photography, Publishing, Technology, or Theater. You won’t be able to use Kickstarter as tuition towards business school or specifically to fund the creation of a company; you have to specify how the funds will go to creating a project.
3. Project creation is available to individuals in US, UK, Canada, Australia, New Zealand, the Netherlands, Denmark, Ireland, Norway, Sweden, Germany, France, Spain, Italy, Austria, Belgium, Switzerland, Luxembourg, Hong Kong, and Singapore.
4. Here are a few no-no’s: no equity financing; no offering rewards not produced by the creator; no funding for websites or apps focused on ecommerce, business, or social networking; no offering alcohol or genetically-modified organisms as a reward; no nutritional supplements. There are other prohibitions, too, though we consider it unlikely that you’ll run into them. Take a look at the Kickstarter guidelines for the full list.
5. Show what work has been done, prototypes and parts, as well as any technical drawings and CAD models. Do not use photorealistic renderings of what you hope the product will look like - these are prohibited.
6. Your product must include a production plan and an estimated timeline. You must also show the progress so far, using for example photos, videos, and sketches.
The Anatomy of a Kickstarter page
Here are the things you need to figure out on Kickstarter. Remember, there’s no such thing as overplanning these things. Bill Trammel of Catan Boards spent a whole month full-time building his campaign page. You should give especially careful thought to your rewards, to how you’ll fulfill, and how much to ask for.
See our advice later for how to optimize each.
1. Make a video
A video is technically optional, but if you want your campaign to succeed, you should definitely have one and it should be good.
2. Create rewards
People pledge not only to support an idea, but also to receive rewards. You can create different tiers and offer different goods at each tier.
3. Set a goal
Kickstarter is an all-or-nothing model, which means that either you receive at least all the funding you request for, or you receive nothing at all. You get nothing even if you’re 95% funded. Figure out how much to price based on the amount required to make an initial capital investment, on fulfilment for your rewards, and for establishing future cash flow.
4. Make a timeline
Your campaign can last from 1 to 60 days.
A small picture that directs people to your campaign page.
6. Product image and description
Take photos of your prototype in its best light, and write a compelling description of why it’s important.
7. Risks and challenges
You must outline potential obstacles, from production delays to permits, that may derail your project.
8. About you
You can upload a profile picture, connect your Facebook account, and write a biography.
Updates allow you to thank your backers, keep posting on current progress, and explain delays when they occur.
10. Prototype gallery
Use Kickstarter's prototype gallery to showcase more detailed updates about the project, from how you designed your product to why you designed it that way.
Bonus: Comparison of 5 Different Crowdfunding Platforms
In addition to the deep dive in Kickstarter and Indiegogo, we've built a handy table comparing the features of five different crowdfunding platforms side by side.