What do Bret Easton Ellis, Ricki Lake, and Whoopi Goldberg all have in common? Believe it or not, they have all successfully launched projects through Kickstarter—the world’s largest crowdfunding site. They’re not alone, either; since the site first debuted in 2009, more than 5 million users have made donations, funding over 50,000 individual ventures that otherwise would never have seen the light of day. It is fair to say that Kickstarter has been a modern phenomenon, helping to fund a wide variety of different projects, from video games to fashion labels and even multi-million dollar feature films. It truly is an entrepreneur’s playground.
But while Kickstarter is number one for a reason, being top dog doesn’t necessary mean it’s the right choice for you. Competition is rich in the crowdfunding sector, with literally hundreds and hundreds of sites out there all vying for your attention, so you are hardly stuck for choice when it comes to alternatives.
If you are keen to get involved with crowdfunding, either by donating and supporting projects, or by seeking financial backing for you own brilliant idea, it’s really worth your while to explore many avenues before making any commitments. Indeed, you may already have used Kickstarter and found it difficult to raise funds, and are wondering which other sites have a good track record of raising money. The problem is, there are just so many to choose from. Which ones should you consider?
Leaving aside the specialist sites that concentrate on one particular area or industry, here at Maximum PC we have done all the hard work for you, whittling down the hundreds of Kickstarter alternatives to three main contenders: Indiegogo, Rockethub, and Fundable. Read on, to find out how they differ from Kickstarter and why they might be worthy of your attention.
A word of caution: Unfortunately, there are no guarantees with crowdfunding that you will be able to safeguard your ideas or any investments you make. Any money you decide to commit to a project is done at your own risk.
Pioneering crowdfunding site boasts openness
Arguably Kickstarter’s biggest and longest running rival, Indiegogo started life in 2007 when Danae Ringelmann met fellow business partners Eric Schell and Slava Rubin while attending the Haas School of Business at the University of California. They shared a common goal of creating a fund-raising model that would allow people a means of raising revenue for their business ideas. They officially launched Project Keiyaku—an early version of Indiegogo that, to begin with, focused purely on funding movies—at the Sundance Film Festival in 2008.
Since those early days, the site has changed its name to Indiegogo and diversified the projects it hosts to cover just about any venture an entrepreneur can think of. In the ensuing five years, the site has emerged as one of the perennial crowdfunding ventures, having launched over 50,000 campaigns. Indiegogo removed the middleman and helped pioneer the way for the “modern” crowdfunding solution, influencing numerous other sites, including Kickstarter itself.
Indiegogo doesn’t just limit itself to business ventures; it covers pretty much everything—you will find just as many private causes, such as appeals to raise money for charity or helping the needy, as you will more commercially minded projects. The site prides itself in its openness; you can take part no matter what country you come from—as opposed to Kickstarter’s limits on residents of the United States, United Kingdom, Canada, Australia, and New Zealand—and over a third of Indiegogo’s business is conducted globally, making it a truly international venture.
Open to any industry and any idea (as long as it’s legal), Indiegogo isn’t fussy when it comes to what you can raise money for—unlike many of its rivals that impose restrictions on what type of campaigns you can run, Indiegogo is free of rules, no matter how serious or trivial your idea. You can even raise money for personal needs if so desired, although your needs would probably have to be pretty compelling to get people to part with their money.
To get started at Indiegogo, you have to set up an account and a funding page. You then decide on a list of perks to offer users who donate, depending upon their level of investment. It’s then up to you to promote your Indiegogo page through social networking platforms in order to gain publicity.
You keep all of the money a campaign generates until its target revenue is achieved, and there is no limit to the amount you can raise. Once your campaign has reached its goal, a charge of 4 percent is levied to Indiegogo. Should your campaign not reach its goal, then you have the choice of keeping all of the money raised thus far, but paying a 9 percent fee to Indiegogo because you didn’t reach your stated goal, or simply refunding all of the money back to your donors.
More favorable rates and a greater diversity of projects allowed on the site are the two main reasons you might opt for Indiegogo. Unlike Kickstarter, Indiegogo distributes your funds immediately when contributions are taken through a donor’s PayPal account. On the flipside, payments made by credit card are held by Indiegogo until the end of the campaign. Indiegogo’s 4 percent charge for funds (when the target is reached) also bests Kickstarter, which charges a 5 percent commission on successful campaigns. As mentioned above, you can even keep the money if your project doesn’t reach its goal, for a nominal 9 percent charge. Kickstarter users don’t have this option—if a project doesn’t reach its goal, they will receive no money at all.
Setting up a new project on Indiegogo is both quick and easy—the step-by-step guide takes you through everything you need to do in order to get your project up and running.
As mentioned earlier, Indiegogo tends to support any project, no matter what it is. If your project doesn’t meet Kickstarter’s criteria—such as not allowing you to raise money for causes—then chances are Indiegogo will accept it.
Size really does matter when it comes to running a successful publicity campaign, and Indiegogo scores high in this area, too. Half the battle when running a promotion is finding an audience with which you can engage. Being the second-largest crowdfunding site on the Internet, Indiegogo ensures your project will be part of a vibrant community that will share your project with their friends and grow a following organically.
With tens of thousands of successful campaigns under its belt, it is not surprising to find that Indiegogo boasts a number of famous projects. Let’s Build a Goddamn Tesla Museum was launched to establish a science museum in Long Island, New York, and sparked a surge of public interest, with the campaign taking home $1.7 million in just six days.
An Indiegogo project in action: Genesis 3D Movie is going great guns, and thankfully has nothing to do with the Phil Collins band of the same name.
Canary: the First Smart Home Security Device for Everyone broke the Indiegogo record for most money raised for a project, at $1.9 million. Its original goal of a modest 100K was met within a few hours of its launch in July this year, and it went on to gather contributions from nearly 8,000 users across the world.
Indiegogo’s most famous project, however, was Let’s Give Karen – the Bus Monitor – H Klein a Vacation! After a number of disturbing videos were posted online depicting a hapless bus monitor being ruthlessly bullied by students, a campaign was set up to give Karen a well-deserved vacation. The original goal was to raise $5,000, yet all in all $703,833 was raised by people sickened by what they saw. The victim of the videos said she planned on using $100,000 of the money toward setting up an anti-bullying foundation.
Your project may be the best thing since sliced pizza, but no matter how innovative it is, unless you attract the attention of others, you will struggle to find the financial backing needed to get it off the ground. After all, your project is just one of hundreds on a given site. So, how do you make your project stand out from the crowd and get the attention it deserves? Here are our five top tips for crowdfunding glory.
Best Practices Before you rush headfirst into a campaign, take your time and study what others have done first. Look at what projects have been successful, and find out how they set about attracting publicity and backing. Follow their lead and use their success as an inspiration.
Be Prepared to Change Devise a flexible business plan that will allow you to adapt should your original idea need tweaking. If things are not going to plan, you will need to be prepared to make changes so you can appeal to your target audience. By repositioning your product if needed, you could achieve greater results and more backing.
Plan Ahead Even before you have reached your goal, make sure you have all eventualities covered should you get asked any tricky questions about your project’s launch and long-term future.
Embrace Social Media Twitter and Facebook are powerful tools when it comes to promoting your ideas. Not only can they help spread the word, but they can also be a useful forum for gathering feedback from your fans and followers.
Be Ready to Go Prepare for your project’s completion. You should devise a marketing plan that you can start using straight away, along with lining up any suppliers you may need to use once your project is launched. This way you will hopefully be able to eliminate long delays after you reach your goal.
Click the next page to read about Rockethub.
Links to a cable TV network give it an edge
Founded by Brian Meece, Jed Cohen, and Vladimir Vukicevic, (with a forth owner, Alon Hillel-Tuch, joining a year later), Rockethub officially launched back at the start of 2010 as a means of raising money for creative projects. The owners were all from creative fields themselves, and the site came about partly because of the frustration they experienced in trying to find backing for their own individual interests. The idea was to establish a free market where artists could easily be put in touch with the financial backing they needed.
In layman’s terms, this very loose remit means that Rockethub could cover any industry or idea in order to encourage as many entrepreneurs as possible. That said, however, there tends to be a much stronger focus on science and technology projects compared to many of Rockethub’s crowdfunding rivals. So don’t be surprised to find an in-depth planned study of microbes sitting alongside more commercial projects, such as a fashion label or music album, as you explore the site.
Earlier this year, Rockethub announced a partnership agreement with the A&E television network. Together they created www.projectstartup.com, a multiplatform website produced in conjunction with the cable television channel that features handpicked projects from Rockethub entrepreneurs.
Rockethub’s Success School teaches all you need to know about mastering the fine art of crowdfunding, so your project has a better chance of reaching its goal.
For newcomers to crowdfunding, Rockethub has an introductory site called the Crowdfunding Success School, which takes you through each and every aspect of running a successful campaign. A crowdfunding 101, it shows you how to network your idea, decide upon goals, and best practices to help attract and manage the expectations of the people who fund you. It makes for compelling reading, even if you eventually decide to use another site.
Rockethub encourages its users to spread the word about projects and complete set tasks, such as voting on others’ projects to increase exposure, and it rewards contributors with badges for their efforts. The more badges you gain, the greater your status as a power user, who others will turn to for advice.
As with other crowdfunding websites, after setting up a campaign, you decide on how much you are looking to raise and the time frame for your goal. You then decide what rewards you will give to donors in return for their backing. You will be charged a 4 percent fee (along with a 4 percent credit card handling fee) for the total money you raise should your campaign prove to be a success. Rockethub also allows you to keep the money raised even if you don’t meet your goal, at a rate of 8 percent (plus a 4 percent processing charge).
Rockethub is a fast-growing site, and is developing at a rapid rate. Like Indiegogo, Rockethub is much more open about what you can cover in terms of projects, so if you find you cannot get featured in Kickstarter, Rockethub may be the answer. In particular, you should consider using Rockethub if you have a scientific or technical project, as there seems to be a greater emphasis on those industries than on other sites.
Unlike Kickstarter, Rockethub allows you to keep all the funding you raise even if you do not make your set financial goal. Granted, if you choose to do this you still have a charge to pay (8 percent), but if you feel your project is still viable even without all of the money you originally wanted, this could be the better option for you.
Rockethub also has a partnership with the A&E television channel. If your idea is innovative enough and you decide to apply for it, your project may be handpicked to feature on A&E’s special project startup website, thus earning even more exposure and the potential for donations. In addition to that, A&E will also offer funding and specialist coaching for your project, which means success is almost guaranteed.
The Project Startup website is run in conjunction with A&E Networks to showcase the very best projects on Rockethub.
The gaming and web culture video series Extra Credits is Rockethub’s most successful venture yet. The comedic web series discusses video games, with an emphasis on game design and using them as teaching tools. The idea proved to be incredibly popular, with the original goal of $15,000 ending up at a staggering $103,814 raised. The creators have vowed to use a portion of the money raised to help other like-minded businesses grow.
AFIA: Save the World… One Dress at a Time, is one of the most noble projects to find funding, having raised $4,790, which is going to help people in Ghana. The project funds dressmakers in the African country, helping poor yet talented seamstresses acquire a fair wage and a larger market for their dresses, allowing them to be sold in the United States and other places.
A special mention must also go to Chomp! Chomp! Chomp!, a clever idea that combines an illustrated children’s book with a tie-in app. The highly educational app includes a system that encourages young children to read—a page of text is shown before they are rewarded with a picture. The goal was met, with the project having raised a grand total of over $15,000.
Click the next page to read about Fundable.
The first site to offer the option of equity backing
The most recent crowdfunding option here, Fundable was launched just last May, but has already experienced incredible growth and success during that short period of time. The site began life as a donation-only platform, but a few months later, taking advantage of President Obama’s 2012’s JOBS (Jumpstart Our Business Startups) Act, founders Wil Schroter and Eric Corl started allowing users the option to purchase equity in projects featured on the site. The JOBS Act legitimized equity crowdfunding and allowed budding entrepreneurs the ability to publicize that they were looking for backing. As a result, Fundable became one of the first crowdfunding sites to take full advantage of the act, and now runs as a dual-funding model. Fundable offers either donations or project equity, largely depending upon how much money a project’s goal has been set to—for larger projects looking to raise more than $50,000, Fundable recommends the equity option.
Fundable is a serious crowdfunding company, and as such it carefully vets its users. Only accredited investors—people with a net worth of over $1 million or an income of $200,000 in the past two years—are able to take part in offering equity funding to a project. Although in theory anyone can start a project, they will still have to apply in order to be approved for the site by the powers-that-be. No charitable projects are allowed, nor are any forms of gambling or money services, among other prohibited campaigns. Many more crowdfunding sites surely will follow Fundable’s lead and venture into equity crowdfunding, but by being the first to do so, Fundable has gained a priceless foothold in the market.
As mentioned above, there are two models you can choose from for raising money on Fundable—either from donations or through equity backing for your business. For both methods, you will need to apply to be featured on the site. Once approved, you then create a profile page that covers your project overview, your goals, and rewards for investment. Additionally, along with their public profile, equity-based projects will also need to create a private page that contains your business terms and related documents. Along with being featured on the site itself, you will also promote your page through the normal social media channels in order to gain interest.
In terms of costs, entrepreneurs are charged a $99 fee each month that a campaign is running. The flipside of this is, should a project reach its goals, then no final fees are applied. You will only be able to collect your money once your pre-determined goal has been reached. This monthly charge may put a lot of people off, especially if you have the slightest doubt about raising enough capital to get your company started, but this just reinforces Fundable’s place in the market for serious businesses only.
Fundable has been dubbed the Kickstarter for the corporate community. The equity fund-raising option is the obvious difference from Kickstarter, allowing you to sell shares in your business as opposed to offering rewards for donations. You can decide whether to go this route or stick with the more traditional crowdfunding method of raising money, although you could argue that equity is more suited to business startups. Donations are fine for creative projects, but do not offer the long-term investment possibilities that equity backing does. As more and more crowdfunding sites start to take advantage of the JOBS Act, expect to see equity fund-raising grow in popularity.
Looking for equity backing? Fundable is the place to go, being one of the first websites to take advantage of the JOBS Act.
There are a number of projects of note that have used Fundable to establish financial backing. The Fleksy app closed at $900,000, and this revenue was part of a $3 million investment raised by parent company Syntellia to develop and market a software keyboard that helps to improve typing accuracy. The company used the $900K to release the app onto iOS and plans to release versions for Android and Windows 8 in the near future.
Celebrity Webchefs does what it says on the box and uses well-known celebrities to explain their culinary secrets in a series of easy-to-follow videos. Famous faces that have lent their names and cooking expertise to the videos include Gretchen Rossi from The Real Housewives of Orange County and Alan Thicke, the star of Growing Pains. It’s a bold and innovative idea that, thanks in part to the star power behind it, has gained a lot of media attention. The venture was funded for $435,000 in total.
On the surface, crowdfunding seems like a great idea. But while the success stories get trumpeted for all to hear, there are even more tales of woe. It can be a risky business, not to mention a potentially humiliating one. Be it stolen ideas, poor planning, or a rushed campaign, here are the main pitfalls you should be wary of.
Exposing your Business Plan: They say that imitation is the sincerest form of flattery, but in the crowdfunding world, a good idea is there for your competitors to see and steal for themselves. There is nothing to stop them from taking your idea and presenting a similar one themselves, so be aware that when you launch your campaign that it may only be a matter of time before it is emulated. Depending on your idea, it may well be worth taking your time to complete an IP (intellectual property) process.
Tax Problems: The money you raise from crowdfunding isn't necessarily all yours to spend. Just as with any other business, you will need to declare your earnings to the appropriate authorities, and depending on what country you live in, this money may well be taxable. A qualified accountant will be able to help you here, although remember they will want payment for their services, too.
Keeping Control: Should you choose an equity-based crowdfunding model, be careful to keep a controlling stake in the company you are raising money for, whether it’s a new or existing business. Your stakeholders have a vested interest in your project; just make sure they do not wrestle the whole thing away from you.
Be Realistic: While the temptation is always there to exaggerate to potential investors just how great your idea is, try not to build up hopes too much. You don’t want your backers to feel lied to or disillusioned; at the very worst, you could end up in court as they try to claim their money back.