As testament to the growth in interest for crowdfunding, we are seeing more market segmentation with niche platforms popping up all the time. These range from charity-focused giants like Just-Giving to the more typical business focused crowdfunding sites. Some platforms offer all types of investment models while others specifically focus on one. Depending on your circumstances you might be looking at equity investments, lending models or product rewards based campaigns. There are plenty of sites out there, you just need to choose the right one for you.
Flexible or All-Or-Nothing Funding?
This is probably the most important factor you need to consider when choosing your crowdfunding platform and your overall campaign strategy as it is the difference between receiving funding or not.
All-or-nothing means if you don’t make your campaign target you don’t keep any of the money and your’ backers cards don’t get charged. In really blunt terms, your campaign has failed to achieve anything and you’ve invested time and potentially money in marketing it. This is obviously the more risky strategy to choose which only pays off if you set achievable targets and have a stellar campaign behind your ask. Naturally though, the ‘all-or-nothing’ condition can work as a powerful incentive for you and your team to work harder to reach your fundraising goal. You might also see it as a selling point – “you don’t invest if we don’t reach our target” adding an element of insurance to your backers.
If you choose a flexible funding campaign, you will receive the pledges you have accrued even if you don’t meet your goal, but it may cost you more to release the money than if you had achieved the full ask. Platforms choose to charge you a higher % fee for partial raises to encourage more active campaigns and the setting of reasonable targets. This system can be especially useful for cause related or donation based projects as it can be used to progress your cause.
Read our 5 tips for crowdfunding success for more information on setting reasonable targets.
The best crowdfunding campaigns couple transparency and community. If your rewards are being shipped out late, you may receive complaints and angry comments with a flexible funding. It is important to consider that if the production and distribution of the reward relies heavily on the crowdfunding, it might be worthwhile to go with an all-or-nothing campaign. Do not underestimate the incentive the all-or-nothing campaign can attain! As Crowdcrux puts it: “if you are £3k away from your goal and you communicated to your supporters that if x% of them raised their contribution by x amount, the project would become a reality…Your supporters would be much more likely to raise their pledge amount if it’s an all-or-nothing deal.”
So where do you start?
The following infographic draws a comparison of 6 main crowdfunding sites:
All crowdfunding websites are straightforward, offering a fundraising page including fundraising goal and deadline and asking you to describe your project in detail so that your project can be assessed by the website crew and then directed to the market. Kickstarter, Indiegogo, Crowdfunder, and Seedrs also offer a video option for the project on the page.
Competition is high on crowdfunding platforms with those seeing the most traffic raised to a ‘featured’ or more prominent position, garnering more attention and even more funds. So, it really pays to market your campaign effectively. Kickstarter and Indiegogo also have mailing lists and top scorer pages calculated by the project’s conversion rates meaning those who get to the top are most nurtured in the community!
So Which One?
It might be hard to choose from the plethora of platforms available, but getting it right is worth every penny. Cost is undoubtedly a factor in your decision but ultimately you want to make sure you choose the platform where your target investor/backer is most likely to be found to give your campaign the best chance of reaching that all important funding goal.
INC published a really nifty decision tree infographic a few years ago to help match the type of business/products to the most relevant platforms. Although there are undoubtedly more platforms available now, it’s still a great starting point for finding the right platform for you.
Still doubting if crowdfunding is for you? Have a read of our Crowdfunding Facts or Fads to learn more about this source of investment and check out our next blog with Sandy from Robotical where he tells us all about his crowdfunding experience…