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Editor's Note: In this guest post, which appears exclusively on Crowdsourcing.org, CrowdsUnite CEO and founder Alex Feldman explains why Kickstarter might not be the best fit for your crowdfunding campaign.
During the past few months, I’ve met a lot of people who want to use crowdfunding to launch their project or business. But when I ask them which platform they are going to use, most respond, “There are other sites besides Kickstarter?!”
Kickstarter is the world’s most popular crowdfunding website, and it’s a great way of raising money, but it is not a one-size-fits-all funding solution. Here are some scenarios where Kickstarter might not be the right choice for you:
You’re Creating a Service Business: Kickstarter is a reward-based crowdfunding platform, so if you’re raising funds on Kickstarter, you need something to give back to your funders; pre-sale items work well. If you’re forming a service company, then reward-based funding may not be a good fit for you.
You Need More than $10,000: The average successful Kickstarter campaign receives $7,825 in pledges, according to research from Wharton management professor Ethan Mollick. While this is three times greater than the industry average for reward-based platforms, it’s still limited. If your goal is significantly higher than $10,000, you might want to reconsider the reward route. Yes, there have been a few dozen projects to surpass the million-dollar mark, but those are only a handful of cases out of thousands that are hosted every week. Debt- and equity-based platforms, which offer higher averages for successful campaigns, might be a better match for your company.
Your Funding Goal is Not Set in Stone: Kickstarter is an “all-or-nothing” crowdfunding site — so if you don’t reach your goal, you get nothing. That’s fine if you have to reach that amount to proceed with your project, but what if you’re going forward with the project regardless of the campaign? Many other crowdfunding platforms, including Indiegogo, allow for more flexible funding campaigns, where crowdfunders can collect they money they raise even if they don’t reach their funding goal. Be advised, however, that in these cases, the platform usually takes a higher percentage of overall funds raised.
You Want Fewer Restrictions: Kickstarter has a number of additional limitations outlined on its website. For instance, you are not allowed to offer rewards in bulk (over 10 items), post renderings or simulations of a product, or crowdfund a medical device. For platforms with fewer restrictions, take a look at Indiegogo or RocketHub.
You Want a Specialized Solution: Let’s say you’re fine with the aforementioned restrictions and that you could pass the Kickstarter approval process (which rejects about 25 percent of projects). Kickstarter might still not be your best option. For each of Kickstarter’s most popular categories — film and video, design, and music — there are other specialized crowdfunding sites that offer additional services to campaign creators. For film and video projects, Seed&Spark doesn’t only help fund production costs, but also acts as a film distribution platform. For design projects, sites like Crowd Supply let people preorder items even after your campaign closes. For musicians, sites like GigFunder, PledgeMusic, and SellaBand allow bands to build a community with their fans, not just raise money for a one-time goal.
There are niche sites out there for every category and region you can imagine.
Some universities have even started building their own crowdfunding portals to connect alumni and others with student entrepreneurs and philanthropists. If you belong to a school like the University of Virginia or the University of Vermont, consider their platforms before launching your campaign — the backing of an academic institution could help provide your project with additional resources and validity.
You can even bypass all crowdfunding websites and raise money directly on your own site by using solutions like WePay or Selfstarter. That way, you can save the four to nine percent in fees that most crowdfunding platforms charge. That’s what the creators of Lockitron did after Kickstarter rejected their product: they raised over $2.2 million by accepting Lockitron pre-orders on their own website.
Kickstarter is a great crowdfunding website. With over one million monthly visitors, it has a great community and its brand is synonymous with creativity. If you have a creative project to fund, then you should definitely look into Kickstarter, but be aware of its limitations. Do your research and consider other platforms that might be a better fit for you.