Suzanne Humphries
Odds are, you’ve heard about crowdfunding or even donated to a crowdfunded campaign on sites like Kickstarter and Indiegogo. The two sites are extremely popular crowdfunding platforms, especially for helping creative projects raise money. We investigated each site to see what makes them tick and to learn what the pros and cons are for campaign backers and project creators alike.
Crowdfunding sites are a great way to discover new technology and creative projects, and it’s fun to get involved with one and help it succeed financially. Some projects were even able to exceed their original funding goals. In 2015, Pebble Technology asked for $500,000 for its Pebble Time smartwatch and netted $20,338,986. In 2019, Critical Role had a goal of $750,000 for creating an animated series and raised $11,385,449.
It’s important to note that while many crowdfunding campaigns succeed, it’s never a guarantee. Depending on which site you choose, failure has repercussions for backers and creators alike. If you fund a campaign that’s unsuccessful, you won’t get the product or reward perks and you might lose your money. For creators, your project won’t be funded, and you’ll still be responsible for paying fees and fulfilling other terms you agreed to.
There are other potential pitfalls backers should be aware of as well. Campaigns are often overpromised or face significant delays, while others get canceled altogether or never deliver the final product even after meeting funding goals. Be aware that crowdfunding projects are always a gamble, and that it might be worth making some extra effort on your part to research and vet the creator (and their reputation) before making a pledge.
So, if you’re looking to launch your own campaign on Kickstarter or Indiegogo, or if you’re wondering what the risks are of backing a project on one of these platforms, take a look at our findings below and be informed.
Kickstarter
Kickstarter is one of the most—if not the most—popular crowdfunding websites ever. It’s aimed only at creative projects across categories like Games, Comics, Design, Photography, Theater, Art, Publishing and others. You can access the app online or on its iOS and Android apps, but it’s only available in the United States, Canada, and the UK.
Of the two platforms, Kickstarter projects have stricter rules and are limited to fixed funding. This means that backers will only be charged if a campaign is successful, and creators will only receive money if their campaign reaches its goal before its allotted deadline. Other sites, like Indiegogo, also offer a flexible funding option to creators, which means that they’ll receive any money donated to their campaign whether or not it is successful.
Kickstarter’s all-or-nothing funding offers more peace of mind to wary backers and gives them the option to cancel their pledge before a project’s deadline should they change their minds. Another perk for backers is Kickstarter’s robust reward tiers. These allow creators to offer tons of donation tiers that can reward backers no matter how much they donate.
The platform has a 5% fee in addition to payment processing charges, which range from 3% + $0.20 per transaction. There is also a 14-day waiting period for withdrawing money if a goal is met on time. Campaign goals range anywhere from one to 60 days, and Kickstarter doesn’t allow a goal to be changed once it’s gone live. However, if a goal is reached before its deadline, creators can add incentives to incentivize reaching higher milestones.
Although creators get to set their own goal and deadline, a campaign must first be approved by Kickstarter before it is allowed to go live. Once it is, though, creators can monitor its statistics and settings from the backend thanks to Kickstarter’s helpful tools, like the creator dashboard, backer reports, and Google Analytics.
Indiegogo
Indiegogo is far less niche than Kickstarter is and is better for multiple types of projects. You’ll see projects on this platform encompass creative works—like TV shows, music, and podcasts—as well as tech and innovation projects—like camera gear and smartphones. It’s a much better platform for hardware and technology than Kickstarter, and it provides excellent support for creative projects at the same time.
Unlike Kickstarter, Indiegogo offers two funding options to creators: fixed funding and flexible funding. As we mentioned above, fixed funding is an all-or-nothing method that won’t fund creators until their project’s goal is met. Any donations made to a project that doesn’t meet its goal on time will be refunded to backers within 5-7 days. Alternatively, flexible funding allows creators to keep all donated funds even if the project never reaches its goal.
So, this technically makes Indiegogo more of a financial risk for backers (but likely more appealing to campaign creators). You are charged right away when you make a donation, and depending on the project you back, you may never get your money back if it fails. If you’re only donating $5-10 this isn’t a huge drawback, but it’s something to keep in mind if you want to make a large donation on the platform.
Indiegogo charges a fee of 5% for successful campaigns, which is on top of its per-transaction 3% + $0.30 payment processing fee. If you ran your campaign on a different site first, your platform fee will be increased to 8%. And if your campaign fails to meet its goal, the fee increases to 9%. Indiegogo has a 15-day waiting period for receiving your funds, as well.
Campaigns here can run for a max of 60 days, but there is a one-time extension option you can take advantage of if needed. There is no option for shortening your campaign’s deadline, however, and unlike Kickstarter, your campaign does not need to be approved first in order for it to launch.
Indiegogo offers tons of helpful tools for its campaign creators. From your prelaunch phase all the way out to product distribution, Indiegogo’s resources can help connect you with all of the tools and resources you’ll need to get your campaign up and running. The resources will also give you a better shot at being successful if you aren’t already familiar with this type of thing. Indiegogo also has solid integration with social media platforms for easier campaign promotion.
Hopefully, this helped you learn a little more about what Kickstarter and Indiegogo offer to backers and creators, and how their funding policies work. Kickstarter is better for creative projects and has stricter rules for both campaigns and funding, while Indiegogo works for both tech and creative campaigns, and has more funding options and less strict rules overall.
