Kickstarter is one of the most well-known funding platforms in the world and often a first choice for budding entrepreneurs who are searching for vital startup funding. It’s been used by everyone from businesses and organisations to musicians, writers, artists and inventors, all of whom hope to create a buzz and raise revenue for their projects.
What is it?
Kickstarter is an online platform that boasts a worldwide community of some 10 million users. The site launched 8 years ago, in 2009, and since then has successfully funded over 100,000 projects, raising nearly $3 billion. Despite its success, Kickstarter is still a relatively small company with just over a hundred employees based in America. As with all crowdfunding sites you can sign up easily and post your pitch including videos and images.
Sign up to Kickstarter and you can post your project and set a funding target. What works well is having a good pitch along with a video outlining what you have to offer. Viewers can then pledge amounts from a few pounds to several thousand to support you project.
In return you offer incentives or rewards that the backer will get once you have successfully completed the project. For example, you may be making a film and need funding. In return you’ll send a DVD of the finished film to your backers.
Most people have graded rewards depending on the level of investment by an individual. As you begin your project you can provide updates to your backers on how it’s all going.
As with other funding platforms, you have a set time to complete your fundraising. If you don’t meet your target, no one gets charged and you don’t receive any money.
The pros and cons of Kickstarter
- If you are having trouble funding your startup, then Kickstarter is one of the staple choices that many entrepreneurs go for. It’s easy to set up and simple to use but you need to have the right strategy in place
- Kickstarter does monitor and vet funding entries so you may have to tweak or change your pitch according to their standards. This will almost definitely include putting a video into your pitch. Stumbling blocks are generally not putting in a realistic target and not offering good enough rewards to backers. This is no bad thing as the staff at Kickstarter know what works and what doesn’t
- The longest a campaign can run on Kickstarter is 90 days which can be a little restrictive if you are trying to raise a large amount of money
- Unlike some other sites, Kickstarter doesn’t take a share of your product. Once they’ve had their 5% cut from a successful campaign, the money is all yours
- The interface is pretty easy to use and even if you have just a modicum of IT skills you should be able to upload to the site. Communication through social media and the like is also made simple and you get some useful stats into the bargain
- The big problem that many budding entrepreneurs have is that this is an all or nothing proposition. If you don’t meet your target then you get no money. That means you have to set a realistic target that you have a good chance of achieving
While it is a useful way to raise money, you have to put in the hard yards if you are going to succeed.
Cost of Kickstarter
If your project is unsuccessful you pay nothing. If you reach your target then Kickstarter will take a 5% cut, in line with most other crowdfunding outfits. Payment processing fees can also have an impact and may be as much as 3% for some services.
Tips for getting the best out of Kickstarter
- Work out your pitch to perfection. That includes investing some time and money in producing a good quality video that is going to wow viewers
- Make sure you put up good rewards for investing in your project and also ensure you deliver them if you are successful
- You have to take advantage of all the resources you can, particularly social media if you want to succeed. That means developing a following and spending time, effort and probably some money, in getting your idea out there
Success rates for projects is lower than with some other funding sites. Only around 35% of posts reach their set target for one reason or another. The majority of successful projects are looking to raise under $10,000 and at any one time there are over 3,000 in play on the site which you have to compete with. 14% of projects never get a single pledge.
If you have the right strategy and a way of reaching out to enough potential investors, this is a good way to raise money for your new venture. You have to be realistic, however, and work hard to reach your target.