Crowdfunding first began to go mainstream back in 2008. At the time there were only a few platforms available, but since then dozens have sprung up all catering to different niches, markets, and funding levels. Complicating matters further, each of the different platforms have different rules as to the types of projects they allow, fee structures, and geographical limitations.
To maximize your chances of successfully funding your technology project it’s important to make the right choice. You’ve got your idea, you’ve maybe even got a working prototype — Now what is the best crowdfunding site for you to use?
For technology projects Kickstarter should be among the top of your considerations. It is by far the most popular crowdfunding platform and therefore commands the most exposure. The flip-side of this point however, is that you are competing with many other projects for that coveted front page exposure which in some cases can be the deciding factor of whether you are successfully funded or not.
It’s not unheard of for extremely successful Kickstarter projects to raise more than $1 million by themselves.
Kickstarter has a long track record of successfully funding technology projects, with hundreds of millions of dollars provided by backers to date (and over $2B when you factor in non-tech projects). It’s not unheard of for extremely successful Kickstarter projects to raise more than $1 million by themselves. A recently completed smart watch project just raised over $20 million to give you an idea of the scale we are talking about here. There are no limitations on small projects either, with some entrepreneurs seeking to raise as little as $1,000.
One of the main limitations of Kickstarter however is that they only allow projects originating in 18 western countries, so if you happen to be based somewhere else you are out of luck. They also have an all or nothing system in place for funding — if you don’t reach your goal then no money changes hands. You retain 100% ownership of your project when funding your project through Kickstarter.
Indiegogo is a close second to Kickstarter in terms of popularity and breadth, but has many of the same features and advantages. Over $900 million worth of projects have been funded on this platform to date. Indiegogo is much less restrictive than Kickstarter both in terms of the types of projects they allow and there are no geographical restrictions meaning you can be situated anywhere in the world and have your project funded with this crowdfunding site.
Indiegogo encourages projects to get on board early and even offer features such as a Coming Soon page to build hype for your campaign before it’s ready to be launched. One of the main differences offered by this platform is the choice available with respect to funding success. Indiegogo offers a Fixed funding option that operates on an all or nothing basis (if you don’t hit your target you get nothing), but they also have what’s called a Flexible plan where you keep all money raised regardless of the amount. The difference between these two options is that Indiegogo charges a higher fee for the Flexible funding plan. Project creators retain 100% ownership of their project.
Sometimes the model of providing rewards to your backers isn’t a suitable approach, particularly where the unit cost of your technology project is very high or will take an extended period of time to produce. Crowdfunding site Fundable provides the option to not only utilize a traditional rewards system, but also to sell equity in your company through shares of stock to obtain financing. This obviously has the potential to add a great deal of complexity to your project, but Fundable recommends this approach for projects seeking between $50,000 and $10 million in capital.
Your project won’t see the same exposure to the masses of the internet as it would with Kickstarter or Indiegogo, but it will be exposed to investors — a different breed of backer than your traditional crowdfunding backer looking to score a new iPhone case at half price as a reward for supporting you. As stated above, this brings challenges, but can also provide benefits by means of support not only from Fundable but from the backers themselves. Fundable claims to have raised over $230 million in funding commitments to date. Also of note is the flat $179 fee per month for their services plus 3.5% + $0.30 payment processing.
What’s Your Opinion?
Have you crowdfunded a tech project in the past? Which platform did you use and was it successful? Please share in the comments below!