Choosing a Crowdfunding Platform
Indiegogo vs Kickstarter
Indiegogo and Kickstarter are the most popular online crowdfunding platforms, and although at first glance they may look similar there are fundamental differences. Both platforms offer a huge community of users and high credibility; and they require that those initiating a project choose a funding goal as well as a deadline and a media pitch for the fundraising campaign. Additionally, those who start projects on the two platforms have a 100 percent ownership over their projects.
But beyond these similarities there are important differences that include: 1) the fundraising model (an all or nothing approach with Kickstarter versus a flexible model with Indiegogo), 2) the types of projects that can be funded, 3) the processing fees and 4) perks or rewards to supporters. The table below compares and captures in more detail the differences between Indiegogo and Kickstarter based on those four categories.
Although some people may turn away from using Kickstarter because of its “all or nothing” crowdfunding model, the company defends that approach by stressing that it is motivating and will make people work hard at spreading the message and seeking support for their projects. They add that to date 44 percent of projects on the Kickstarter platform have been funded. It also makes more sense to go for an “all or nothing” crowdfunding option if your project cannot be implemented unless it meets the set goal. If that’s not the case, and if you maybe seeking funds both online and offline to meet your goal or you don’t need to meet your goal to launch your project, then a flexible crowdfunding option maybe more suitable for you.
Finally the insistence on a physical reward/perk maybe a problem in countries where the postal service is poor, non-existent or unreasonably expensive; as is the case in many developing countries. Hence going with Indiegogo’s more flexible model that allows you to skip on offering rewards to your backers might be an advantage in this case. Another option is to choose perks that are memorable but non-physical, such as an invitation to an event or a skype chat with the project creator.
Table: comparison between Indiegogo and Kickstarter
|1. A flexible model of fundraising. You can choose a fixed funding approach where you only received the funds collected if you reach your fundraising goal; or a flexible funding approach where you collect all funds raised even if you do not reach your goal. Note that processing fees are higher for the flexible fundraising choice (see below under “fees” for more details).||1. An all or nothing fundraising model. You have to meet your indicated goal to receive the donations raised. If you don’t meet your goal all funds are returned to their donors, and you are charged nothing. Kickstarter says that 44 % of all projects in their platform get funded.|
|3. Fees: If you meet your funding goal indiegogo charges 4% of all funds collected regardless of whether you chose a fixed funding or flexible funding campaign. Nonprofits based in the US get a discount of 3%. If you don’t meet your funding goal; with a flexible funding campaign, 9% of all funds raised is collected by indiegogo. With a fixed funding campaign you get nothing and all donations are returned to funders. Add to this amount credit card processing fees that can range from 3 to 5%. For more details check out the “fees and pricing” page.||3. Fees: Kickstarter collects a 5% fee applied to all funds collected, in addition to 3 to 5% credit card processing fee.|
|4. Perks or rewards: Indiegogo gives its users the option of opting out of offering a perk, but they also encourage users of their platform to create perks and say that, “campaigns offering perks raise 143% more money than those that do not. Perks help you attract a larger audience, make people feel more valued for their contributions, and help you spread the word about your campaign.” They define perks as, “nonmonetary incentives that campaigners offer in exchange for your contribution”.||4. Perks or rewards: Kickstarter requires that all its users offer rewards as incentives to donors/backers. They emphasize that, “Every project’s primary rewards should be things made by the project itself”; and advise that prices are kept at a reasonable level. Rewards can also be in the form of “creative experiences”, such as invitations to the set during filming a movie or a public acknowledgement or even writing a personal thank you note or post card.|