Perhaps the first question to answer before getting into the details of how to choose the right platform for your campaign is ‘Why crowdfunding’? Short answer, because statistics prove it is both a viable way to raise money and test your product for the market.
In recent years, crowdfunding has become the go-to fundraising strategy to help everyday entrepreneurs raise the money they need to get their projects and business ideas off the ground. As the name suggests, this strategy involves making an appeal to the ‘crowd’ by way of sharing and promoting your project using one of the various crowdfunding platforms available online.
So it is pretty obvious that crowdfunding is one of the major sources of startup funding for entrepreneurs and allows anyone anywhere to raise capital outside the traditional sources. However, we shouldn’t lose sight of the fact that about half of all crowdfunding campaigns are not successful or the targets are not reached.
But crowdfunding is not all about the money. In recent years, many non-profits, startups and even Fortune 500 companies have begun to see other benefits of crowdfunding: product validation, creating brand visibility and building an email list before launch as well as building brand advocates are some of them. Why is this important to know?
Because you are more likely to choose the right platform for your crowdfunding campaign if you know exactly what you want to achieve through the campaign. And the platform you choose can play a huge role in your success and strategy.
If you are new to crowdfunding, it can be hard to make this decision, so here are a few tips to guide you, starting with 4 things to consider when choosing your crowdfunding platform.
1. What is the nature of your project?
The nature of your project should play a big role on which platform will work best for you. Is your project a non-profit, a creative project, an app? Take some time to determine where projects like yours are most successfully crowdfunded.
For example, Kickstarter is really popular among artists, designers, inventors and other creatives. If you have a general business idea, you may want to consider looking at Indiegogo as your best alternative. For non-profits or personal causes, GoFundMe is one of the most popular choices.
2. What are the platform fees and what happens if you do not meet your target?
Most crowdfunding platforms charge a percentage fee for each transaction, and some will charge more if you do not hit your goal amount. It’s important to know this before settling on the platform. Also very relevant is what happens if you are not able to meet your target. Do you lose the funds raised or do you keep it? Kickstarter, for example, charges successful projects 5 percent of the amount raised, plus between 3 percent to 5 percent to Amazon Payments, which processes contributions.
However, Kickstarter follows an all-or-nothing policy which means if you don’t meet your target, you don’t get any money and the backers are not charged. Nobody wants to think of their campaign not reaching its target but it’s better to be prepared. This will also help you decide how ambitious your target should be.
3. What types of payment methods are available?
The more flexibility of payment you can offer your backers, the better your chances of raising funds. So before choosing your platform, check the payment options available and consider how that will apply to your target audience.
Remember that some platforms are not able to support payment from certain countries and that will be worth checking. Some of the popular payment options are Credit cards, Paypal, Google pay. Indiegogo, for example, currently accepts payments from direct credit/debit cards, Apple Pay, and Google Pay. Another option you can consider is creating the avenue for your backers to make offline payments. This is usually something you will have to make arrangements for outside the platform.
4. What kind of support does the platform offer?
You will need some support during your campaign -whether it’s in the form of resources, a knowledge center or direct contact with a support person. Though you may find several general articles on crowdfunding online, you may need specific support for using the platform and having quick access to support will be essential. So read loads of reviews of each platform you are interested in and check the support available to campaigners before you start your campaign.
Being in the business of democratizing access to entrepreneurship support, we believe entrepreneurs everywhere should be able to raise funds to bring their projects to life – and crowdfunding can be a great solution. Just take time to do your due diligence before choosing the best platform to launch your campaign and remember that no crowdfunding campaign ever succeeded by being run on autopilot.
Be ready to put in the work to make your campaign a success and take advantage of all the benefits crowdfunding can offer your project!