The Crowdfunding Warriors: Kickstarter & Indiegogo

Crowdfunding is a great idea: as a project creator, you can get lots of people around the world to back your project and in turn, also gauge the kind of interest people have in an as yet unfinished product or service. But as a backer, do you know why you're doing it or the differences between the two crowdfunding majors? Hitesh Raj Bhagat explains some key differences and highlights some of the other platforms you should look at
Simply put, crowdfunding refers to the act of many people or organisations contributing money towards a product, service or cause. Before the internet facilitated this, large projects, inventions, ideas, events and even research was often funded by wealthy benefactors (or patrons). The internet made it easier for a lot of people to donate little amounts of money. And crowdfunding was born!

Why Crowdfunding?

As a backer, it can be very viable to get in on the crowdfunding stage -you get access to that product or service before anyone else, at better prices and mostly with some exclusive perks. In some cases, and depending on how much you put down, you can even be involved in the decision making process of that company.For a small company (or even a single person) with a great idea, limited resources and reach, crowdfunding helps to publicise, get feedback from potential users buyers, build up a fan base (if that's what you're going for) and needless to say, offers the potential to get a lot of money that can kickstart the business, support manufacturing, testing and distribution.

The controversies

Despite best efforts, there is a chance of fraud. For instance, projects that disappear, even after being successfully funded. Several cases have been reported of backers not getting their promised rewards or their money back.On the other hand, there are campaigns mired in controversy because reports by experts deem them to be impossible. For instance, Healbe GoBe is a wearable device that claims to measure the number of calories you consume, through your skin.The question is, should the platfom be responsible for the campaign content? Or should the public decide where to put their money.The jury's still out!

Kickstarter & Indiegogo: The key differences

Limited vs International

Backers for Kickstarter can be from anywhere, but to create a new project, you need to be 18 years or older and a resident of US, UK, Canada, Australia, New Zealand, the Netherlands, Denmark, Ireland, Norway or Sweden.Each country has certain other requirements. There are workarounds (Bridgestarter is one. Another is to get someone in these countries to front you) but the methods fall in a grey area. With Indiegogo, a project can be created by anyone, anywhere.

All-or-nothing vs Flexible funding

When you create a project on Kickstarter and set a goal, you'll be informed several times over to set one that's realistic and achievable.That's because if your goal isn't met in your campaign period, you get nothing! The backers, if any, will all get their money back. It'll be back to the drawing board. One could argue that apart from realistic goals, backers are also more amenable to putting money down (even on multiple projects at the same time). On the other hand, several great ideas might never see the light of day, simply because they couldn't meet their goal.With Indiegogo, you can choose flexible funding -this means you get the entire amount that's been pledged, even if you don't meet the goal.

Lenient vs Strict

Kickstarter, being the largest and most popular, has strict guidelines. There are three basic rules: you must create something to share with others.Projects should be honest and clearly presented. Last, you can't fundraise for charity, offer financial incentives or raise money for prohibited items.Any product that you plan to make must include prototypes and clear plans. Indiegogo is more open: as long as you're over 18 and stay away from the clearly mentioned prohibited campaign types and perks, you're OK.

How much does it cost

Both the majors take a cut out of what you will earn and the amount is typically held till the campaign is over.Payments can be made by PayPal or by wire transfer into a bank account but you will have to pay a commission of anywhere between 4 and 9% of the total amount you raise.

The Competition

Kickstarter & Indiegogo aren't the only ones on the scene. GoFundMe, RocketHub, Crowdrise and Quirky are some of the other names you'll hear. There are many more smaller, more specific platforms available too. GoFundme is a platform that's usually used by people to help with important moments: medical expenses, education, retirement, memorials and so on. You can typically create a GoFundMe page in under 5 minutes especially if it's just meant to be shared among friends, family & colleagues. RocketHub has a clear preference for the arts and sciences: theatre, music, short films, dance, documentaries, festivals and art shows are all likely to be found and funded here. They use the flexible funding model (the project gets all funds).Crowdrise is a platform for charitable causes or for something that's dear to you.They take only 3% of the funds generated and there's no goals or deadlines -you keep everything you get. It's also used by organisations like Unicef and Red Cross.Quirky focuses on consumer products only but they also offer a lot of handholding. If you have a great idea but no clue what to do with it, head here.You can pitch it to Quirky and they'll even help you write the pitch. Next the staff members & community (including the general user at large) votes on it. And after it goes through several other evaluation layers, they'll also help you manufacture.