So, you are a budding entrepreneur with the next great idea and you are looking for money. The seat cushions have been searched, the empties taken back, and all immediate contacts have been tapped. Where to go next?
At some point you heard about crowdfunding sites, with the heavyweights being Kickstarter and Indiegogo. You’re new to this and are not sure which fighter to go with. Luckily for you we here at BanklessTimes loiter in the gyms, talk to the trainers, all to get YOU the inside edge. Here is our Ferdie Pacheco-style breakdown on the differences between Kickstarter and Indiegogo.
In da club
Groucho Marx said he would never join a club that would have him as a member.
Groucho would have had a much easier time getting into Indiegogo. They take almost everybody.
Political groups, religious causes and environmental organizations are all welcome to make their pitch. Indiegogo thrives on this fact and offers help throughout the site to assist socially beneficial causes in making their presentations.
They are becoming a go to site for “one-off” campaigns such as pleas for people who have lost everything due to fire, natural disaster or fraud. Moved by a tragedy in the news? Head to Indiegogo. There’s a place for you. As of this writing there are 28 different campaigns dedicated to the citizens of Newtown, Connecticut. In a few clicks you see a long list of who can come in. Think the Statue of Liberty.
Now take the ferry past the Statue of Liberty, hop in a cab, head down to Wall Street and try to grab a burger in the executive dining room at Goldman Sachs.
You have a better chance of pulling that off than you are of getting a social cause pitched on Kickstarter. They are exclusive to certain milieu and are not ashamed about that.
Projects in design, performing arts, media and technology are their target markets. Click on “Start your project” and read “How Kickstarter works”. They tell you creativity deserves it’s own space. Fair enough, but this (hopefully) unintentionally snooty response to all sorts of wonderfully imaginative solutions to social issues comes across as arrogant. In a few clicks here you can see a long list of who CAN’T pitch.
Location, Location, Location
You can only create a campaign on Kickstarter if you reside in the U.S. or U.K. With Indiegogo, however, you can be anywhere in the world.
Kickstarter does have a nice note asking you to be patient as they are working on it (adding countries). My teenager uses the same rationale when I tell him to clean up his room and the next morning his socks are lying in a bowl of popcorn. That note has been on the site for a while now. Better to say nothing, and underpromise/overdeliver.
It’s good to have options.
Big difference here. Kickstarter is all or nothing. If you do not reach your preset funding goal, you do not get to keep any of the money pledged, whether you earned a nickel or fell one dollar short. Now if you are the former, you have some larger issues at hand, with an additional one being you lose the nickel. Either way it’s back to the drawing board.
Indiegogo offers some flexibility. Like Kickstarter, they offer the all or nothing (“fixed funding”) plan. Unlike Kickstarter, there is a flexible option where you keep what you earned, but with a tradeoff that we will soon see.
Money money money
What does each company take for their services? Kickstarter’s fee system is much simpler to explain. They take 5%. Payments are made through Amazon, who takes an additional 2-6%, depending on whether you are paying via your bank, domestic credit card or international credit card.
Indiegogo has a tiered payment plan. Under the fixed funding plan described above, Indiegogo takes a 4% fee, plus 3% for credit card payment, for a total of 7%. If you chose their flexible funding plan, which allows you to keep whatever amount you raised and you DON’T hit your goal, Indiegogo takes 9% + 3% (credit card) for a total of 12%. If you reach the goal, the total take is the 7% as laid out above.
Another difference between Kickstarter and Indiegogo is their philosophy on dealing with projects. Kickstarter only accepts projects with defined beginnings and ends, that have clear results – widget, album, game. Ongoing business funding is not allowed. Think fun date but no relationship.
Indiegogo will meet your parents. They encourage you to come back and pitch the next stage of the project. They have also forged ongoing partnerships with KIVA, Startup America and some two dozen umbrella organizations whose members have made several Indiegogo presentations.
This is convenient if you are a fan of Women Make Movies, for example, and you wish to see if they have endorsed any projects you want to support.
Both sites encourage you to develop perks that are creative, unique and memorable. Where they differ is in valuation. Kickstarter suggests pricing the perk at the retail cost. So if you are supporting a game that costs 50 bucks, that’s what you should price the perk at.
Indiegogo encourages you to price it higher than retail to show people that they are supporting something bigger, that they are part of something beyond the game.