Kickstarter helps raise money for creative venturesTrendspotting — By Melanie McIntyre on February 21, 2012 at 8:00 am
Funding a business venture, especially a creative one, can be challenging. Kickstarter is working to change that.
Every week, the online crowdfunding platform allows thousands of people to pledge millions of dollars to creative projects −big and small− that resonate with them. In exchange for that money, project creators offer products and experiences unique to their venture.
It seems people can more easily buy into an organized online fundraising effort rather than handing money directly to you, says Nick Dekker, a writer and blogger who used Kickstarter to fund the first printing of his book, Breakfast With Nick: Columbus. He set out to raise $3,000 but ended up raising nearly double that: $5,487.
“I think Kickstarter allows you to really involve the community in the process of fundraising,” he says. “They push you to articulate your ideas succinctly and use a multimedia approach −video, social media, email campaigns, etc.− to reach potential backers. By hosting the fundraising in a public forum, your backers can follow the campaign’s progress, which allows everyone to buy into the excitement of reaching your goal.”
Alex Bandar, director of the Columbus Idea Foundry, expressed a similar sentiment, saying Kickstarter helps project creators “leverage the passion of your community along with their interest to fund you.”
Bandar used Kickstarter to fund the Columbus Idea Foundry’s expansion. He asked for $5,500, but raised much more: $9,000.
“Kickstarter is advantageous over a loan, as you don’t in fact pay back interest,” he says. “It’s also advantageous over selling shares, as you retain full ownership of the business.”
Adam Benner decided to give Kickstarter a try after seeing the founders of Pipeworks Brewing Co. in Chicago use it successfully to secure funding. At the time of our interview, Benner was just a week into his Kickstarter campaign, and the brewery he’s looking to establish in Columbus −Oval Brewing Co.− was already 52 percent funded. His fundraising goal is $30,000.
“Though a lot of our initial funding was from family and friends, we are beginning to see people who were not necessarily familiar with Oval Brewing Co. before the Kickstarter get involved,” he says, adding that it now has backers from Southern California all the way to Florida.
“The main disadvantage I can see is that you might lose potential backers if they don’t trust the internet and online security,” Dekker says. “There’s also the danger of setting your funding goal too high. Kickstarter employs an all-or-nothing method, so if you set the bar too high, you might fall short and not receive any funding.”
However, Benner sees that funding approach as a plus.
“I believe the fact that it’s all or nothing makes people who may be on the fence about pledging a little more comfortable pitching in to your project,” he says.
If there is a downside to using the platform, he says it’s the money Kickstarter and Amazon take from the funds that are raised: 5 percent and 3 to 5 percent (for processing payments), respectively.
In addition to providing thoughtful rewards for plegdes (Dekker’s backers received a copy of his book and had their names listed in its “Special Thanks” section, for example), both Dekker and Bandar contend that it’s critical to manage backers’ expectations, and that the easiest way to do that is communicating with them throughout the fundraising process.
It’s important to provide a clear mission to your backers, to provide information to them as your Kickstarter is evolving, and to communicate with them afterward about when they can expect their rewards, Bandar says.
Dekker posted three or four updates about his book’s printing progress and when it would be available.
“By keeping everyone in the loop, I could make my backers feel secure with having pledged money to me,” he says.
All three project creators interviewed for this story say they would all use Kickstarter again, with Dekker and Benner saying its appeal largely lies in its ability to reach a wide audience.
“I landed a couple small writing gigs, including an article for PC World magazine, because someone found my project by searching Kickstarter,” Dekker says. “Even though my project had a specific Columbus focus, it still connected with a broader audience. I ended up having to ship books across the country and even to Belgium and Australia!”
Kickstarter also makes it simple to share a project by providing easy links to Facebook and Twitter, as well as shortened URLs and embed code, he says.
That’s not to say that Kickstarter does all the work for you.
“Because Kickstarter is an online platform, anyone using it needs to understand that you’re only going to make the project work if you can communicate it to others, ” Dekker says.
It’s also important to remember that once fundraising goals are met, project creators have backers to tend to.
“Don’t underestimate the cost and planning necessary to produce and mail out your backer awards!” Bandar says.