Crowdfunding is a product of digital innovation and fundraising, and is a powerful way for individuals, entrepreneurs and organisations to turn their dreams into reality. Crowdfunding campaigns account for many new businesses today – where once creative projects turned business ventures would have needed to be funded by the entrepreneurs own capital or a bank loan, crowdfunding websites now allow new business owners the chance to meet their funding goal with just a small donation from lots of people.
From creative initiatives, new product development, charitable causes and equipment needs, crowdfunding platforms like Kickstarter, Indiegogo and GoFundMe are a great way to raise much needed funds.
These three key players in the crowdfunding market each have their pros and cons, with a slightly different offering to customers. Read on for a comparison between them to help you navigate the increasingly popular crowdfunding space.
Below you’ll learn about Indiegogo campaigns vs Kickstarter campaigns and how crowdfunding campaigns with GoFundMe differ from them both. At the end of our post today, you should be able to understand the differences between these top crowdfunding platforms to help you decide which is best to launch your new business idea.
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What Are The Highest Rated Crowdfunding Platforms?
There are plenty of crowdfunding options to choose from, but three popular ones include; GoFundMe, Kickstarter and Indiegogo. Finding the right crowdfunding platform for you involves getting to know these three main contenders when it comes to the title of ‘best crowdfunding site’.
Kickstarter
Kickstarter is a popular crowdfunding platform that was launched in 2009. It supports fundraising for creative ventures in the film, music, games, tech, arts, design and food spheres. This platform has amassed an impressive $8,470,660,745 towards creative works at the time of writing, but this number grows daily and is proudly displayed on the Kickstarter website and on the crowdfunding sites FAQ section.
To date, there’s also been 99,584,653 Kickstarter backers, so you can see the popular nature of the platform here. Kickstarter attracts some of the most creative projects too, which is exciting for users who enjoy the flexible funding options.
Top 10 Kickstarter Projects
- Pebble Time – raised over £16.7 million ($20.3 m)
- Coolest Cooler – raised over £10.7 million ($13.2m)
- Frosthaven By Isaac Childres – raised over £10.6 million ($12.9m)
- Kingdom Death: Monster 1.5 – raised over £10.1 million ($12.3m)
- Travel Tripod By Peak Design – raised over £9.9 million ($12.1m)
- Critical Role: The Legend Of Vox Machina Animated Special – raised over £9.3 million ($11.3 m)
- Travel Jacket By BAUBAX – raised over £7.4 million ($9.1 m)
- Exploding Kittens card game – raised over £7.1 million ($8.7m)
- Wyrmwood Modular Gaming Table – raised over £6.4 million ($7.8 m)
Kickstarter Pros
The main benefits of Kickstarter are:
- The potential for generating lots of attention to your cause/project for free.
- Unique brands have been seen to gain good press coverage via the website. This can be helpful in exposure, even if initially fundraising target’s aren’t met.
- No equity share is offered to Kickstarter, so business owners don’t need to dilute the ownership of their company in return for investment on this platform.
- It’s easy to set up a campaign on Kickstarter and there is an easy user interface to keep track of progress and talk to all of your supporters.
Kickstarter Cons
- 5% of your earnings on Kickstarter will need to be paid to the platform in return for hosting your crowdfunding initiative.
- Supporters can change their mind or revoke donations and this is more likely to happen due to the length of time a campaign can take. Even successful projects can see funding withdrawn if the campaign reaches its funding goal.
- Organisers need to put in hard work to generate interest in their campaigns and, as with all crowdfunding sites, there is never a guarantee it will work as a funding option.
Indiegogo
Indiegogo is another online fundraising platform that first launched in 2008. This is a space that supports tech, innovation, creative works and community projects. With a global reach, campaign organisers have reach over 9 pledges! Indiegogo campaigns are incredibly popular with new business ventures because all the money you raise is kept, even if you don’t meet your funding goal.
As a place to pitch creative ambition to potential investors, Indiegogo can bridge the gap between ambition and financial success.
Top 10 Indiegogo Projects
- Mate X foldable e-bike – raised over £14.6 million ($17.7 m)
- Flow Hive honey harvester – raised over £12.3 million ($14.9 m)
- The Babymaker e-bike – raised over £11.3 million ($13.7 m)
- Ubuntu Edge smartphone – raised over £10.4 million ($12.7 m)
- Superstrata Bike – raised over £5.7 million ($7.0 m)
- Lomi composter – raised over £5.7 million ($7.0 m)
- Ze Time smartwatch – raised over £5.3 million ($6.5 m)
- Sondors e-bike – raised over £4.9 million ($6.0 m)
- Pamu Slide wireless earphones – raised over £4.1 million ($5.0 m)
- Restoration of King Chapel project – raised over £4.1 million ($5.0 m)
Indiegogo Pros
Indiegogo campaigns are worth a look as a new business owner because of the following key benefits:
- You can keep any money raised, even if you don’t meet the total goal amount
- Plenty of time to reach your goal, as campaigns can stay open for 120 days.
- The platform offers support and mentorship to help you get the most out of campaigns being run.
- A dedicated charitable platform is included called ‘generosity’ and it offers a lower fee meaning more of the money raised goes to a good cause.
Indiegogo Cons
Indiegogo doesn’t have quite as much of a following as Kickstarter, which means you might need to put more effort into promoting your campaign. There is also a higher 9% fee payable, compared to Kickstarter’s 5%, and the payment processing fees for users is also higher, meaning less of the money they donate gets to you. The platforms ensures that you send rewards or perks to your supporters – so even if you haven’t met your fundraising goal, you may need to outlay money on delivering this end of the bargain, further reducing your pot.
GoFundMe
GoFundMe is an innovative crowdfunding platform that allows both individuals and charities to raise vital funds for social causes and projects. From medical bills, emergencies, tuition fees and more, GoFundMe gives you the potential to make a difference in the lives of many. Starting in 2010, GoFundMe has raised over £10 billion from more than 120 million donations.
There’s no reason why you can’t use this funding model and platform for your business, but it would need to be a business designed to help others in order to qualify.
Top 10 GoFundMe Projects
- Navajo & Hopi Families COVID-19 Relief Fund – raised over £6.4 million ($7.8 m)
- Support Victims of Pulse Shooting – raised over £6.4 million ($7.8 m)
- Frontline Responders Fund – raised over £6.7 million ($8.2 m)
- Stoneman Douglas Victims’ Fund – raised over £8.3 million ($10.1 m)
- Las Vegas Victims’ Fund – raised over £9.7 million ($11.8 m)
- Funds for Humboldt Broncos – raised over £9.5 million ($11.5 m)
- The Official George Floyd Memorial Fund – raised over £12.1 million ($14.7 m)
- Time’s Up Legal Defense Fund – raised over £19.9 million ($24.2 m)
- We Build the Wall – raised over £20.6 million ($25.0 m)
- America’s Food Fund – raised over £37.2 million ($45.1 m)
GoFundMe Pros
GoFundMe is a well known platform, easy to set up, and user friendly for those who are new to fundraising in this way. A big win is that funds are released as soon as money comes in, this means fundraisers don’t need to wait until the campaign is over to see money in the bank. Another benefit is that there is no time limit on campaigns.
There is also no platform fee to worry about, but there is a 2.9% transaction fee when paying by credit or debit card.
GoFundMe Cons
GoFundMe does not have the same wide range of potential backers that Indiegogo or Kickstarter has, as some countries do not support the website. As with all of these platforms, there is no guarantee that your campaign will be seen, so it’s especially important to promote your cause far and wide to get the most audience engagement.
There are identity verification processes to complete before you can take funds from the platform. This can be a plus point for those looking for additional security, but can slow down the process initially which can be frustrating for project creators wanting to hit the ground running.
How Does Crowdfunding Work?
Crowdfunding works so well because it’s all about lots of people contributing small amounts. A few pounds from lots of people can really add up to huge sums, and that’s the beauty of it, and part of its success. Reward based crowdfunding platforms also increases interest because often there’s something in it for the contributors – small rewards, loyalty schemes for investing in a business early, etc.
To crowdfund, fundraisers need to set up a campaign via a crowdfunding platform. The campaign should outline the reasons for raising money, fundraising goals and compelling content, that can include video and images that really sells the cause you’re working for and explains why it’s a worthy cause.
Each platform will have a user guide demonstrating how to get the most out of the platform, but they’re essentially not dissimilar from regular fundraising pages that you might set up to capture sponsorship for a sporting challenge or similar campaigns for personal causes.
Once you have your page/campaign set up, it’s time to share it with your friends, family and other networks. The more eyes you can get on the page, the better chance you have of resonating with people that can help you to meet your fundraising goals.
Crowdfunding can be an effective tool for getting financial support for all kinds of projects, but organisers should be realistic about the amount they can raise and the timelines involved. It’s unlikely to be an overnight success, unless it goes viral, but it’s still worth trying because many successful businesses have started out in this way.
Why Might You Need Crowdfunding?
Fundraising can be used for almost anything. If you need to raise money and can sell the reason to others, it’s worth a shot!
From raising funds to go travelling, to cover the cost of private medical bills, film projects, music albums, buying equipment for a local sports club, or supporting the cost of legal bills – almost anything can be fundraised for via a crowdfunding platform.
New startup businesses may even use the platforms as a way to seek investment into their new ventures. If a traditional loan isn’t viable or favourable to you, crowdfunding could bridge the gap and encourage others to invest in your business early and show support for your business idea. This will only serve to increase your confidence and give your business the boost it needs to get started when just starting out.
The Benefits Of Crowdfunding
Aside from the obvious benefit of raising much needed funds, crowdfunding also has the following benefits:
- With the right marketing and sharing, crowdfunding can raise the profile of businesses, projects and fundraising initiatives. With wider exposure comes the higher chance of investment to the cause – angel investors and venture capitalists could find you and invest larger amounts. It can also help to attract other people to the cause who may not be able to donate, but can help by donating their time or expertise to the initiative.
- Crowdfunding has the ability to reach huge numbers of people via social media. Far easier than trying to get a sponsorship form in front of your next door neighbour!
- Crowdfunding can create results and access to funds far quicker than traditional capital investment routes.
- Crowdfunding can be integrated into email campaigns and e-commerce platforms meaning its using existing processes and reducing costs compared to other fundraising initiatives.
Types Of Crowdfunding
Crowdfunding can be split into four main categories; donations, rewards, equity and debt.
Donation Crowdfunding
When charities or public services need a cash injection, crowdfunding can be a great option. Donors to these causes will know they’re donating to a good cause and have made a positive contribution.
In this example, donors are generally driven by a desire to support initiatives that align with their values and interests. Great examples include environmental conservation projects, medical research, community development initiatives and local sports clubs.
Reward Crowdfunding
Reward crowdfunding occurs when donors are incentivised to donate to the campaign in exchange for the opportunity to win something or access products/services in return for their cash. This type of funding route works well for entrepreneurs, creators and businesses looking to launch new projects and services.
By offering early access to products / limited edition merchandise or personalised experiences, supporters with a genuine enthusiasm for the campaign are likely to want to be involved.
An example of this is the Pebble Time smartwatch on Kickstarter which raised over $20,000,000 by offering a pre-order of the product at a discounted price.
Equity Crowdfunding
In Equity crowdfunding, cash is donated in return for ownership rights in a company. This can be a good opportunity for startups and small businesses to raise capital by offering shares or ownership rights so that donors become shareholders.
This avenue bypasses traditional business funding sources and gives businesses the chance to engage directly with a huge audience of potential investors who buy into their ideas and plans.
Debt Crowdfunding
Peer-to-peer lending through crowdfunding sites is a way to by-pass traditional borrowing routes and connect those in need of capital directly with individual investors.
Under the debt crowdfunding route, interest rates are typically more competitive than regular high street lenders and often come with less constraints that can be beneficial for both parties.
Each of these four types of crowdfunding provides innovative ways for project and business owners to cultivate resources and tap into new markets. Choose the right option for your organisation to have the best chance of success.
Kickstarter vs Indiegogo vs GoFundMe: Final Thoughts
Crowdfunding is an excellent way to raise funds for any project or cause and has helped many individuals, charities and entrepreneurs reach their goals and succeed in their dream.
It is a great way to raise capital through unconventional means, outside of expensive loans or sourcing investors. It allows individuals and organisations alike to solicit donations from people around the world and access resources that may not have been available previously.
When comparing Kickstarter vs Indiegogo vs GoFundMe, all three websites have their pros and cons. Choosing the right one depends on your personal goals and preferences but there are also plenty of other options available. Consider the fees, features and services they offer before making a decision that best fits your project’s needs. With the help of crowdfunding, you can think bigger, engage more supporters, and ultimately bring your visions to life.
