If you are considering crowdfunding, you would certainly be comparing Kickstarter Vs Indiegogo, two of the biggest crowdfunding platforms worldwide.
(As of Dec 8) Over $3.4bn has been committed on Kickstarter projects spread across 135,353 projects, with a success rate of 36%. Indiegogo has brought 800,000 ideas to life, raising more than $1bn. About 19,000 campaigns launch on the platform every month.
Over 11mn contributions have been made on Indiegogo versus 42.5mn pledges on Kickstarter.
World Bank predicts that crowdfunding investments will be a $96 billion a year market in developing countries alone by 2025. Read the complete report here.
Startups and large corporates alike continue to leverage crowdfunding to find early adopters and validators for new products. Sony even launched its own crowdfunding site to promote innovative projects by its employees to Japanese consumers.
This is a testimony to how Crowdfunding has become a key investment, customer acquisition and marketing strategy for companies.
Kickstarter VS Indiegogo - let’s dive in!
Starting a project
Kickstarter is curated with regards to registrations.
A strict review is done by the Kickstarter team to ensure that project submissions comply with its policies - no personal project or raising for charity or without a working prototype.
Indiegogo is more open and allows anyone to start a project on its platform. The platform also supports a more variety of projects and has a dedicated program - called Generosity - for non-profit and social projects.
Innovators from almost any country can start a project on Indiegogo whereas Kickstarter supports about 22 countries.
Working Prototype vs. An Idea
You must have a working prototype to be able to raise on Kickstarter vs. Indiegogo that accepts projects even at idea stage.
This is an important differentiation.
Indiegogo provides an innovator the opportunity to test and validate an idea before putting any considerable resources in it.
Funding
Both Kickstarter and Indiegogo charge 5% as platform fees. In terms of the funds raised, Kickstarter offers innovators an All-or-Nothing model, which means that you must hit your funding goal to collect the funds.
With Indiegogo, you can either go with the Fixed (all-or-nothing) model or Flexible model that lets you keep the contributions regardless of the target achieved.
InDemand lets you continue the fundraise even after your crowdfunding campaign is over. Projects on Kickstarter must be closed within the set timelines.
Choose wisely.
Manufacturing may need a minimum amount of capital. Therefore, it can be tricky if you miss your fundraising goal but accept the funds raised - be sure to have raised enough to deliver what you promise to your backers. Alternatively, you may use these funds to produce the initial prototypes (and relaunch the campaign).
Typically, backers may find more comfort in a fixed model. However, it also depends a lot on your product development stage and requirements.
Reach and Success Rate
The general perception is that Kickstarter has a better reach as compared to Indiegogo. With a 13.9mn-strong backers community vs 9mn at Indiegogo, that may well be true.
Kickstarter’s success rate stands at 36% vs Indiegogo’s 17% (in 2014, as per Shopify).
It is vital for any innovator to leverage social media and content marketing strategies to bring traffic to their projects. Relying on the crowdfunding platforms alone, without leveraging your own network and efforts, will not be enough to successfully fundraise.
Should you choose Kickstarter or Indiegogo?
Both the platforms offer distinct advantages.
1. Make a choice based on the stage of your project (idea stage vs prototype) and the flexibility you need w.r.t fundraising model.
2. The review process to some extent, lends Kickstarter a more curated and quality controlled image in the eyes of the Press as well as backers, thus benefitting the innovators raising on the platform. Given that those fundraising on Kickstarter at least have a working prototype may contribute to a higher success rate.
3. Kickstarter seems to have better outreach. Regardless, you will still need to put a lot of effort in marketing your project to evince interest from your target audience. You will need to bring traffic to your projects and this is true for both Kickstarter and Indiegogo.
4. Equity Crowdfunding by Indiegogo is a way for innovators and backers to partner for the long term. The Marketplace offering by Indiegogo is another great offering that helps startups sell their products to a large community. As a startup that's ready to launch your products, this could be a great starting point.
5. If you are a hardware startup, the most difficult part of product development is manufacturing. The Kickstarter Hardware Studio helps you overcome this hurdle by offering resources and assistance with manufacturing. Indiegogo offers connects with several experts in various domains including prototyping and fulfillment, via their Directory.
Programs That You Can Leverage
1. Indiegogo Marketplace
If you have a product that’s ready to ship, Indiegogo’s Marketplace offering may be for you. As a startup, you will have a customized page for your product which will also be promoted via Indiegogo’s marketing channels. You can use this offering even if you didn’t crowdfund your project. This can be a great place to start selling your products to a large, active community.
2. Equity Crowdfunding with Indiegogo
Indiegogo partnered with MicroVentures to launch First Democracy VC, an equity crowdfunding platform. This is very different from crowdfunding in that backers now hold equity in the company. The founders and investors (backers) engage in a long term relationship and are bound by the offer terms and other funding regulations.
The founders set the minimum investment amount and therefore have more control over the fundraise. Backers get the opportunity to be investors in the company that they back, although there are more risks involved.
3. Kickstarter Hardware Studio
We know that building a hardware product is hard and there can be several reasons for a hardware startup to fail. Kickstarter partnered with Avnet and Dragon Innovation to launch the Hardware Studio to help hardware startups succeed
The objective of the program is to educate entrepreneurs on manufacturing via tutorials, webinars and other online resources. It also offers selected entrepreneurs more resources, manufacturing and engineering connects and manufacturing and marketing expertise.
This is a great initiative for an entrepreneur planning a hardware product and doesn’t know how to get started with manufacturing. It also helps backers successfully receive the products that they back.
4. Indiegogo Enterprise Connect
Indiegogo’s program for large corporates helps them crowdfund new ideas. While these companies don’t necessarily need the funds, they use the platform’s backer community to get their ideas tested.
A few examples of such projects are Honeywell’s All-in-One Smart Home Security System that raised $96,000 from 293 backers; GE’s Paragon Induction Cooktop and Opal Nugget Ice Maker that raised $3 million and featured among Indiegogo’s top 10 campaigns; Sleep earbuds from Bose that recently raised almost $450,000 from over 2900 backers.
As a startup, this information may not be directly useful to you. However, it reinforces that you should leverage Crowdfunding for more than just the funds - to find early adopters, promote your product without spending a lot on marketing and create an engaged community for the longer term.
These are great pro-entrepreneur initiatives from Indiegogo and Kickstarter that speak volumes of their long term vision of bringing new ideas to life.
Trying to bring a new product to market?
Outdesign is a product design & development company helping startups & entrepreneurs around the world bring new products to market.
Reach out now for any questions or get a quote: info@outdesign.co
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