Over the past couple of months crowdfunding has become one of the hottest topics in social media and technology. And thanks to the JOBS Act by the Obama administration crowdfunding will only grow in the coming months and years, offering a great alternative to classic ways of raising money for small to medium sized projects like friends & family rounds, local fundraisers or seed and angel rounds.
In this post I would like to present the three most popular crowdfunding platforms today, but there are of course a lot more out there with new ones popping up every week in different verticals. The ones I am going to cover today are Kickstarter, Indiegogo and gofundme. Each of the three has a different approach to crowdfunding and hence attracts different kinds of donors which consequently means that the performance of different types of projects might vary quite a bit depending on the platform you choose.
Though being smallest of the top three crowdfunding platforms gofundme still raises more than $2 million for projects each month. According to a recent article on TechCrunch gofundme sees a steady 20% growth month over month since October of last year.
The main focus of gofundme is major life events and the donors usually come from the closer circle of the person who set up the campaign. 11% of the campaigns on gofundme are around school tuition and gofundme makes it pretty easy to share your campaign with your friends and family on Facebook, Twitter or via email.
Because of its focus on personal networks I would use gofundme for smaller projects and with a focus on real life experiences rather than products. Teachers could use it to collect money for school or classroom projects for example or, as the article on TechCrunch suggests, students can raise money for a trip overseas, to pay tuition fees or equipment for their sports team.
gofundme takes a 5% fee for each donation. Donors can securely pay via debit or credit card. Withdrawing funds works via bank transfer or PayPal.
Together with gofundme, Indiegogo is one of the first crowdfunding platforms that launched in 2008. Recently Indiegogo became widely known through fundraisers for Karen Klein, the bullied bus monitor who raised more than $667,000 and the fundraiser of Matthew Inman aka The Oatmeal which raised more than $220,000 in response to a lawsuit.
Indiegogo is becoming very popular amongst Internet activists and pundits, drawing attention to campaigns via the Internet forum reddit where both of the campaigns mentioned above drew most of their funding from, it seems. One of Indiegogo’s advantages is that you can setup a campaign and keep the money even if you don’t succeed in raising the minimum goal set at the beginning. Campaigns are also international and not limited to the US.
Though Indiegogo also features technology related campaigns it seems that projects around creative arts and causes seem to work very well on the platform. And though each campaign starts with your personal circle there is a huge audience on the platform that is willing to donate to projects they like.
Therefore, I would use Indiegogo for medium sized to really big projects like setting up a play, filming a documentary or building a school in Africa.
If your campaign reaches its goal, Indiegogo takes a fee of 4%. If you don’t reach the goal in a so called flexible funding campaign the fee is 9%. There is also an extra 3% credit card processing fee and $25 if you withdraw the money to a bank account outside the US.
Last but not least there is Kickstarter. Although the platform opened after Indiegogo and gofundme, Kickstarter has become the most popular platform in the tech space. We have seen very successful campaigns around products like the Pebble Smart Watch that raised more than $10 million and also revivals of popular computer games.
I would describe Kickstarter more as a pre-order platform where entrepreneurs pitch their ideas for a product and interested buyers basically pay for the yet-to-be-build product in advance.
Therefore, Kickstarter is best for teacherpreneurs who want to create a real product or application for the classroom, e.g. something people will receive when the funding is successful. And this is also something to keep in mind here. On Kickstarter campaigns must reach their goal in order to receive the money. If you miss the initial goal every donor will get a refund.
Kickstarter takes a 5% fee when the campaign is successful. Also, you need to be a US citizen in order to create a campaign on Kickstarter.
What kind of projects would you like to see and invest in using crowdfunding? And is it the kind of platform you would use to take your education ideas to mass market? Leave a comment and let us know your thoughts.
Feature image courtesy of Flickr, Images_of_Money