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Crowdfunding Best Practices

How to Choose the Right Crowdfunding Platform

Crowdfunding platforms come in five types, offer different fee structures, and cater to unique audiences. Meaning: it's easier than you think to make a good choice.
How to Choose the Right Crowdfunding Platform
Ian Heinig

By Ian Heinig

 

May 6, 2021

Crowdfunding platforms help you to launch your passion project with the support of like-minded people. Crowdfunding is no cakewalk, though. According to Entrepreneur, less than 1 in 3 crowdfunding campaigns reach their target.

Your choice of crowdfunding platform is a decisive factor in the success of your campaign. As the inroad to your audience, each crowdfunding site fosters a unique culture. When you find a good fit, your campaign thrives.

This blog shows you the 5 steps to picking the right crowdfunding site for a successful campaign, from cost structures to project fit.

Easyship integrates with top crowdfunding sites like Indiegogo and Kickstarter to make your shipping cheap and easy. You’ll save up to 70% off all shipping rates from top couriers like USPS, FedEx, and global couriers. When you save on shipping and fulfillment, your campaign runway goes longer.

1. Identify Your Goals

“Which crowdfunding site should I use?”

Like anything, beginning with the end in mind is the best way to be successful in crowdfunding. So ask yourself: what are you trying to accomplish? Create a product? Launch a platform? Change the world?

Before you try to match your vision to a platform – up next in section 2 – clarify your mission. Once your vision is clear, you can map out the steps that will lead you to the end-goal, including:

  • Financial targets
  • Specific deadlines or benchmarks

Creating a basic roadmap for your campaign helps you see the big picture. You’ll gain a sense of your timeline, total funds you need to raise, and from how many people. These practical details have a direct impact on how you choose platforms based on their pricing structures (that’s section 3).

For example, a personal fundraiser or an equity-raising campaign involves fewer moving pieces than creating a tech gizmo. This is because neither fundraisers nor equity projects require you to pay for shipping and fulfillment.

With product-based campaigns, though, these end-stage processes are a significant cost center that cannot be overlooked. If you need help estimating your campaign shipping costs, try our free crowdfunding cost calculator.

To start, create a roadmap to connect the dots from your end-goal to where you are now. Every other factor must fit into this financial framework.

2. Research Platforms

Each crowdfunding platform was designed to support specific types of campaigns and attract a certain audience. With 75+ crowdfunding sites to choose from, it’s best to use a platform that caters to your target audience. In other words, look for a fit between your goals with those of the platform.

Kickstarter, for example, caters to creative projects such as art, music, and performance. Syndicate Room is an equity-based crowdfunding platform that attracts venture capitalists looking for the next big win in their investment portfolio. By contrast, GoFundMe revolves around charitable causes. Where would your campaign fit best?

There are five different types of crowdfunding platforms. Each crowdfunding site is built to optimize success for its chosen campaign type, including:

  • Rewards-based: Send backers a tiered selection of perks for their support, whether physical, digital, or intangibles. (ex: Indiegogo, Kickstarter, Crowdfunder)
  • Equity-based: Grant investors a share in your project in the form of equity. (ex: Syndicate Room, Seedrs, Crowdcube)
  • Cause-based: Raise money to support a specific cause, mission, or charity. (ex: GoFundMe, JustGiving)
  • Lending-based: Secure a loan from your project, then pay it back through the peer-to-peer platform. (ex: Funding Circle)
  • Merchandise-based: Offer swag like t-shirts and hoodies while accepting cash infusions for your project. (ex: Patreon)

Each crowdfunding platform carries its own set of restrictions. GoFundMe, for example, is limited to users in The United States. Kickstarter prohibits you from running any campaign that isn’t creatively-oriented. Syndicate Room is only available in the US as well, but Seedrs and Crowdcube are internationally supported.

Some sites won’t let you sell merchandise directly to backers outside of the campaign, while others won’t let you relaunch an unsuccessful campaign without jumping through hoops.

Reading case studies on the platform website is a good way to conduct research. Look for areas of overlap with successful projects and your campaign audience, goals, and campaign model.

Also, don’t hesitate to get in touch with the platform's sales team to ask detailed questions. Doing so is both a quick way to get answers about restrictions, and also a chance to assess the quality of support. After all, it’s best to do business on a platform that has your back.

3. Figure Out The Fees

The cost of doing business varies by crowdfunding platform. Visit the pricing page on platform sites to learn about the pricing structure for a campaign, plus the associated fees. These fees often include:

  • Sign-up fees
  • Transaction fees
  • Credit card processing fees
  • Donor fees
  • Currency transfer fees

Some sites like Crowdcube have no signup fee. Typically, though, you can expect to pay a flat fee of 3-5% for using a platform. You’ll also pay for completing a transaction and perhaps for credit card processing.

Here’s the pricing page for Indiegogo:

Once you run the numbers, you may find that certain platforms are cost-prohibitive. For example, Kickstarter has one of the steepest fees structures – upwards of 10% of your total campaign – but offers the largest audience. Is it worth it? If you’re in the creative space and needs lots of backers, probably. If you don’t need a massive audience to succeed, perhaps not.

Platform costs are a vital consideration because what you don’t pay to the platform you can use for marketing. Marketing campaigns are vital to crowdfunding success, but they’re not cheap.

Be sure to calculate your total campaign costs for several prospective platforms. If the cost of business is too steep, you might opt for a cheaper platform and more robust marketing effort.

Lastly, check whether a prospective platform uses conditional final payouts. In other words, larger platforms like Kickstart only charge donors if you reach your target. Campaigns that come up short get nada and have to start over. This ‘all or nothing’ approach to raising funds may not be feasible for your campaign goal or financial structure. Weigh your options carefully.

4. Look For Key Features

Crowdfunding platforms are more than just a space. They offer marketing tools and page customizations to help you attract backers and drive signups. Your ideal crowdfunding platform should make it easy to adjust your campaign page and market your project to its widest possible audience.

Curb appeal and reach are important for crowdfunding campaigns. After all, you’re not the only one calling for cash. Moreover, campaigns that update their supporters receive 126% more funding in the end.

Look for native site features that let you:

  • Upload media to your profile, including a mission video, your logo, and photos
  • Share directly on social media
  • Use email marketing
  • Access content marketing

Unlike smaller platforms, larger crowdfunding sites offer a bevy of marketing tools. If your campaign is better suited for a niche site, you’ll need to take responsibility for these marketing activities yourself. However, you can only DIY your marketing if you have the time, know-how, and budget to do so.

At a minimum, a quality platform lets you brand your campaign and spread the word about your project across several channels.

5. Compare The Details

Goals. Audience. Fees. Marketing...After working through these steps, you should have a shortlist of prospective crowdfunding sites that suit your strategy and budget. If you’re feeling stuck, do a deep dive on your best candidates.

Pore over the user reviews for your final candidates on review sites like G2 and TrustPilot. Look for language that speaks to your deal-makers and deal-breakers, whether that's cost, customer support, marketing features, etc. A thorough survey of feedback from real users should help you make up your mind.

You can consider some statistics about success rates on different platforms, including:

Also, here's a list of the top 10 UK crowdfunding sites.

Choosing Your Best Crowdfunding Platform

How to choose a crowdfunding site really comes down to audience selection and costs. The best crowdfunding platform for you should align with your campaign model (how you want to repay donations) and your budget.

Easyship helps crowdfunding campaigns simplify and save on shipping and fulfillment. Our end-to-end platform integrates with top crowdfunding sites like Kickstarter, Indiegogo, and Backerkit to help you streamline operations. Plus, you’ll save up to 70% on all shipments with our pre-negotiated courier rates.

Ready to ship your campaign with Easyship? Create your free account.

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