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We think Kickstarter is a great choice for business owners and individuals looking to get debt- and equity-free funding to launch consumer products and creative endeavors. Kickstarter allows you fund any amount for up to 60 days with all-or-nothing funding. The company charges a 5% platform fee as well as payment processing fees for each donation.
Kickstarter Review: Is It Right for Your Business?
Among crowdfunding platforms, Kickstarter is the largest and most well-known. We recommend Kickstarter for individuals and business owners looking to fund consumer products and creative projects, especially related to design, technology and film.
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The Pros of Using Kickstarter
We think Kickstarter is great for individuals and business owners who are launching consumer-facing products and creative projects. As of this writing, categories with the most projects include design, fashion, film, music, games, publishing and technology. Some of the most funded campaigns on Kickstarter include smartwatches, coolers, board and video games, TV shows, movies, clothing and luggage. It’s also arguably the most well-known crowdfunding site, so your project will have a chance at more press and online exposure there than on other crowdfunding sites.
Kickstarter is also good for relatively quick funding. While the maximum funding time on the platform is 60 days, the company recommends project creators set their funding time to 30 days or less. According to the company, this creates a sense of urgency around the project and leads to a higher chance of meeting the funding goal. It’s also great for project creators who need to move quickly on their idea.
The Cons of Using Kickstarter
Unlike some other crowdfunding sites, Kickstarter only offers all-or-nothing funding. This means that if you don’t meet your funding goal, all money will be returned to your project backers and donors. In some cases, all-or-nothing funding can be great, especially if you are producing items or have a strict budget you need to meet. In many other cases, a project could still succeed even if it only meet part of its funding goal.
We cannot recommend Kickstarter for businesses or individuals looking to create very niche products or business-to-business products. Since backers can come from all over the world and from any background, projects that do well on crowdfunding sites typically have a broad reach and appeal or a devoted following.
Currently, Kickstarter does not allow projects featuring the following items or services: items claiming to cure, treat or prevent illness or medical conditions, contests, coupons, gambling, raffles, energy food and drinks, offensive material, genetically modified organism as a reward, live animals, alcohol as a reward, financial services, travel services, phone services, business marketing services, political fundraising, already existing projects, resale, drugs and weapons.
Kickstarter is the oldest and most recognizable crowdfunding platform on the web today, and it’s one of the best places to crowdfund. In particular, we think Kickstarter is a great fit for projects that involve consumer-facing products or creative endeavors. Most of the top funded projects on Kickstarter are consumer products, like smart watches and clothing, or creative projects, such as TV shows, films and video games. We don’t recommend Kickstarter for business-to-business products or very specific niche items.
Almost anyone can create a project on Kickstarter. To be eligible, you and your project must meet the following criteria:
- Project creator must be 18 years or older and permanent resident of U.S., U.K., Canada, Australia, New Zealand, the Netherlands, Denmark, Ireland, Norway, Sweden, Germany, France, Spain, Italy, Austria, Belgium, Switzerland, Luxembourg, Hong Kong, Singapore or Mexico
- Project must be created in your own name or on behalf of a registered legal entity with which you are affiliated
- You must have an address, bank account and government-issued I.D.
- If project is created by an individual, bank account must belong to that individual
- You must have a major credit or debit card
- Projects must create something to share with others
- Projects must be honest and transparent
- Projects cannot fundraise for charity
- Projects cannot offer equity
Kickstarter is known to be a little more selective in the projects they approve, so meeting the above criteria won’t necessarily guarantee approval.
Kickstarter Pricing and Features
Kickstarter is one of the most well-known rewards crowdfunding websites. You can fund a project for up to 60 days on the website.
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To start a project, you’ll need to fill out some basic information such as the category, project title and your country of residence, and create an account on the website. After creating your account, you can begin filling in details for your project. You’ll need to provide a header image, a short description, a sub-category, location, funding duration and goal and any project collaborators.
Next, you’ll want to specify rewards for your backers. Kickstarter allows you free reign on how to customize your rewards, but suggests that you offer several tiers of tangible rewards for your backers. A reward could be a copy of the product you’re producing, a t-shirt or promotional item or a limited edition of the item, among other things. After completing this section, you’ll need to provide more information about the project and yourself. This includes a video for the project, detailed description of the project, description of the risks and challenges you face, project FAQ, picture of yourself and biography.
Finally, you’ll enter your bank account and contact information. In some cases, projects are eligible to immediately launch, but in many cases, you will need to submit the project for review. The review process can take up to three business days.
How Does Kickstarter Compare to Other Crowdfunding Platforms?
If you’re thinking about starting a crowdfunding project, you should shop around to see which crowdfunding platforms are the best fit for your project.
Kickstarter vs. Indiegogo
We recommend Indiegogo over Kickstarter if you want flexible funding, want to raise money for charity or want to offer equity in your business. Indiegogo offers both flexible and all-or-nothing funding for reward-based crowdfunding, and has special platforms for charity fundraising (Generosity by Indiegogo) and equity crowdfunding (First Democracy VC). Pricing for Indiegogo reward crowdfunding is comparable to Kickstarter: 5% platform fee and 3% plus $0.30 for payment processing. Similar to Kickstarter, projects that fare well on Indiegogo are consumer-facing or creative; the company states that art, architecture, technology, films and DIY projects are a great fit. Some of the most funded projects on Indiegogo include smartphones, clothing, luggage, bikes, watches and films.
Kickstarter vs. Crowdfunder
Crowdfunder is an equity crowdfunding platform, so we only recommend it for businesses that are looking for equity financing. At this time, Crowdfunder is only available to early-stage and mature businesses (inception stage companies are not eligible to apply). Unlike Kickstarter, Crowdfunder charges a monthly subscription fee ranging from $449 to $999. Crowfunder accepts companies in marketing and advertising, finance, healthcare, technology, arts, entertainment and more. Companies and products that have performed well on Crowdfunder include smart cameras, alcohol brands, green cleaning products, commercial real estate marketplaces and retail marketplaces.
Kickstarter vs. Patreon
Patreon operates a little bit differently than other crowdfunding campaigns, and is ideal for content creators, musicians and artists. Instead of one-time donations, backers agree to make subscription-based or creation-based donations. For example, a backer could opt to donate $5 to you every month or $5 every time you post a new creation. Patreon charges a 5% platform fee plus an average transaction fee of 5%. Top categories on Patreon include video and film, podcasts, science, animation and games. Some of the most popular creations on Patreon include science animation videos, horror video games, home improvement videos, true crime podcasts and psychology lectures.
Kickstarter vs. Building Your Own Crowdfunding Platform
If you have your own developers and a way to drive traffic to your website, you could always build your own crowdfunding platform using a credit card processor for lower transaction fees. For example, WePay has an API specifically designed for this exact type of application. The company charges just 2.9%+ $0.30 per transaction, which is a lot less than Kickstarter's cut.
However, this approach will introduce other potential issues. For example, Kickstarter may be able to accept more payment methods from potential backers than something like WePay, which isn't compatible with PayPal. Another big advantage of using Kickstarter over your own crowdfunding platform is the free audience you receive with the former. When your campaign goes live on Kickstarter it can get attention from the thousands of people that visit the website. If you decide to set up your own crowdfunding website, you'll be responsible for driving visitors and potential patrons to it. The customer acquisition costs may overshadow whatever savings you get from using a processor.