Rob Thomas, the creator of the Veronica Mars television series, recently paid a lot of money to raise money on Kickstarter (KS for short). He and his team led a campaign that was a runaway success on KS, raising $5,702,153. But, think about it, why would you use KS for crowdfunding if you were a celebrity? To be clear, celebrity crowdfunding is great, but why the heck would a celebrity use KS?
In particular, the cost of capital, or what you pay to get what you get, is worth looking at when you’re talking about trying to raise at least $2M and you actually raise over $5.5M. KS charges the average Rob “a 5% fee from the project’s funding total if a project is successfully funded. Additionally, payment processing fees generally work out to 3-5%.” [Taken from their website on 5/7/2013.] Now I’m going to bet that if you say you’re going to raise a few million dollars and you are a celebrity, KS cuts you an undisclosed deal in the neighborhood of 3.5% on their cut and you get more like 2.1% on the credit card fees. So, let’s assume this particular Rob got charged about 5.6% in total transaction fees.
That’s $319,320.57, SO WHY THE %$#& DIDN’T THEY USE A WHITE LABEL CROWDFUNDING PLATFORM?
“Well, they got a lot of free traffic from KS members.” Nope. 80% of traffic on KS most days is from people sending the link out within their networks. With a campaign like this, it was probably even higher than 80% that clicked on a link somewhere else to get to that crowdfunding campaign page directly.
“Well, even that extra 20% helps.” Naah, the combined viewership of the Veronica Mars TV show and the combined reach of multiple celebrity’s PR engines completely outstrips the number of repeat visitors on KS. In other words, the show, the show’s stars, and the show’s fans collectively know more people than KS does.
“Well, maybe it was because KS has all the legal stuff and the transaction security figured out.” Yes, they do, but it’s not rocket science and could be provided to other celebrities for a lot less than $319,320.57.
“Well, it’s faster to get set up on KS.” Nope and this is pretty much irrelevant. With a big campaign like this, the planning started many months before the campaign page went live.
Celebrities should use Launcht for their crowdfunding campaigns. Total fees on the raise would be more like 3.5% and the traffic would go to the celebrity’s website, thus building engagement with the celebrity and not with KS. Celebrities spend a lot of money to build engagement with their social media channels and to grow their web presence, why shunt all the attention away from these things? Celebrities don’t need Kickstarter. Celebrities have the networks, the reach, the appeal, and the infrastructure to pull off a campaign themselves. All that a celebrity crowdfunding campaign needs is the simple crowdfunding platform software to host their own campaign!
To learn more about how Launcht can support celebrity crowdfunding and white label crowdfunding platforms, review our options here.