What Value do Crowdfunding Platforms Offer to Campaigns?

Many of our white label clients who run focused niche crowdfunding platforms run up Screen Shot 2013-09-16 at 3.18.56 PMagainst similar concerns from potential campaign leaders on their portals. Most notably the campaign leaders say,

“Why should I put my campaign on your portal over Kickstarter or Indigogo?”

What they are actually asking is,

“What value does your portal provid that these larger crowdfunding portals do not?”

Putting aside the straight fee comparison conversation, the first point in this discussion for any portal operator is to unpack the perceived value that these large platforms offer and debunk a lot of misconceptions that people have about them. Fortunately there is a plethora of information out there to use in such talks.

There has been a lot of conversation and analysis about success/failure rates on Kickstarter and some interesting numbers have come to light. In July of 2012 Ethan Mollick and Jeanne Pi published a large number of stats that they had worked up on success rates on Kickstarter and contributing factors. What I found most telling was that the surest predictor of success for a given campaign was the number of Facebook friends a given campaign has access to. Specifically:

For an average 10k campaign a project Creator with …

  • 10 Facebook Friends = 9% chance of success
  • 100 Facebook Friends = 20% chance of success
  • 1,000 Facebook Friends = 40% chance of success

What this tells us is that it is not the platform but the individual that drives success. The perceived value that people think a platform will add to their campaign is relatively minimal unless the campaign leader wins the proverbial lottery and gets one of the large platforms to feature their campaign.

This is backed up by the statistic that 85% of people who fund campaigns on Kickstarter come to the portal for that specific campaign. In short it is the campaign that is the inspiration not the portal on which it resides.

So lets take it back to our clients hypothetical conversation with a potential campaign leader. The campaign leader has just said “Why should I put my campaign on your portal over Kickstarter or Indigogo?” to which our client can say quoting the stats above that when it comes to general crowdfunding portals like Kickstarter or Indigogo it is not the platform but the campaign that drives success.

This is not the end of the conversation, however. Now that the perceived value of these large sites has been rectified with reality, the platform operator can make a compelling value proposition based on the community that they have built around their portal. Large portals are general but because the portal operator is running a portal that is focused on a niche they are able to build a focused interested community around the portal that would not be possible with a general platform. Thus the answer to the question is simple “I can give you more value and most likely for a lower fee.”

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2 Responses to What Value do Crowdfunding Platforms Offer to Campaigns?

  1. Doug Deck says:

    The unique value Drag Racing Crowd offers over other crowdfunding platforms is partnering with businesses to offer exclusive deals to contributors. In exchange, we promote their company on our website, Facebook, and Twitter.

  2. We would definitely concur with you on this article. For several months after monitoring Kickstarter and Indiegogo, we came to the realization (just by viewing the success rates / without the luxury of statistics) that many LGBT crowdfunding campaigns would have a better success if they would choose a niche crowdfunding platform, specific to their campaign, and one that could give them more value and most likely for a lower fee. We’re just a startup ourselves, but we founded it on this exact need – to increase the success rate of campaigns. This article, although reading it now years later, does spin these crowdfunding juggernauts strength into their achilles heal. Thanks for the article.

    Rainbow Campaign (http://www.rainbowcampaign.com) is the LGBT Crowdfunding Network dedicated to the fulfillment of dreams and projects that concern the LGBT community.

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