Crowdfunding comparison
- 1. Comparison of Crowdfunding Websites By Malika Zouhali-Worrall A successful crowdsourcing campaign can generate buzz, provide proof of concept, and, oh yeah, raise a bunch of start-up cash. Here's how you can make crowdsourcing work for you. Artists, filmmakers, and musicians flock to sites like Kickstarter to raise cash for their projects. Now, entrepreneurs are getting into the game. There are dozens of crowdfunding sites, including some geared specifically to start-ups. It's not just money that users are after: A successful campaign can also generate buzz and provide proof of concept to professional investors. But raising small sums from hundreds of strangers is hard work. Your pitch must be concise and compelling. And because crowdfunding happens online, it helps to be a whiz at using Facebook, Twitter, and other social sites to spread the word about your project. The chart below looks at services with different approaches to crowdfunding—and introduces companies that have found success using them. Kickstarter What It Is : A haven for emerging artists, Kickstarter is fast becoming a platform for entrepreneurs to finance innovative new products. The site has seen more than 13,000 successful campaigns since its launch in 2009. How It Works : Each project on Kickstarter gets a fundraising page, which includes the funding goal, a video explaining the venture, and the deadline (one to 60 days after the launch). Campaigns are expected to offer "rewards" to contributors; such perks run the gamut from a thank-you on the company website to a prototype. If you don't hit your goal by your deadline, you won't see a penny. Best For : Artists, designers, and inventors The Catch : Kickstarter accepts only 60 percent of the 2,000 or so projects that apply each week -- and it's especially picky about entrepreneurial endeavors. Service providers, beware: Kickstarter takes projects of only an artistic or creative nature. "That's where our heart lies," says co-founder Yancey Strickler. The Cost : Successful projects pay 5 percent of funds raised to Kickstarter, plus 3 percent to 5 percent to Amazon Payments, which processes contributions. Avg. $ Raised : $5,000 Success Story Jessica Genet and Stephan Angoulvant, co-founders of the Los Angeles -- based design shop Lumi, were convinced that the textile printing process they had invented was innovative and exciting. They also knew that they needed a lot more research and development before they could convince anyone else that it was commercially viable. They launched a Kickstarter project in late 2009. Eight weeks later, they had raised $13,597 from 188 funders, in exchange for coasters, card wallets, bags, and other items they had designed. The campaign, say the pair, brought them instant credibility. Indeed, a furniture designer that learned about Lumi as a result of the Kickstarter campaign wound up hiring the company to produce textiles. "All of a sudden, we're working with a major client, we have furniture lines going out the door, and our work is being exhibited at international furniture shows!" says Genet.
- 2. Indiegogo What It Is : Founded in 2008, IndieGoGo takes an anything-goes approach. As long as the project is neither pornographic nor illegal, it's accepted. "We're open to any campaign, any idea, anywhere in the world," says co-founder Slava Rubin. How It Works : Each project gets a profile page, with a video, a written summary, descriptions of perks for funders, a fundraising goal, and a deadline (one to 120 days from the launch date). Businesses can keep whatever they raise, whether or not the goal is reached. Contributions can be made via check, credit card, or PayPal. Best For : Anyone with an idea—and a willingness to compete against thousands of others The Catch : IndieGoGo's unfiltered approach has a downside: Entrepreneurs must share the platform with as many as 10,000 other causes and projects at any one time—including the guy asking people to chip in for his root canal and the miniature horse in need of surgery. That's a lot of clutter to cut through. The Cost : IndieGoGo takes 4 percent if the fundraising goal is met and 9 percent if it isn't. There's also a third-party payment processing fee of 2.9 percent. Avg. $ Raised : $15,000 Success Story Brian Lamb and Vladimir Tetelbaum recently raised $24,680, 123 percent of their goal, on IndieGoGo. The money is nice. But even nicer for their Belmont, California-based company, Satarii—which is developing a camera mount that lets users easily take videos of themselves—are the metrics. By the time the campaign was completed, Satarii had some pretty impressive numbers: 500,000 views of its YouTube video, 10,000 comments and e-mails, and 283 backers, 63 of whom were so impressed that they kicked in $200 or more to receive a prototype of the device—some 30 percent more than the device's anticipated retail price. "When you walk in and say that to someone, they pay attention," says Lamb. He and Tetelbaum have gone on to raise seed funding from a number of angel investors and a manufacturing company. A commercial product launch is expected at the end of 2011. PART A QUESTIONS 1What is crowdfunding? What are the advantages? 2 What information goes on the Kickstarter fundraising page? 3 Why are service providers told to “beware” for Kickstarter? 4 State a disadvantage with Kickstarter. 5 Approximately how much money did Lamb and Tetelbaum want to raise? 6 What product does the company make? 7 Why were people prepared to pay more than the market value for the product? 8 What is seed funding? PART B COMPARE KICKSTARTER and INDIEGOGO Date founded, candidates, deadline, cost, processing fee, average amount raised. If you earned 10,000 dollars, how much would you pay out in fees to a) Kickstarter b) Indiegogo ? PART C VOCABULARY Find words in the introduction that mean 1) to gather 2) adapted 3) sales argument 4) attractive 5) expert. Find words under Kickstarter that mean 1) a business project exposed to risk 2) date when a project must be finished 3) an advantage 4) quite particular about what is chosen 5) ended by (finished) Find words under Indiegogo that mean 1) inclination/consenting 2) disorderly heap 3) money paid for a service 4) an object made for a particular purpose (usually mechanical or electronic) 5) sale of goods to consumers (in small quantities)