To continue our series on the crowdfunding we will now focus on the platforms that are the most important for startups in the Northern Europe. Interestingly, there are some 600 European crowdfunding platforms out there, but US-born Kickstarter and Indiegogo are the most used platforms.
We will start from the No 1 platform – Kickstarter, which has also brought into English language the verb often used as a synonym to crowdfunding: kickstarting. Out of the $35 billion raised worldwide, projects on Kickstarter rose $2.6 billion from 111,183 successful projects and with the support of a stunning 11 million backers.
To understand for which kind of projects Kickstarter is the best let’s take a look at the key statistics. First of all, when looking at the amount of projects per category — film & video, music, publishing, games and technology make the top 5 and account for 60 percent of the projects launched.
Out of the projects launched it is important to look at how many succeed in reaching their funding goal. Despite all the hype around crowdfunding this is not a money-making machine: on average only 7 percent of the projects succeed. However, when looking by category we see that it’s the arts driving it: Film & Video, and music have about 20 percent success-rate, and all other categories drag the rate to well below 10 percent.
This doesn’t tell the whole story though, because successful funding doesn’t mean successful execution of the service or product funded and also the funding goals are very different for the different categories. In the following chart I grouped the amount of funds raised and the final success rate of a product, and that picture is very different.
If we look at the Games category for example. There just 3% of the projects are successfully launched (only every third of the 9% successfully funded projects) — these raised overall a staggering $531 million. This totals 21% of the funds raised by Kickstarter platform.
To finish the Kickstarter statistics review if we look at the distribution of funds per category (figures are in % of the overall $2.6 billion raised on Kickstarter).
As you can see through Kickstarter there’s potential to get funding but you need to have a solid project to be amongst the few percent that reaches the goal, and more important you need to be ready to execute your plan once the funds are there – not all projects make it to market, despite raising the money.
Kickstarter is not available in many countries: for example for Finland-based projects – so one would need to use a work-around.
You should have a prototype of your product when launching on Kickstarter – it is not for raising money for ideas. It works best for testing the market demand/pre-sales of the products you planning to launch.
When you launch your campaign, keep your fans close: Update them on a regular basis on how your Project is doing: this includes also talking about the problems and adventures on the road. As a supporter you pay for the ride, as Kickstarter co-founder Charles Adler said in an interview to latest CoFounder Magazine.
Data source: Kickstarter website