Why learn about crowdfunding?
We’ve all been there. Stuck in the corner of a networking event talking to, “That guy.” You know the one. Quick to mention his recent trip to southern France. “Oh you really must go,” he says, “It’s just lovely this time of year.”
It’s all you can do not to roll your eyes as you desperately search the room for some way to escape. You think about excusing yourself to the restroom, but in your heart you already know – he’ll find you there too.
Between sips of wine, he asks you, “Kind sir, what do you know about crowdfunding?”
You remember this blog post, which explained in plain English everything you need to know about crowdfunding. Suddenly you stand a bit taller – your voice deepens as you address this overconfident buffoon.
“More than you,” you say while walking away, “More than you.”
But how do you get to the point where you know enough about crowdfunding to smugly tell, “That guy,” to get lost? Well let’s start with the basics.
What is crowdfunding?
Crowdfunding is a way for Average Joes to turn their product idea into a reality. They don’t have to have millions in the bank, or even know much about running a business. Really all you need to launch a crowdfunding project is a good idea.
Creators often have a finalized prototype, but need your help to actually manufacture the final product. Curious about real world examples? The base of the Statue of Liberty was actually crowdfunded.
Kickstarter’s core crowdfunding belief is that, “A good idea, communicated well, can spread fast and wide.”
We couldn’t agree more.
What is the best crowdfunding site?
Think of crowdfunding as a family. Indiegogo’s the older brother. Indiegogo was born first and essentially pioneered modern crowdfunding. They were everyone’s favorite until their younger brother, Kickstarter, was born. Like good parents, we can’t claim to love one more than the other, but like every mom and dad, we secretly have our favorite.
You’ll find cool products on both platforms that you literally can’t find anywhere else. So they’re both worth checking out individually if you haven’t already.
Modern crowdfunding has evolved a lot since the early days where people were mostly raising money for events or concerts. Tech and design products now dominate both platforms.
I’m on Kickstarter, now what?
How do I find the coolest Kickstarter projects?
It can be surprisingly difficult to find the best projects on Kickstarter, as often they’re not just hanging out on the front page. Why? Well Kickstarter is a Benefit Corporation, which basically means that they’re obligated to consider the social impact of their business decisions.
So while they obviously would prefer to make a profit, it’s not necessarily Kickstarter’s top priority. They tend to showcase creative projects on the front page that have the potential to make the world a better place. And for that we offer a heartfelt, “Kudos.”
If you’re interest in finding the coolest products on Kickstarter, we’ve bookmarked the top 12 products in Kickstarter’s most popular categories below.
Check out today’s top projects in:
What does it mean to, “Back a project” on Kickstarter?
Regular crowdfunding isn’t like Shark Tank, you’re not investing money in exchange for a percentage of the company. Instead, your pledge usually gets you the product that the campaign is offering. So if you find a campaign showcasing, “THE BEST HEADPHONES EVER,” your pledge will get you a pair of those bad boys, but no equity in the company.
What are early bird rewards?
Just about every project uses early bird rewards as a way to reward people for backing their project at the very beginning of their campaign.
Once these early bird rewards sell out, you can still back the project, but the next reward tiers will likely be 10-20% more expensive.
Pro Tip: Some campaigns will re-open their early bird rewards after they sell out, so check back occasionally and you may still be able to snag a deal.
I backed a project on Kickstarter, now what?
Let’s put it this way, if you want something quickly, you’re better off sticking with Amazon Prime. Crowdfunding projects usually take a couple of months to actually ship. That’s because, in a lot of cases, the project creator needs the money raised in crowdfunding to actually produce the product. When it comes to crowdfunding, you’ve got to have patience.
How do I ask the project creator a question on Kickstarter?
If you’re looking at a project’s page on Kickstarter, you’ll see the project creator’s profile in the upper left corner. Click on their logo, scroll down, and click the blue, “Contact Me” button. You’ll then be able to send the creator a message from there.
What are these project updates I’m getting in my inbox?
Project creators usually send out several updates to their backers while their campaign is live. These updates can be used to announce stretch goals (more on those below), share new information about the product, or request important information – like your shipping address.
Fixed Funding vs. Flexible Funding. What’s the difference?
Every project on Kickstarter uses fixed funding. So let’s say you back a project on Kickstarter with a goal of $100,000. If that campaign raises $99,999, and falls just $1 short of its funding goal, your credit card will not be charged. A Kickstarter project has to have ended, AND met its funding goal before you’re charged.
On the flip side, if a campaign’s goal is $10,000 and they go on to raise $1 million, the project creator is on the hook to produce all those extra units. So if you see that a campaign has already passed their funding goal, don’t think that you’re out of luck and unable to back the project. Instead, hop on that hot train!
Indiegogo is a bit different. They charge your card immediately after you make a pledge, and refund you later if a campaign fails to meet its funding goal. Indiegogo also has flexible funding.
So if you see a campaign with funding like the picture above, it means they don’t have to raise $35,000 to fund. Those 48 backers will get the product even if no one else makes a pledge.
How long is a crowdfunding campaign?
Most crowdfunding campaigns last about as long as the average middle school relationship, anywhere from 30-40 days.
What are stretch goals?
Are stretch goals ambitions for pregnant women? Not quite. The purpose of stretch goals is motivate you to share a Kickstarter project with your personal social network.
Here’s an example:
“If we reach $50,000 in funding, we’ll release our cool-little-do-dad in a new color.”
Hopefully you’ll be so pumped about that new shade of blue that you tell your friends about the project.
4 Reasons To Back A Crowdfunding Project
You’ll save money. If you back a project when it’s on Kickstarter or Indiegogo, you’ll likely get it for 30-50% off its future retail price. Brondell Swash is a smart Bidet (Oh là là!) that sold for $399 on Kickstarter, but now sells for $649 on its retail site.
You’re helping beginning entrepreneurs. Most crowdfunding projects are launched by individuals who have other full-time jobs. These projects legitimately represent their hopes and dreams – so help ’em out!
It’s a great way to find cutting edge products. Simply put, you will find technology products on Kickstarter and Indiegogo that you cannot get anywhere else. As it turns out, most innovation comes not from huge corporations, but from the little guys.
It’s fun! There’s a certain thrill that you get when you discover a really cool crowdfunding project. It’s sort of like you’re in on a secret that only a handful of other people know about. There’s really no better thrill than finding a hidden crowdfunding gem.
So there you have it, that’s crowdfunding in a nut shell. You now know more about crowdfunding than 95% of the world. Seriously. Now that you’ve successfully prepared yourself to fend off, “That guy” at your next social event, share this guide with a friend. Trust us, they’ll thank you later.