Crowdfunding Tips – Choosing a funding target – Part I: Why crowdfunding platforms matter

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So you’ve come up with an exciting project and you’re ready to give crowdfunding a shot. Great! It’s time to get thinking about a funding target. For those of you less familiar with crowd funding, this is simply how much money you’re looking to raise. On some platforms they also call this a ‘goal’.

Why do you even need one? Charities, for example, don’t usually set down goals for people donating. If you just fancy raising some sponsorship and are happy with whatever your sponsors are willing to give you, you might not want to set a goal in the first place. Fair enough. But there are a couple of reasons why it’s a good idea to do so:

1) It gives people looking at your project a clear idea of what you need to raise to ACHIEVE something. This can incentivise them to give a little more if there is a clear achievable aim in sight. If donations are appreciated but will not make a decisive difference either way, people feel less excited about engaging. True, they will get the good vibes you get from giving to charity. They are helping a good cause… But they won’t feel like they’ve made something happen. It’s not make or break.

NOTE: As explained in a previous post, the idea of a crowdfunding project is to have a clear goal in mind. You’re not raising money just to keep things ticking over. If you have a vague aim like becoming a successful rock band (or winning your football division etc.) and no clear explanation of how you’re going to achieve it (or rather, how donations will help/cause you to achieve it), it’s unlikely to impress many people. Funding targets help communicate to people that you aim to get something specific done.

2) Practically speaking, there are (to my knowledge) no major crowdfunding platforms that allow you not to specify a funding target. Which I guess is a pretty good reason to have one…

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Right then! The target you choose should depend to a large extent on what you actually aim to do. No surprises there. Do you want to produce a best-selling video game or a Hollywood blockbuster? Or are you just looking for a £500 boost to cover your gang’s transport and accommodation for an event? Or £300 for printing and distributing promotional materials (e.g. t-shirts, posters and flyers)? Different types of projects will lend themselves to different platforms. People might claim that this isn’t true but it is. It’s also a friendly way of putting it. In actual fact, certain types of funding targets and the projects they accompany are barred from some platforms. Usually smaller ones. It being assumed that more modest targets are not attractive enough for sponsors and won’t actually ‘produce a result’, whatever this means.

The point is that what you want to achieve should have a bearing on what crowdfunding platform you choose. Or for those of you desperate to use a particular platform, the crowdfunding site you choose will often have a bearing on your funding target, whether you like it or not. If you decide for understandable reasons (it is the market leader, after all) that you want to be on Kickstarter, you may have to adjust your funding goals accordingly. In order to gain access to some platforms, you will need to be more (or less) ambitious…

All crowdfunding platforms have a project vetting process of some description and more popular platforms won’t consider letting smaller projects onto the site until certain adjustments are made. Conversely, emerging platforms might sometimes suggest that you scale your project down a little so as to give you a better chance of hitting your funding target. They will not usually reject your project as the value of your ideas should be determined by the crowd (and your own ability to promote them). But some targets just don’t seem quite right for the platform their creators choose.

Kickstarter is a popular website with a huge following (a literal CROWD) of people browsing through looking for the next ‘big thing’ to sponsor. If your campaign is really good, you could raise a lot of money there. The fact that you actually get featured there might encourage some people (who might not otherwise) to fund you. However, it will typically not publish a project whose creators are seeking more modest sums like £1000 or less. This is not the case with Indiegogo or Sponsorcraft, for instance.

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The first thing to know when you’re looking to crowdfund (yes, it is a verb) with Kickstarter is that it operates on an all-or-nothing funding model. What does this mean? It means that projects must reach 100% of their funding target or no money changes hands. You get 0. Nada. Zilch. Sound harsh? A little. But, as the folks at Kickstarter explain, this “protects everyone involved. Creators aren’t expected to develop their project without necessary funds, and it allows anyone to test concepts without risk.”

Note: The risk for sponsors being that, without the all-or-nothing model, they are still expected to part with money they pledged (often months before) to a project that they later find out won’t succeed – or at least, won’t succeed in achieving everything its creators intended (and may well have been what enthused the sponsors in the first place!). In order for everyone to ensure the project creators are up to the job (and have the necessary budget and support with which to deliver), projects must therefore set a funding goal and a length of time in which to reach it.

So Kickstarter uses all-or-nothing. Indiegogo, on the other hand, allows you to select a target but doesn’t require that you to meet it. You get to keep whatever you raise! There are obvious advantages to this from the project creator’s perspective – much less stress, a (pretty much) guaranteed sum of money at the end of the process no matter how disastrous your project turns out… However, there can be significant drawbacks too.

Here are just 3:

1) Because there is no need to raise a specific amount, project creators could be tempted to just press the publish button and see what comes their way. This is not the case with project creators on all-or-nothing platforms. They know they have to promote hard to have a chance of success. This means they are likely to generate more momentum and, provided they do succeed in hitting their target, raise more money.

2) Sponsors have no idea whether their donations are actually going to bring something to fruition. This could make them a little reluctant to plough into a project as it may or may not bring about the outcome they’re looking for. And, just as importantly, they will be asked to pay up anyway.

3) Sponsors might sense a lack of urgency in the project. You are guaranteed some money whatever happens and so the whole process can become more casual. All-or-nothing platforms, conversely, tend to see a frantic last few days while the creator attempts to secure the last few donations that will determine a project’s success and failure. While a frantic few days may seem less than attractive to you, it will probably mean more money for your project. The all-or-nothing model also gives you a better basis on which to approach your friends and family for money – “I could really do with everyone chipping in or the project fails.” This sounds a bit more persuasive than “chip in a few pennies if you fancy it. Sure, I’d appreciate it but it won’t make a lot of difference either way…”

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Sponsorcraft operates an all-or-nothing funding model, like Kickstarter, but accepts much smaller projects. Our smallest project so far, for instance, set out to raise £100. This was only a part of a wider fundraising effort involving donation boxes but was nonetheless useful in mobilising support online, utilising the power of the internet and social networking to secure donations and interest from further afield.

According to the project creator, Ed, “Sponsorcraft was by far the most effective way of raising funds for the campaign. There is such a massive bank of potential sponsors online, and Sponsorcraft makes it a walk in the park to donate. I collected about £15 with all the donation boxes combined over three weeks, but £113 via Sponsorcraft in two weeks, with 1120 views to the project!”

“About half of the Sponsorcraft donations have come from friends and family who are outside of Bristol so couldn’t have made it to a donation box. The other half are from people I have never met and who probably would never have found out about the project if it hadn’t been on Sponsorcraft.”

Looking at things purely financially, £100 may seem a tiny amount. However, as he explains, the interest in the project Ed gained from crowdfunding it online certainly justified him promoting it there.

Note: Before everyone thinks Sponsorcraft won’t accept projects looking to raise more than £1000, we’ve currently got an ambitious project called PAPERpotential on the website seeking close to £4000! We’ve also hosted Bristol University’s Burst Radio, The Oxford Belles and Ollie Bent’s trip to Tanzania with Engineering World Health who all raised in excess of £1000. Still a bit less than the $10,000,000 projects you find on Kickstarter though, isn’t it.

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The target you choose will depend on what your goals are in putting the project online. But it will also depend on the platform you choose. If you’re going with Kickstarter, you may need to pitch for more money. If you’re going with Indiegogo, your funding target will not be as important in determining the success of your project.

There are a whole set of other reasons to choose a particular platform – some are only available in particular countries (e.g. Kickstarter will not allow you to start a project from the UK yet), some specialise in particular areas and can offer you expertise in those areas (e.g. publishing), some won’t accept certain types of projects (e.g. sports projects or those that are deemed ‘controversial’), some won’t allow you to advocate for causes or carry charity logos etc. You might want to do a little research before you start… Even if this only means flicking through a few of the accepted projects to get a better idea of funding targets and the kinds of projects they commonly feature.

Thoughts? Let us know below.