When to Use (And Not Use) Kickstarter

Paul's picture

Many people I have met seem to think of Kickstarter and other crowdfunding platforms as a sort of magical money factory. There is a general impression, even among some fairly experienced entrepreneurs and business people, that, if only you follow all of the right steps, Kickstarter will shower money upon your business idea and solve all of your money problems. In reality however, certain projects lend themselves to crowd funding, while others do not. Furthermore, just because you can crowd fund a project, it does not thereby follow that you ought to crowd fund that project. Consider the following:

Crowd funding is a marketing amplifier, not a marketing generator.

I believe that the most common misconception about Kickstarter is that, in addition to fundraising, it doubles as a marketing platform. While it is true that running a Kickstarter campaign can help you reach potential customers who would not otherwise have heard of your company or potential product, the ability of a crowd funding campaign to do so is limited (or aided) by the size of your existing social network and customer/fan base.

This fact is very apparent in the board game world. When we launched our first GTG Kickstarter for the Rook City expansion to Sentinels of the Multiverse back in the fall of 2011, we were able to blow past our initial goal of $12k and raise $27k, largely on the back of the marketing we had done with the original edition of Sentinels of the Multiverse at Gen Con. Without that pre-existing network of fans, it is unlikely that we would have raised nearly that amount. That first Kickstarter campaign and subsequent marketing at PAX East then fueled a dramatic growth in our fan base, which lead to raising $100k on a $20k goal for our Infernal Relics campaign.

A successful (and successfully delivered) Kickstarter project fueling the success of subsequent campaigns is a common theme among successful boardgame publishers. Jamey Stegmaier of Stonemaier Games, a master at using social media to build and engage with customers if ever there was one, raised $65k on a $25k goal for Viticulture, his first board game Kickstarter campaign. Its success contributed to the success of his next campaign, in which he raised $309k on a $15k goal for Euphoria.

Crowd funding is very difficult without a physical or digital product costing less than $100.

There is a reason why the most successful categories on Kickstarter are games and consumer electronics. Although Kickstarter is not a store, and is, at its best, a way for individuals to help a project that they really believe in succeed, most Kickstarter backers still want a cool product that they can own when the campaign concludes, ideally for under $100, at least at the entry level. This is not to say that a campaign for another kind of project cannot succeed, but there is a reason that, until the incredibly well run and well marketed campaign for the ARKYD Space Telescope campaign, the most funded Space Exploration project on Kickstarter had raised just over $116k - an impressive amount, but an amount commonly exceeded by campaigns for tabletop games, to say nothing of video games and consumer technology.

The crowd funding community skews millenial.

Whatever you want to call the generation born between 1980 and 2000, we make up the plurality of Kickstarter backers. This means that projects aimed at the tastes of our generation have a much higher likelihood of success. Last year, I spoke with a woman with a great idea for a consumer product to measure blood sugar. Although she had definitely done her homework in terms of marketing and pricing, she was having trouble finding other successful Kickstarter campaigns for similar consumer medical equipment, and no one she talked to could tell her why. It occurred to me that demographics are a powerful explanation - far fewer older adults use Kickstarter, so products targeting their needs are going to have a tougher time succeeding.

Crowd funding is expensive.

The expense of a Kickstarter campaign can be significant; there have been a number of news stories in recent years about project creators losing significant amounts of money when their campaign turns out to be much more expensive to fulfil than they initially projected. Even companies good at calculating monetary overhead, however, often fail to account for the amount of time that a well run Kickstarter campaign requires. In order to get the most out of a campaign and ensure that backer concerns are addressed, a project creator must spend a significant amount of time responding to comments and PMs and curating the project page. While critical to the success of a project, this takes up time that could be spent developing the actual project.

In summary, Kickstarter is a fantastic resource, but is not for everyone (or every project). Before launching a campaign, first work to maximize your social network of fans and potential customers, ensure that you are offering rewards that will interest your audience, and confirm that the amount of money you expect to raise is worth the investment of time that a successful project will require.

Comments

arenson9's picture

Yay, business blog!