Lately there has been a rise in the use of independent crowdfunding methods; projects that don’t use the typically third party sites like Kickstarter or Indiegogo to host their campaigns. Star Citizen has raised over $66 million on their own website and Scout raised over $474K for its home security device after being denied by Kickstarter “because it wasn’t far enough along in preproduction,” according to a ChicagoInno post. This crowdfunding trend isn’t right for everyone but can be a smart option for some startups who don’t fit well into traditional crowdfunding communities.
Below are some pros and cons that you might want to consider if you think launching an independent crowdfunding campaign might the right option for you:
Pros
1. Stronger branding
By launching a crowdfunding campaign on your own website instead of through a third party you are enhancing your branding by keeping the project all about you. Instead of being a highly funding Kickstarter campaign, your ingenious startup has taken the initiative to raise its own money by offering pre-orders on you own website. That makes the main source of information about you and your campaign the same place that you’d like customers to keep returning to when the fundraising is over.
This way, when you receive media coverage new people are drawn to you website and not your Kickstarter campaign. Clicks that you receive from old articles will not lead people to a closed campaign but instead to your web page where you will be offering your finished product at retail price after your initial funding has ended.
2. Avoiding platform fees
Platform fees on crowdfunding sites often range anywhere between 4 and 9 percent. This may seem like a small amount in exchange for the dedicated backer communities that follow these sites like Indiegogo and Kickstarter, but in the cases of some highly funded campaigns it can end up being pretty costly. A post by The Verge said that:
“[T]he bulk of [Star Citizen’s] fundraising happened on their own site, where the team built its own donation meter and collected donations directly. That required a little more logistical work, but also let them wriggle out of Kickstarter’s 5 percent fee — which in this case, would have cost the project a hefty $750,000.”
As you can see those small percentages can add up to a lot when it comes to high earning crowdfunding campaigns. In comparison, white label crowdfunding software that allows creators to raise funds independently offers different payment options such as, “set-up expenses, commission-based licenses or one-time fees,” according to an Entrepreneur post. These choices may offer creators more savings and flexibility.
3. Flexible duration
Another exciting feature of white label crowdfunding software is that is removes the need to limit your project to shorter periods like 30 to 60 days. Typically this is done to instill a sense of urgency in backers to donate before the campaign ends, but independent campaigns can run for years (like Star Citizen has). This has given them a chance to offer pre-orders, reach stretch goals, offer limited rewards, and create hype for the game’s release, and cultivate a dedicated fan base years before its official launch.
4. More backer information
When you crowdfunding independently using software that allows you to launch a project on your own website and manage the data you receive you get access to a lot more backer information than what Kickstarter provides. Kickstarter limits the amount of information given to creators about backers for privacy reasons, which sometimes hinders creators from reaching out and maintaining direct relationships with their supporters.
5. Good for those with an existing audience
Independent crowdfunding is usually a better option for those who have already built up a following and can easily draw traffic to their own site. For those who are relatively unknown, working to get that attention can be hard and the help of platforms with established communities can be worthwhile. Projects with an existing fan base can connect with their audience, let them know about the campaign, and post updates that get them shared on social media and maybe picked up by blogs and other publications.
Cons
1. No support from the platform’s community
As I mentioned before, by choosing to run your crowdfunding project independently you are basically losing out on the backers you would get from the existing crowdfunding community. As Kickstarter points out on their Stats page, their platform has attracted a total of over 7.5 million backers and over 2.2 million of those are repeat backers.
2. Loss of anti-fraud measures
Many third party crowdfunding services have measures to protect users against fraud. This is done through application processes and rules for what kinds of projects are allowed on the platforms. Although they recently relaxed their rules, Kickstarter is known for suspending, refusing, or cancelling projects (like the recent Blood Sport campaign).
By choosing to launch on their own, campaigns may be faced with the issue of backers being hesitant to support projects that didn’t have to go through these types of acceptance measures.
3. You have to handle your own payment processing
This and other technical aspects of running an independent crowdfunding campaign can be a big turn-off for those who are not very tech savvy. Sites like Kickstarter and Indiegogo handle payment processing, with creators having to pay fees for that service. For independent campaigns it can depend on the white label service you use, or you may have the option to choose several different payment processing methods.
4. Requires strong marketing if you don’t have an existing audience
Independent crowdfunding can be done successfully but it takes a lot of strong marketing and commitment to build an audience as you go. In this case strategies such as targeted Facebook advertising can be useful.
Conclusion
Software that enables independent crowdfunding has been growing in popularity over the last few years, but still there is a proliferation of campaigns signing up daily for third party websites like Kickstarter and Indiegogo. Both of these strategies have pros and cons and the trick is to decide which option is best for a particular crowdfunding campaign – there is not one way that is better than the other for everyone.
A few sites that offer white label crowdfunding software are Tilt/Open, CrowdEngine, and Selfstarter. For more examples and descriptions of white label crowdfunding platforms check out this post on CrowdCrux!
Feel free to leave any questions or comments below!
