Crowdfunding websites like Kickstarter or Indiegogo are the platforms upon which many of today’s entrepreneurs are taking their business and creative projects to market, seeking financial support from the masses.
Backers do not receive equity in projects, but may be offered involvement in production, or receive first orders of the final result. Project success can be huge. Just ask the American man who generated over US$50,000 on Kickstarter to make a potato salad. His goal was US$10.
Much of his campaign’s success lay in its quirky and shareable nature, which led to widespread media attention. Driven by social media, ideas can be easily spread, and the market will very quickly tell you with their wallets whether your idea has merit.
Rough Stuff
Australian movie director Jonathan Adams this year successfully sourced more than $40,000 through Kickstarter to help fund an Australian 4X4 movie, Rough Stuff.
“It’s Star Wars meets Die Hard meets Indianna Jones,” Jonathon said of the movie. “Han Solo in a 4X4 on a treasure hunt.”
He had already secured $60,000 through his own capital and private investors, however he knew he needed more. Coming up with $40,000 from people he had never met was tough.
“Credibility was extremely challenging to create,” he said, citing a teaser trailer as being the centrepiece of the fundraising campaign.
“I thought ‘people will be so blown away by this trailer they will throw money at us’.”
The reality was that money did not come flying in. While Jonathan had a seemingly great idea, the challenge was reaching people who thought likewise.
Luckily, Australian 4×4 accessories manufacturer ARB saw the movie’s potential early on and became a supporter of the project, agreeing to fit out vehicles and promote fundraising through their media channels.
Thanks to ARB’s large following, and that of a select few other 4X4 media channels who beat the drum, Jonathan reached his target. Just.
Thirty-six hours before the campaign was scheduled to end he was still $12,000 off.
“It was a horrible 36 hours. Really intense. A lot of running around and not sleeping, working out a Plan B,” Jonathan said.
“We got very, very lucky in that a couple of major backers decided to back us … when we made it, it was an enormous relief.”
Shooting is scheduled for October 2014 and the movie will be released mid-2015.
www.roughstuff.com.au
Baja Board
Another Australian Kickstarter story is the Baja Board, a motorised 4X4 off-road skateboard. While founders George Li and James Murphy reached only $116,637 of their $200,000 target (and so receiving nothing), they still describe their Kickstarter campaign as an excellent public relations exercise.
With features such as an electronic diff with traction control, double wishbone suspension, an adjustable ride height and launching from a standstill to 30km/h in about one second, the Baja Board has more in common with your fourbie than a skateboard.
“The suspension design provides a lot more ability for off-road use as well as being able to handle jumps and drops,” George said.
It also weighs in at only 18kg.
Speaking about their Kickstarter campaign, George said the $4000 price tag and 12-month wait put people off.
“We found that Kickstarter is good for products up to $1000 where people were happy to outlay and wait a year,” adding that it was disappointing Kickstarter did not allow backers to place a deposit rather than paying $4000 up front.
“If we thought about doing this whole thing again we might have gone with Indiegogo,” George said, describing them as more flexible on receiving funds.
However, he said their initial research found Kickstarter offered the best publicity. Indeed, their fundraising campaign generated publicity which later led to revenue from venture capitalists as well as 28 pre-orders, distributor interest, a couple of hundred email enquiries and a large increase in Facebook likes. Pre-orders will arrive early 2015.
George also said Kickstarter on its own was not enough and you must ensure you have an audience to market your fundraising to.
“We spent a good six months building about 5000 followers on Facebook and then we built the Kickstarter campaign.”
www.bajaboard.com.au
Crowdfunding
Crowdfunding is not a magic money wand. You must have a marketing plan and be able to reach and resonate with your target audience with inspiring videos, images and words.
Kickstarter and Indiegogo are two better-known crowdfunding networks. Pozible is an Australian-based network. They all charge a percentage fee of funds earned.
Kickstarter is an all-or-nothing system. If you don’t reach your target, you receive nothing. Other networks offer different terms.
Crowdfunding has seen a recent resurgence, but has a long history. Mozart crowdfunded his concerts in 1783, offering backers manuscripts of his music.
Words: Tom Haynes
