At this point in our modern lives, you probably know someone who has run a crowdfunding campaign. For better or for worse, crowdfunding is a major way to finance projects large and small, personal or professional. If you’re curious about this (relatively) new phenomenon, we’ve got a quick crash course in the why and how.
Why Should I?
Good Q. Crowdfunding isn’t for every project. As we mentioned in an earlier post on F&B funding, crowdfunding is more likely to be a good option if you already have a strong following (whether that’s on social media or in your hometown) and are trying to attain something tangible (i.e., a new piece of equipment to make more of your product). But new types of crowdfunding, like equity crowdfunding, can be worth exploring if you’re simply looking to raise capital. This great article from Rob Heyns gives an overview of the types of crowdfunding in common use today.
How can you choose a platform where there are so many out there? We’ve got details on some of the major players to help you make an informed choice.
The original and most recognizable crowdfunding platform, they have an all or nothing model: If you don’t raise at least your target amount, you don’t get the money. While they come with the biggest risk of not fulfilling your goal, and charge the highest amount (5% + cc processing fees), they do have the largest network of users and are the ideal choice if marketing your product is just as important as raising the money. Successful food campaigns include Suso Sriracha, Vite Ramen and Rebel Ice Cream.
Our interview with Kickstarter Food Outreach Lead Carol Benovic-Bradley will provide guidance on best practices for this exciting platform.
The second most famous platform, although they actually typically have more active campaigns than Kickstarter. Indiegogo has a slightly lower base fee (4% + cc processing fees). They are considered a more flexible platform, and you will still receive the pledged money even if you aren’t fully funded (though they charge a higher rate for not reaching your goal). They also now house alternative campaign structures that allow for equity rather than reward. While their marketing network is not as big as Kickstarter’s, this is a good option if you are nervous about “all-or-nothing” funding. Successful food campaigns include Fatbar, Bear Powerfoods and Akua Kelp Jerky.
Targeted specifically to food and beverage makers, Pieshell has been growing in recent years. While the network is still small, the market is more specialized to food and they have a much higher success rate as a result. The platform fee in one of the highest (6% + cc processing fees) but included in the fee is the 1% that they give to food and beverage charities. Successful food campaigns include CBC Sweet Boutique, Not Ketchup and Neale’s Sweet N Nice.
No matter the platform or type of crowdfunding you choose, there’s a special kind of feeling that comes from bringing members of your community together to support a common cause. If you think crowdfunding is for you, don’t waste time – go get out there!