Image by: mandiberg
By Tony Melino
A lot of businesses and companies have been using crowd funding as a source to raise money for a product launch or funding the beginning plans of their business. It’s more common with independent filmmakers to raise money for their film so they don’t have to pay investors back who are coming for their 3% profit increase.
One of the major sites Kickstarter has actually been slowing down when it comes to profits and people putting their campaigns on the site.
The Major Flaw Of Kickstarter
There have been other sites such as IndieGoGo and Free Funder that have become increasingly popular because Kickstarter is the only crowd funding source that you have to reach your goal to obtain all of the money you raised. If you don’t raise your goal – your project is not funded.
With the other sites; you’ll be able to keep the money you’ve raised and go forward from there. Of course you may have to seek out other investors, run another campaign, or start an email marketing campaign to boost your reputation and credibility before finding people who are willing to lend you money.
This is the number one reason people are looking elsewhere. They could spend anywhere from 30 days to 6 months campaigning their Kickstarter campaign but if they don’t reach the goal – they see nothing. It’s the biggest flaw that may ruin Kickstarter – unless they are willing to change their contracts.
Veronica Mars Campaign
If you haven’t heard about this; you haven’t checked the internet over the last few days. Apparently; the producer’s of Veronica Mars (the television show) decided to do a crowd funding campaign on Kickstarter. In 10 hours; they raised over $2 million dollars. That is technically the most amount of money raised on Kickstarter in that amount of time.
This just says that they weren’t able to find real investors and that they aren’t positive it will be a successful movie but they are allowing the audience to raise the funds for the movie.
With the profits that Kickstarter received from this campaign; they are looking into other ways to boost their site and how to stand out from their competition. [Kickstarter also takes out the biggest percentage of your campaign – sitting at 5%.
If the producers would have been smart; they would have set up numerous campaigns for the Veronica Mars project instead of all in one. Kickstarter took 5% of almost $4 million that was raised for the film in under a week. Talk about a killing since Kickstarter has raised over $500 million since it launched in 2009.
Why Kickstarter Is Here To Stay
Even though the traffic may have slowed down on the Kickstarter page; it’s here to stay along with the other major crowd funding sites. Why is that? Kickstarter will soon branch off into what IndieGoGo has been doing for years.
They are allowing people to raise money for other facets (not just films and video games) businesses, projects, trips, seminars, art, etc.
The generation after me and so on live in the internet age. The email marketing campaigns will start coming because they can advertise that they are currently raising funds for a certain product or project.
The future for investing is crowd funding. Of course this will never replace real investors and crowd funding definitely does have it’s downside; but as long as people continue to use social media… there’s always going to be a need to crowd fund.