If you are looking for a funding option for your small business or creative project, you’ve probably heard about crowdfunding platforms — websites that let you pitch your idea to a large group of people, who can all kick in money to get you going.
There are a lot of crowdfunding websites out there, but two of the biggest in the field are Indiegogo and Kickstarter. In this article, we’ll dive deep into the Indiegogo vs. Kickstarter debate. Which site is better? Which one offers more? Which charges more in fees? And the big question: Which is more likely to get your project funded?
By the end of the article, you should have a good sense of the two platforms and which one is right for you.
Understanding Crowdfunding
Before we discuss the two companies, let’s get a brief overview of how crowdfunding works.
A crowdfunding campaign is when a creator with an aspirational business, new gadget, or creative project seeks backers to help them realize that dream. Project creators can offer perks or early access to a new product to the people who help them reach their funding goal.
A campaign ends when a target monetary goal is reached or a certain period of time passes. (We’ll get into the two different models below.) Some crowdfunding sites ask backers to pledge money, only charging their credit card when a project hits its fundraising goal. Other platforms take pledges right away.
Usually these sites offer rewards, discounts, or early access to products. Some practice equity crowdfunding, however, letting backers actually take a small piece of ownership of the company with their money pledge. That being said, there are regulations and laws that make it somewhat difficult to do so. (Read all about equity crowdfunding to learn more about the practice.)
There are other crowdfunding models out there as well. GoFundMe is built more toward charitable endeavors or personal help, letting people give money to nonprofits or people struggling with medical expenses. Patreon takes a subscription model to crowdfunding, letting people pay a monthly fee to get access to a podcast, newsletter, mixtape, or some other form of periodic offering.
Indiegogo vs. Kickstarter: A Quick Comparison
Let’s do a quick rundown of Indiegogo and Kickstarter.
For one, both operate in essentially the same way. Project creators make a page showcasing their business or creative endeavor and ask for backing. They both let creators offer reward tiers for people who donate certain amounts of money. For example, a backer who gives $5 might get a sticker with the company logo on it, while someone who donates $10,000 could get a product named after them. There’s usually a wide range of reward possibilities.
Both platforms ask you to post a video explaining your project and give a thorough description of what you’re trying to accomplish.
One of the biggest differences between the two platforms is their funding models. Kickstarter projects have an “all or nothing” funding model. If the project doesn’t meet the target fundraising goal, all the pledges evaporate and none of the backers have to pay any money. Indiegogo, on the other hand, lets users pick from two models, one of which doesn’t require a project to hit the funding goal.
The other major difference between the two is that Kickstarter requires you to submit your project to them for approval. They limit their funding projects to creative endeavors and approve projects to ensure that only high quality fundraisers reach their audience.
Fees
The final differences between the two companies are with fees, though the differences are slight. Kickstarter takes 5% of your total funds raised in a platform fee, but if you don’t meet your target, they don’t charge the fee. Kickstarter also charges a payment processing fee between 3% and 5%.
Indiegogo also charges 5% of your funds raised, but it takes that whether you hit your goal or not. Indiegogo uses Stripe to process credit card payments, and Stripe charges a processing fee of 3% plus 30 cents per transaction.
Kickstarter tends to limit projects to those in the United States, while Indiegogo allows projects from around the world. In that case, there can also be additional fees for international payments.
Why You’d Choose Indiegogo
The main benefit of starting an Indiegogo campaign is how easy and quick it is to do. There’s no approval process — you can simply build a page and start sending it out to your network.
Indiegogo also doesn’t limit the types of projects you can take on. If you’ve got a creative idea, that’s great. But you can also use the platform to launch a photography business. Or a food truck. Any (legal) business idea or creative project you can dream up, you can crowdfund on Indiegogo.
For campaigners, another huge benefit to launching an Indiegogo project is the support the company gives you after a project is completed. The website has 24-hour customer support and can connect you to designing and prototyping partners to help you make your product. They also have retail partners, including Amazon, who can help you immediately start selling and delivering your products when they’re ready.
The platform also tracks stats for you so you can see how many people are seeing your project and what the conversion rate is for people to visit and donate. And if you fail to reach your mark, you can move your project over to their partner iNDEMAND and continue to raise funds.
Indiegogo takes 5% in fees, which is standard and comparable to Kickstarter. A downside of Indiegogo is that they take that 5% whether or not a project meets its target goal, but some people view that as a positive because Indiegogo gives you the option to get all the funds raised, whether or not you meet a goal.
Why You’d Choose Kickstarter
Kickstarter is almost synonymous with crowdfunding, and one of the big reasons you’d choose to use the platform is name recognition. Backers know and trust Kickstarter. Also, because Kickstarter only takes money when a project is fully funded, backers can feel more confident that they won’t be tossing their money away. That may make them much more likely to donate.
This is the big hook of the “all or nothing” funding model, and one that creators should take into account. If you take money if a project isn’t fully funded, it may be more trouble than it’s worth.
Say, for example, you need $10,000 to prototype and build out a product, but only raise $4,000. It would be nice to have that $4,000, but if it’s not enough to get the work done, you’re in a really tough situation. Do you issue refunds? Do you just take the money and deal with angry backers? There aren’t a lot of good answers.
Kickstarter campaigns do have to undergo a review process, but for many people, that can also be beneficial. It forces you to think long and hard about your campaign page and make it as strong as possible before you get approved to start raising money.
Kickstarter accepts PayPal and major credit cards and has competitive payment fees. A nice touch is that they don’t take their cut unless you fund your project, so they only get paid if you succeed.
Successful Kickstarter campaigns have gone on to be huge businesses, successful podcasts, independent films, and more. They limit their projects to creative endeavors, but if you fit their scope, they offer a trustworthy platform that backers believe in.
The Final Verdict
There are many similarities between Indiegogo and Kickstarter. Both let creators raise funds through large groups of people on the internet. Both have had tons of successful campaigns. Both Kickstarter and Indiegogo charge small payment processing fees to backers and 5% of total funds to creators, though Kickstarter only takes the platform fee if a project is successful.
That being said, for most creators, the easier option to take on will be Indiegogo. They have less strict project parameters and no approval process to get started. They have competitive fees and more support for a business after a fundraising period, offering partnerships and business development help to get your venture off the ground.
If you do have a creative project that fits Kickstarter’s parameters, and you want to get in on an established, well-known platform that people trust, you may want to go with Kickstarter. Both are strong options, and you can’t go wrong with either.
