What is Crowdfunding?

Here is some general information that I’ve found out as I’ve been planning my crowdfunding campaign for “Echoes from the Drift”. I hope it’s a good place for you to get some general knowledge about crowdfunding and there are links at the bottom of this post, if you’d like to know more.

Why do people use Crowdfunding?

Crowdfunding is a great way to help individuals (or small teams) make their project a reality. People around the world can contribute money to a project and end up with some great new products that would be very expensive for a creator to fund by themselves. Creators can talk to their audience through the crowdfunding websites and let them know, step-by-step, how the project is progressing. In return, people can become involved with the project by asking questions or sending comments to the creators. Plus, you can end up with some exclusive bonus items that won’t be available anywhere else.

So, what exactly is Crowdfunding?

There are several types of crowdfunding strategies. The most common is being able to, essentially, pre-order a product. But other examples include donations to charities, donating monthly payments to help support creators, or investing in a new enterprise.

Crowdfunding websites (such as Kickstarter, Indiegogo, Patreon and several others) act as a hub where creators tell you about their projects and you can decide if you’d like to support them (or in Kickstarter terms, become a “Backer”). A backer becomes a patron or sponsor for that project and, at the same time, makes a pre-order of an item (or items) from the project. Projects can range from the creation of new comic books, boardgames, video games, films, music, inventions, dance events, charity causes, the list goes on.

How does Crowdfunding work?

The example I’ll be talking about here deals with the pre-order of a product. There are various “Rewards” (also known as “Perks” at Indiegogo) that the creator will offer to you (e.g. a digital comic; a digital and printed comic; a printed comic with a sketch; etc.). On the page of the creator’s campaign, you can select the reward that best suits your budget for what you would like to receive.

The creator states his/her financial goal on their campaign page and people will have a set time limit (usually around one month) to support them and help them reach that goal. If the creator succeeds in reaching that goal amount, you will be charged the amount that you said you would pay for the reward you asked for. If the creator does not reach that goal, on sites such as Kickstarter, no-one will be charged and the campaign will be unsuccessful.

How can I support a project?

When you want to support a creator’s campaign, you will need log in to the site of their campaign, enter your credit or debit card details (most cards are accepted, but check on the site) and select your reward. You won’t be charged for the reward until end date of the campaign. On Kickstarter, you’ll only be charged when the campaign’s financial goal has been achieved. Some projects on Indiegogo will charge you for the amount you agreed to donate, even if the goal hasn’t been achieved.

What if I like a project, but can’t afford much at the moment?

Most crowdfunding sites also offer you the chance to just donate money towards a campaign without asking for a reward. You also can offer support to the campaign in other ways, by telling your friends and family about a campaign you like, to help that creator get more supporters.

What is a Stretch Goal?

Some campaigns offer “Stretch Goals”, where if a certain amount of the goal is met during the campaign, the creator will offer additional rewards (e.g. a different cover for their comic, or a new set of miniatures for their game, etc.).

When will I receive the goods I ordered?

The project will have an estimated delivery date on when you will receive your rewards (usually this is written below the reward). The creators will keep in touch with you via the campaign site and emails to give you updates on their progress, during and after the campaign. You can also post comments on the campaign page to find out progress or cheer them on.

What are the risks of Crowdfunding?

Sometimes, crowdfunding campaigns fail. The creators have only a short time to reach the goal, so sometimes they will need to rework his/her campaign and try to raise funds again later. Even if the campaign is successful, sometimes creators can’t meet the deadlines they’ve set for themselves. Or unexpected complications arise and they just can’t complete the project for you.

Unfortunately, there have been cases where people have used crowdfunding to swindle money from others. These disreputable individuals say they are going to create products for you, take your money and you never hear from them again (or they start another project without completing the one you backed). These “scampaigns” get reported by backers to the crowdfunding sites, but there is usually little hope of getting your money back. So, be safe and check through the information on the creator’s campaign page carefully.

Are there ways I can more confident about backing a project?

In crowdfunding campaigns, the backers trust that the creator will do their best to deliver, but there are no guarantees (it’s not like buying an item from an online store). Also, there can be long time delays before you receive your product. So you need to consider how much work they’ve put into their campaign, their skill set, and how reasonable they are with what they offer and the time frame they’ve set for the delivery before you decide to back their project.

The more information you get from the creator (seeing them in the campaign’s video, getting links to their Facebook pages and websites), the more faith you can have in them. It’s an honesty and trust system. The creator’s personal and professional reputation is on the line. Creators want to succeed and not let their backers down but sometimes, for various reasons, delays happen. That’s why it’s important for creators to update their backers on the status of the campaign and announce any possible delays to maintain the trust and keep the backers informed.

Where can I find out more information?

I hope that general information was of use to you crowdfunding newbies out there. For more details about crowdfunding, try these links from Kickstarter: