The most common question I get asked on crowdfunding is which one should they use. I normally respond, what are you looking to do and who would be your ideal investor? Most have an answer to the first question but not to the second.
Choosing the right investors is one of the most critical decisions that you are likely to make as a Founder. Using a crowdfunding site may mask them from you but they still exist and they will reach out personally to enquire how their investment (whether £10 or £500) is doing. There is actually a very careful strategy that you have to employ when raising on crowdfunding platforms because it is not uncommon for individual investors to become major shareholders in future rounds.
This is where analytics has such an important role in your decision making process.
When I launched the first analytic platform to monitor the top crowdfunding sites around the world, the data generated over a period of time was interesting. When site to site comparisons were made, it became clear that there was a pattern for success.
I designed the site to track a number of factors including capital raised, backers, individual contributions, days it took to raise targets, average raised and typical projects classifications.
The general conclusion was the following:
- Product and Electronic innovations raised higher capital on Kickstarter in pre-orders.
- Art based and social causes faired better on Indiegogo.
- CrowdCube would typically draw in more backers who invested smaller amounts.
- Seedrs would raise capital quicker but generally from less backers (so higher individual investment).
Now, crowdfunding is a changing landscape and there will always be outliers. I accept as you should that each case could be unique. Data changes over time and when campaigns are started. In fact, there are certain periods in the year that you should avoid on some platforms.
But what hasn’t changed is that Kickstarter is attracting a younger crowd. Indiegogo is the site of choice for community based projects. Seedrs is appealing to more established investors and CrowdCube is reaching to a new ‘retail’ investors.
Sounds obvious? When you combine the additional cost of fees and the increased pressure on crowdfunding sites to perform, the wrong choice of platform can affect both parties so ensuring you have all the data to make the right decision is critical.
As the market matures, the divisions between platforms will become clearer. We will see more sector specific crowdfunding platforms such as Real Estate or Health. Examples such as those from the US.
So make those decisions wisely and remember that making decisions on data and trends is increasingly becoming the means of measurement for success.