For many young businesses and startups, crowdfunding platforms like Kickstarter and Indiegogo are now the go-to source for seed capital. So much so that, by the end of 2016, this innovative financing method is expected to contribute more business funding than venture capitals (VCs).
Given the ever-increasing popularity of the system, getting backers’ attention is no easy task and barely 40% of all campaigns succeed. My latest study was designed to see whether those that do would consider embarking on the crowdfunding campaign trail again, or if once was enough for any sane entrepreneur.
This is our methodology: we questioned campaigners with a history of success on the two largest platforms; Indiegogo and Kickstarter. The 1124 respondents represented campaigns from every major category (scaled to the size of each). We divided them into three groups: those who raised less than $50,000, those who raised $50,000 to $150,000, and those who raised more than $150,000.
We put two simple questions to them:
1. “Are you planning a second campaign?”
2. “Will you choose Indiegogo or Kickstarter?”
Big campaigns are less likely to jump twice
On the face of it, the majority of crowdfunders (62%) were keen to launch a second campaign. At 18%, the no group was the smallest, while the remaining 20% were undecided. However, once we broke the responses down by the amount raised in the first campaign, it became clear that the level of success was a driving factor.
We found that campaigners in the $50,000 or less group were the most likely to embark on a second campaign while 74% of the campaigns that raised over $150,000 had no intention to crowdfund again.
We have two explanations for this. The first being that six-figure campaigns require large marketing budgets, a fact that is well known by successful campaigners. Having reached their goal, it is likely these individuals chose to concentrate their resources on production and PR activities, rather than start the same journey again.
The second reason is that VCs watch the crowdfunding platforms. As such, well-executed campaigns that demonstrated high audience engagement are likely to attract further capital from traditional investors and have no need to launch a second campaign.
Music and technology campaigners have more to give
Analyzing the responses relative to category showed that Music, Technology, and Video campaigners are the most likely to run a second campaign. By contrast, those in the Journalism, Politics, and Sports fields are less keen on going through the process twice.
It seems likely that this is a reflection of the audience as much as the campaigners. Musicians and filmmakers tend to have their own followings – fans that contribute to and publicize their campaigns and are motivated to keep investing in new projects. It’s a trend recently noted by Kickstarter, with platform-specific data showing that Music is one of the largest categories, second only to Film and Video.
Interesting to Note
It was interesting to note that according to the official data from Kickstarter (Indiegogo is not that open with statistics) the highest success rate has the Dance category, followed by Theater and Comics (62.9%, 60.4% and 51.2% accordingly) while the lowest success rate is in Technology category (19.6%) which can be surprising to many. Still the average success rate across the platform is far from reaching to half and is 35.9%.
Kickstarter vs. IndieGoGo
The Kickstarter community is slightly more (2.7%) likely to launch a second campaign than IndieGoGo campaigners, probably a reflection of Kickstarter’s ability to draw organic traffic. The IndieGoGo population has to rely on their own promotional activities to a much greater extent.
There is definitely some crossover taking place between the two platforms, but that’s reserved almost exclusively for unsuccessful campaigns. As expected, 98% of our campaigners would launch a second campaign on the same platform as their first. After all, why change a winning formula? Interestingly, the 2% of campaigners who did indicate an intention to change platforms all had experience of campaigning on both Kickstarter and IndieGoGo.
We found that smaller, successful crowdfunding campaigns are more likely to launch again, probably because the effort and resources required for success are much less than those of the larger six-figure earners, many of whom would not return to crowdfunding. While there is a cross over between IndieGoGo and Kickstarter, it is more pronounced in unsuccessful campaigns. The majority of successful campaigners are loyal to their chosen platform.