As some of you may know I have backed the odd Kickstarter project in the past and even an Indiegogo project. These are crowdfunded projects which rely on backers to take an estimated gamble to make them happen. But what exactly is crowdfunding and most importantly how does it work?
Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet. Crowdfunding is a form of alternative finance, which has emerged outside of the traditional financial system.
The crowdfunding model is based on three types of actors: the project creator who proposes an idea and/or project to be funded; backers, individuals or groups who support the idea; and a moderating organization (the “platform”) that brings the parties together to launch the idea. Moderating organizations include Kickstarter, FundAnything, ICrowdFund and Indiegogo.
In 2013, the crowdfunding industry raised over $5.1 billion worldwide.
Kickstarter is one of a number of crowdfunding platforms for gathering money from the public, which circumvents traditional avenues of investment. Project creators choose a deadline and a minimum funding goal. If the goal is not met by the deadline, no funds are collected, a kind of assurance contract. Money pledged by donors is collected using Amazon Payments. The platform is open to backers from anywhere in the world and to creators from the US, UK, Canada, Australia, New Zealand, The Netherlands, Denmark, Ireland, Norway, Sweden, Spain, France, Germany, Austria, Italy, Belgium, Luxembourg and Switzerland.
There is no guarantee that people who post projects on Kickstarter will deliver on their projects, use the money to implement their projects, or that the completed projects will meet backers’ expectations. Kickstarter advises backers to use their own judgment on supporting a project. They also warn project leaders that they could be liable for legal damages from backers for failure to deliver on promises. Projects might also fail even after a successful fundraising campaign when creators underestimate the total costs required or technical difficulties to be overcome.
Indiegogo users/project creators can create a page for their funding campaign, set up an account with PayPal, make a list of “perks” for different levels of investment, then create a social media–based publicity effort. Users publicize the projects themselves—through Facebook, Twitter and similar platforms. The site levies a 4% fee for successful campaigns. For campaigns that fail to raise their target amount, users have the option of either refunding all money to their contributors at no charge or keeping all money raised minus a 9% fee. Unlike similar sites such as Kickstarter, Indiegogo disburses the funds immediately, when the contributions are collected through the user’s PayPal accounts. Indiegogo also offers direct credit card payment acceptance through their own portal. Those funds are disbursed up to two weeks after the conclusion of a campaign.
So why would anyone in their right mind risk their money to use a crowdfunding website to back a project? Well there are perks to be had. Backers usually buy into a project using a “pledge”. A pledge can grant access to restricted or limited edition products and more usually reduced prices on the final product being backed. As money is raised “stretch goals” are achieved and more options are made available and more freebies on each pledge awarded. Occasionally early backers can get favourable treatment by getting access to things even later backers cannot receive.
My experience of Crowdfunding is mainly in the gaming and terrain spheres. Some of the big games companies such as Corvus Belli (Infinity), Mophidius (Mutant Chronicles), Mantic Games (Warpath), Battlesystems (Sci-Fi, Dungeon and Post-APoc Cardboard Terrain) and PRODOS (Warzone Resurrection and AvP:The Hunt Begins) have all used Kickstarter to generate funds to get a project going. Some of these could have run projects without Kickstarter and use the service as a glorified pre-order service. I’ll be honest….I’ve had a mixed bag when it comes to the results of Kickstarters Ive backed. Some have been unmitigated successes and others have been a little questionable or badly managed, leading to delays and negativity.
Recently I’ve backed two Kickstarters run by friends of friends with good reputable backgrounds based off thier times in other companies…..The Devils Run:Route 666 by Mark Rapson (ex-PRODOS Games Ltd) of Word Forge Games and Macrocosm:The Next Races by Chris Nicholls (ex-Tor Gaming) of Macrocosm.
The Devils Run:Route 666
The Devil’s Run: Route 666 is a fast-moving and hard-hitting vehicular combat board game (for 2-6 players) set in a post-apocalyptic America. Each player runs a gang of cars, trikes, trucks and characters racing on post-apocalyptic Americas highways to beat each other to resources and objectives. Its very much a boardgame/wargame version of Mad Max
Macrocosm:The Next Races
Macrocosm is a 28mm Sci-Fi Skirmish game set in a future galaxy of excitement, rayguns, weird aliens and wonder.
Players take on the role of a group of adventurers and explorers, represented by a group of miniatures, where they play out scenarios and campaigns to determine the fate of the colonies and to further the glory of their chosen faction… and of course… to have fun!
I’m very happy that both projects have met their funding limits and are now fully funded so I can look forward to the goodies arriving through the door soon. I need to select the extras my pledge credit bought in TDR:R666. I’m due about £125 worth of goodies and think I’m going to buy into the Brit Attack Gang and maybe The Hunters.
I also really need to get my sh*t together and sort out my Macrocosm pledge and any extras I want to buy. I backed the Malignancy and really really like the models offered in that range. I think I will increase my pledge and buy more stuff.
In truth not a single project I’ve backed has failed to become funded and despite the negativity surrounding one of the projects I backed I’ve actually been treat very well by PRODOS and have had things delivered exactly as originally indicated, Sure Im still waiting for Wave 2 but so are the vast majority of backers regardless of location or Backer number. Im happy enough that AvP will fulfil as promised and I’ll receive what I pledged for.
So….what do I think about crowdfunding? Well its a gamble, you could lose your money but for some truly awesome products I’m willing to take that risk. Ive had mixed luck and you could argue I should quit whilst Im ahead but as an entry into a new game its always worth pledging £1 to become a backer. I can always increase my pledge at a later date. All I ask from Project Creators is that you talk to us, the Backers. Yes its your vision but you haven’t spent the money to make it happen. We are Customers and without us you have a failed crowdfunded project. I can absorb a delay or even a change but you MUST MUST MUST give us the information we need to back and continue to back your projects. If you expect a leap of faith you have to give us something to believe in. Talk to us and keep us engaged and involved. Your future in directly linked to the success of your games………it is a symbiotic relationship between Backer and Project Creator. We are no bottomless pocketed cash cows to be milked as and when it suits you….we deserve better.
My final piece of advice is as follows and directed to Backers….if you cannot afford to lose the money do not Back the project. No matter the success of a project your money can dissappear off into the sunset and I would advise checking out the company or people involved before you commit. Worst case is pledge £1 to get involved and then upgrade the pledge later if necessary.