The Pros and Cons of Different Crowdfunding Platforms

Hey there! Are you looking to start your own business or launch a project, but don’t quite have the funds to do so? Crowdfunding platforms can be a great way to jumpstart your ideas and get the financial backing you need.

But with so many platforms to choose from, it can be challenging to decide on which one is the best fit for you. Don’t worry, though. In this article, we’ll be discussing the different pros and cons of various crowdfunding platforms to help you make the right decision.

Kickstarter 💰

Kickstarter is perhaps the most well-known crowdfunding platform out there and was founded back in 2008. It’s best known for its “all-or-nothing” funding model, which means if your project meets its funding goal within the deadline, you can keep the funds. If not, your backers will not be charged, and you won’t receive any of the funds.

Pros:

• High Traffic – Kickstarter has a broad user base and a lot of people who use it regularly.
• Flexible Categories – Kickstarter allows a vast range of projects from art, technology, fashion, and more.
• Rewards System – It allows for reward tiers where backers can pledge different amounts and receive different incentives in return.

Cons:

• Strict Screening Process – Kickstarter has a stringent set of rules that must be followed, and you have to go through an approval process.
• High Fees - Kickstarter’s fee structure is on the high side, with a 5% platform fee and a payment processing fee of around 3 to 5%.
• All or Nothing - Campaigns that don’t meet their set target won’t get any funds at all, which can be disappointing for creators and backers alike.

Indiegogo 🤑

Indiegogo is another popular platform that has been around since 2008. It is similar to Kickstarter but has a broader range of campaigns that it allows, including charity projects.

Pros:

• Flexible Funding – Unlike Kickstarter, you can choose to get the money you raised, even if you don’t meet your goal.
• No screening Process – Indiegogo’s screening process is lenient compared to Kickstarter, making it easier for individuals and independent businesses to get started.
• Good for Charity Projects – This platform is becoming popular for its fundraising capabilities for nonprofits and charity projects.

Cons:

• High fees – It has a higher fee structure, with a platform fee of around 5% plus a 3-5% processing fee.
• Weak traffic – The audience isn’t as large as Kickstarter.
• Lower success rates – Indiegogo has success rates lower than Kickstarter with a 13% successful project rate.

GoFundMe 🤝

Are you an individual or a small business looking to fundraise money without having to pitch a business plan? GoFundMe might be the platform for you.

Pros:

• Easy to use – This platform is user-friendly, and you don’t have to pitch a business plan to participate.
• Perfect for personal campaigns – It’s the most popular platform for personal fundraising, like medical expenses, funeral funds, and disaster relief.
• Transparent Fees – GoFundMe doesn’t charge a platform fee, but it does take a small percentage out of donations for payment processing.

Cons:

• No screening process – While it might seem like a good thing, it means there’s no vetting process, and it can lead to people scamming unsuspecting donors.
• Low success rate - Only one-third of campaigns on GoFundMe receive funding above $1,000.
• No reward system - Unlike Kickstarter and Indiegogo, GoFundMe doesn’t have a rewards system.

Patreon 🤑

Patreon is slightly different from Kickstarter and Indiegogo. Instead of raising funds for a specific project or endeavor, Patreon is a platform for you to request recurring payments from fans and followers to support your work.

Pros:

• Recurring Income – Creates consistent and predictable revenue that creators can rely on.
• Focus on Sustained Effort – Rather than just one project, Patreon supports artists, musicians, and other creators ongoing work and art.
• Flexibility – Creators on Patreon set their own schedules for releasing content.

Cons:

• Lower earning potential – While it’s ideal for a sustainable income, you might not get as much one-time fundraising revenue as you would on other platforms.
• Smaller audience – The fan base on Patreon is smaller.
• Little control over audience – Patreon takes complete control over a creator’s relationship with their audience.

Conclusion 📈

Choosing the right crowdfunding platform can make the difference between success and failure. We’ve outlined the benefits and drawbacks of the four most popular platforms, so you can make an informed decision.

Remember to consider user traffic, fees, screening processes, flexible funding, and the type of project you are launching. Each platform has its strengths, so it’s best to choose the one that suits your needs the most.

We hope this article helps you make the right decision. Happy crowdfunding!