Crowdfunding Platforms

In 2012 there were more than 700 crowdfunding platforms available which increased to over 1250 in 2015. Sourcing the ‘Nesta Report’ Drake goes on to say “that the UK alternative finance that includes crowdfunding is estimated to have provided working capital in 2014 for 7,189 small and medium enterprises, equivalent to 2.4 percent of bank lending to businesses.” (Drake 2015).

In this blog post I will be discussing 7 of these platforms and what makes them unique.

heard-platforms
46 Partispants. Survey undertook by Emma Simms 18/11/2016

Kickstarter:

“Kickstarter helps artists, musicians, filmmakers, designers, and other creators find the resources and support they need to make their ideas a reality. To date, tens of thousands of creative projects — big and small — have come to life with the support of the Kickstarter community.”

Kickstarter is a global service of over 10 million people and was launched on 28th April 2009. Since then 12 million people have backed a project. It is based on a rewards system for instances backers donate a certain amount which entitles them to specific rewards such as a t-shirt, or copy of the product. Creating an account is easy and simple however once a project is fully completed charges do apply. It is important to take these charges into account when calculating your target. UK fees are as followed:

If your project is successfully funded, the following fees will be collected from your funding total: Kickstarter’s 5% fee and payment processing fees (between 3% and 5%). Please note we do not withhold VAT. If funding isn’t successful, there are no fees.

Kickstarter fee

5% of total funds raised

Payment processing fees

3% + £0.20 per pledge

Pledges under £10 have a discounted micropledge fee of 5% + £0.05 per pledge

Funding on Kickstarter is all or nothing, therefore a project must reach it’s target to receive payment.

Kickstarter also allows users to continue interacting with there backers once a project has been funded. This allows users to provide updates as the project progresses and answer any questions from future investors. Backing a project is also easy with a clear discover section available.

User review on ‘Consumer Affairs’ report good social media connection and easy to navigate profile set-up.
kickstarter-review

In a survey undertaken by Emma Simms between October 2016 – December 2016 targeting crowdfunders, Alke Groppel-Wegener used crowdfunding for her campaign ‘Writing Essays by Pictures’ and chose Kickstarter because it was ‘easy to use’ and James Fair choose the site to fund his independent film due to ‘Larger audience, all or nothing helps the psychology of funders’. 43% of those who undertook the survey used Kickstarter.

Indiegogo:

“At Indiegogo, our mission is to empower people to unite around ideas that matter to them and together make those ideas come to life. With the help of our Indiegogo community, we’re redefining entrepreneurship—shifting it from being a privilege to a right. Because every inventive idea should have its shot, and every creative entrepreneur should have their moment. Together, we can do anything.”

Indiegogo is a rewards based platform and runs in 223 countries with over $1 Billion raised for projects. It offers a range of tools to support your campaign throughout the process such as marketing & promotions, integrated analytics, mobile management and more.

Payment works very similarly to Kickstarter making it just as important to check the terms and conditions.

For funds raised through PayPal:

*PayPal fees are determined by PayPal.
*PayPal fees are charged per contribution.

For funds raised through credit card:

*Credit Card fees are charged by payments processor Stripe.
*Credit Card fees are charged per contribution.

For USD funds raised and your bank located outside the US:

If you raise funds in US Dollars through direct credit card contributions and your bank account is located outside the US, a one-time wire fee is charged by the bank.

Unlike Kickstarter there is an option to receive funds even when the project doesn’t meet it’s target. Indiegogo also has extra features unavailable to Kickstarter:

indiegogo

In a survey undertaken by Emma Simms between October 2016 – December 2016 targeting crowdfunders, 43% of people choose to use Indiegogo. Reasons given included:

  • “They take a smaller percentage than others, and offered flexible funding.”
  • Flexible Funding
  • Easy to use

Raindance Film Festival entered a partnership with Indiegogo in 2013 (Alois 2013) cementing crowdfunding platforms as a credible financial source.

Crowdcube:

Established in 2011 Crowdcube in an investment service. Allowing like-minded people to give money and knowledge to British Business. Aimed at helping small business to start-up. Backed by ‘Balderton Capital’ and ‘Numis’ Crowdcube presents itself as a reliable, trusted and professional investment site and has successfully raised £201,410,773 for 476 projects. It is a UK only platform and the more you invest, the bigger proportion of the business you own.

“Crowdfunding is an alternative method of financing a business, which allows everyday investors, professionals and venture capitalists to invest as little or as much as they like, typically through an online platform.”

Due to Crowdcube being an investment site it takes a higher overall percentage of 7% but has no additional costs such as charge per backer like Kickstarter.

Who is Crowdcube good for? (MG 2016)

  1. Investors looking to diversify their assets to include private businesses.
  2. People looking to invest in a company that they truly believe in.
  3. Investors looking to optimise their tax strategy – As mentioned above, you can claim tax back on investment if they are EIS or SEIS approved. Another great aspect of EIS is that if your investment is profitable and you eventually sell your shares, it is exempt from capital gains tax under certian conditions. This is particularly beneficial for higher rate or additional rate tax payers.

Slated:

Slated is specifically designed for filmmakers and based in the USA. It works as a film investment service allowing projects to find distribution costs. Therefore the fees are a lot higher than standard platforms due to the size of the projects.

slated.png

“Slated’s Executive Producer Services fee is 2-10% of the project’s budget plus 5-10% of the back-end after recoupment plus 20%. The fee includes some third party fees (e.g., Slated Advisors’ fund management fees, agency packaging fees, etc.) but not others (e.g., completion bond and CAM account fees). Slated’s fees are payable upon release of funds to the production; Slated receives no compensation for its Executive Producer Services unless the project goes into production.” Mary C 2016.

The site also offers assistant to build a better script by using a ‘package score’ and would be recommended to filmmakers in the Los Angles region with high quality cast and crew.

Crowdfunder:

“Raising money for ideas

Thousands of people have used Crowdfunder to raise the funds they need to make things happen.”

Crowdfunder is a UK based platform for community based projects. It focuses more on charity and community work than the wide range that indiegogo offers. These projects include ‘Mobility house renovation’, ‘Yoga for Refugees’ and ‘Support a veteran’. Due to this Crowdfunder also offers an ‘Extra Pledge’ service where extra funding of up to £10,000 is also available for projects. Fees are up to 6% including VAT with a further charge on cards and paypal payments. It offers two types of funding – ‘All or nothing’ and ‘Keep what you raise’. The second option has more fees attached.

Crowdfunder is a rewards based platform with a simple layout and easy to use system similar to Kickstarter and Indiegogo.  In a survey undertaken by Emma Simms between October 2016 – December 2016 targeting crowdfunders, Footlights’ Production- ‘The Phantom of the Opera’ was successful completed using crowdfunder.

GoFundMe:

GoFundMe is a fundraising platform for individuals, groups and organisations. Funds are received even if the goal is not reached and and there is no penalties for missing a goal.

gofundme

GoFundMe supports artists and musicians. Filmmakers often look at GoFundMe for documentary work.

Seed and Spark:

Seed and Spark is a rewards based platform for filmmakers based in the USA.

“We started Seed&Spark because we want to make movies & shows independently but we needed a healthier environment in which to make them. We believe the art of storytelling is about expanding imagination, shining a light on the world inside and deepening empathy for the world outside.”

Unlike Slated, Seed and Spark is aimed towards independent productions and offers a Streaming service too.

sands

In an interview with Max Silverman CEO of Seed and Spark he states “Seed&Spark is a crowdsources film studio (seedandspark.com/ep), so it’s value is much broaden than that of a general-purpose crowdfunding platform. Our monthly subscription allows audiences to discover finished movies & shows to watch now and pick new projects to fund to watch later.”  (2016). 

It also offers a wishlist function for users to ask for things directly i.e. locations, crew food. You need to raise at least 80% of your goal. What about the fees? “The lowest in the biz, actually. Seed&Spark’s platform fees are 5%, but we offer contributors the chance to cover that fee at checkout ( and the majority chose to do so ). Credit Card processing fees are $0.30 + 2.9% of the contribution. On average filmmakers keep 95% of what they raise!”

The only downside is the service is currently only available in the US, this will be possibly expanded over the coming years.

Conclusion:

 

After review each platform in further detail and linking it to my feature film the sites most suitable to use would be ‘Kickstarter’, ‘Indiegogo’, ‘Seed&Spark’ (if UK based). Therefore these sites will be more focused for further research.

References:

Alois, J.D. (2013) Indiegogo pushes partnership with Raindance film festival. Available at: http://www.crowdfundinsider.com/2013/08/21299-indiegogo-pushes-partnership-with-raindance-film-festival/  (Accessed: 1 January 2017).

Barnett, C. (2013) Top 10 Crowdfunding sites for fundraising. Available at: http://www.forbes.com/sites/chancebarnett/2013/05/08/top-10-crowdfunding-sites-for-fundraising/#28e20b01cfbd (Accessed: 9 November 2016).

Best Crowdfunding sites for 2016 (2016) Available at: https://www.consumeraffairs.com/business/crowdfunding-sites/ (Accessed: 9 November 2016).

C, M. (2016) Advice and answers from the slated team. Available at: http://help.slated.com/executive-producer-services/what-are-the-fees (Accessed: 1 January 2017).

MG (2016) Crowdcube – A review of the equity crowdfunding website 1. Available at: http://moneygrower.co.uk/2016/01/crowdcube-a-review-of-the-equity-crowdfunding-website/ (Accessed: 1 January 2017).

Silverman, M. (2016) Seed&Spark Interview Questions. Simms, E. Email. (10/11/2016).

Seed (2016) Seed&Spark: Fund movies. Watch movies. Empower diverse voices. Available at: https://www.seedandspark.com/ (Accessed: 9 November 2016).

Slated (2016) Where great movies get made – projects, talent, film financing & distribution. Available at: https://welcome.slated.com/ (Accessed: 9 November 2016).

Indiegogo (2016) Indiegogo: The largest global Crowdfunding & fundraising site online. Available at: https://www.indiegogo.com/#/picks_for_you (Accessed: 9 November 2016).

Kickstarter (2016) Kickstarter homepage. Available at: http://www.kickstarter.com (Accessed: 9 November 2016).

Crowdfunder (2015) The History of Crowdfunding. Available at: https://www.crowdfunder.com/blog/wp-content/uploaded-files/History-of-Equity-Crowdfunding.pdf (Accessed: 10/10/2016)

Crowdfunder (2016) Crowdfunding, UK fundraising website for community, business and creative projects. Available at: http://www.crowdfunder.co.uk/?e=b&utm_expid=73155098-40.yiUNLAlDRCSIqlHBzreA2g.1&utm_referrer=https%3A%2F%2Fwww.google.co.uk%2F (Accessed: 9 November 2016).

Crowdcube (2016) Available at: https://www.crowdcube.com/ (Accessed: 9 November 2016).

Falcon, A. (2007) 10 Crowdfunding sites to fuel your dream project. Available at: http://www.hongkiat.com/blog/crowdfunding-sites/ (Accessed: 9 November 2016).

GoFundMe (2010) GoFundMe: #1 for Crowdfunding & fundraising Websites. Available at: https://uk.gofundme.com/ (Accessed: 9 November 2016).

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