With the start-up culture trending rapidly, crowdfunding has become the most accessible and low-effort way to raise capital. The crowdsourcing industry raised over $2.7 billion across more than 1 million global individual projects in 2012. Indiegogo and Kickstarter are the two most popular crowdfunding platforms that support only donation-based projects. As of now, Kickstarter is only available for creative projects in the US, UK and Canada. Indiegogo is available for any kind of project taking place anywhere in the world.
On both platforms, project creators have 100% control over their products and services. Neither platform allows contributors to become investors or shareholders, nor can they qualify as accredited investors to participate in any financial returns.
edit Enterprise Model
Although founded two years after Indiegogo, Kickstarter has experienced stronger growth and larger break-out campaigns. According to web-traffic tracker Alexa, Indiegogo has more projects, but it is Kickstarter that has more traffic.
Kickstarter is stricter in screening campaigns, and uses two main criteria:
- that a project is something with a clear end that will be met
- the project is non-charity in nature and fits within the stipulated categories of art, dance, fashion, film, and technology.
Indiegogo approves fundraising campaigns for almost any type of project including hobbyist, personal finance, or charity. Also, Indiegogo is for just about anyone with a bank account, and is the likely choice for projects with little chance at funding (including projects rejected by Kickstarter).
Zach Gray and Bob Harper of Roaming Startup discuss Indiegogo vis-a-vis Kickstarter in this video:
edit Funding Model
Kickstarter has an all or nothing system; i.e., if the total funds raised from all the pledges equals or exceeds the target amount, then that amount will be sanctioned. If the target is not reached, all the backers are refunded and no money is disbursed to the project. Kickstarter charges a fee of 5% of the money raised. This all-or-nothing model is called fixed funding.
While Indiegogo also supports a fixed funding model, their key differentiator is their flexible funding model - the option of keeping pledge money even when the goal is not met. A fixed funding campaign would make sense for a campaign owner who only wants to proceed with a minimum amount of money - and that's a personal or business decision that a campaign owner might make. But all Indiegogo campaigns can keep the money they raise, regardless of any total goal they might set, if they choose the flexible funding option. Indiegogo charges a 9% commission for its flexible campaign arrangement, and a 4% commission for its all or nothing campaign.
Kickstarter requires an Amazon Payments account and does not disburse funds until 20 days after the project has ended.
Indiegogo requires an account setup with PayPal. Indiegogo disburses funds instantly, i.e., as soon as contributions are collected through the users' PayPal accounts.
edit Fund Raising Goals
Until recently, comparing Indiegogo with Kickstarter was impossible, as Indiegogo had not yet revealed statistics about the number of projects it had helped launch, the total funds it had helped raise, etc. Upon release of this information, it was discovered Kickstarter raises nearly six times as much money as Indiegogo does and has a higher success rate.
Kickstarter has its own regularly updated statistics page. And in January 2014, Kickstarter released a set of performance statistics that covered all of 2013. These revealed three million people had pledged $480 million in the year and had successfully funded nearly 20,000 projects.
Meanwhile, Indiegogo has hosted more than 150,000 campaigns since its launch in 2008. A data analysis for Indiegogo by crowdfunding freelancers Jonathan Lau and Edward Junprung shows the following:
The difference in figures is because each company uses a different business model. Indiegogo offers flexibility with funding open for anyone, anywhere. The cost for such openness in geography and project type is a higher number (hence higher percentage) of failed campaigns. Kickstarter filters who can launch what kind of project. Because of the geographic limitations, it is easier to make predictions and approve projects that are tangible, specific and more likely to succeed.
edit Campaign Statistics
Indiegogo's traffic and market recognition numbers rank it second to Kickstarter. Even then, Indiegogo does exhibit the engagement metrics and rising counts that make it comparable to Kickstarter.
The Verge found that while 40% of projects on Kickstarter succeed in meeting their funding goal, less than 10% of projects on Indiegogo do.
Typically, visitors to either site review projects that may be of interest, pick one or shortlist a few, and then actually make a contribution. Most contributions are made by people who want to support a project's cause, or by friends and supporters of the project creator.
The 2013 data related to both sites, inclusive through September, shows a difference in the rate for visitors reaching a project page:
It would be fair to infer from this data that Kickstarter leverages its visit count better by channeling visitors to more relevant projects, resulting in a higher click-through rate. Indiegogo has also recently redesigned their website such that their processing matches that of Kickstarter more closely.
Indiegogo performs very well regarding data showing visitors to pages where a contribution can be closed:
Even when the projects and visitor demographics are relatively similar, and now that the two sites have closely matching layouts, it is still an achievement for Indiegogo to convert visitors to contributes 40% more than Kickstarter. Perhaps because Indiegogo visitors are possibly more interested in the project and much more likely to contribute. Also, the call-to-action button for Kickstarter includes a “$1 Minimum Pledge,” which can be a turn-off to any potential contributer and affect their intent to contribute. Indiegogo does not require any such limit.
Finally, in spite of Indiegogo having a high rate of visitors going to the contribution page, their visitor-to-contributer conversion rate is lower than that of Kickstarter:
Usually, a 58% abandonment rate is on track with ecommerce averages. Even then, it is significantly higher than the 35% abandonment rate that Kickstarter is seeing. But in spite of this high abandon rate, Indiegogo is clearly catching up, with traffic gains close to those of Kickstarter.
edit Writing a Successful Campaign Pitch
Some campaigns are more successful than others, and this may come down to something as simple as the language used in a pitch.
Georgia Tech researchers, Assistant Professor Eric Gilbert and doctoral candidate Tanushree Mitra, studied the campaign for Pebble, an e-ink smartwatch, which has been Kickstarter's most successful campaign to date, and the campaign for Ninja Baseball, a PC game that received positive coverage but failed to meet its funding goal. The major differences between Kickstarter success stories and tales of shortcomings prompted the researchers to further investigate over 45,000 Kickstarter campaigns.
Gilbert and Mitra discovered that, after controlling for other factors, certain phrases that made use of principles of persuasion led to a higher probability of funding. In particular, reciprocity—that is, offering a gift in exchange for a donation—led to greater funding, while less authoritative phrasing (e.g., "We hope to get...") hurt funding prospects. The full results of Gilbert and Mitra's study are published in The Language that Gets People to Give: Phrases that Predict Success on Kickstarter [PDF].
edit Security Breach
In February 2014, Kickstarter announced that the service had been hacked and customer information had been stolen. The company claimed that no credit card information had been accessed by the hackers. However, they advised all their users to change their passwords.
edit Indiegogo and Kickstarter in Recent News
- Wikipedia: Indiegogo
- Wikipedia: Kickstarter
- Conversion rates Indiegogo vs Kickstarter - compete.com
- Donation based crowdfunding sites - forbes.com
- Top 10 Crowdfunding Sites for Fundraising - forbes.com
- Which is the Best Crowdfunding Site and Why - crowdfundingpr.wordpress.com
- Choosing your Crowdfunding Platform - crowdfundingdojo.com
- Kickster vs Indiegogo by the numbers - startupsfm.com
- How many projects on Indiegogo get fully funded? - verge.com
- Indiegogo FAQ
- Kickstarter's average success rate higher than Indiegogo - techcrunch.com
- Kickstarter’s 2013 Saw 3M Crowdfunders Pledge $480M, 19.9K Successfully Funded Projects - TechCrunch
- Georgia Tech Researchers Reveal Phrases that Pay on Kickstarter - Georgia Tech