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 Website review: Crowdfunding
Tallulah Habib
Do you have a dream, but no way of amassing the money needed to make it a reality? One of the digital age's more heart-warming inventions is something called crowd-funding. Sites exist that let you propose your idea to the world at large, and accept donations towards your dream.
Kickstarter
One such site is Kickstarter, which helps to fund creative dreams in particular. Users start a project falling under one of many categories by setting the amount they need and the time period (up to three months) that the project will be open for. They have the option to offer awards to people who pledge – anything from a downloadable MP3 to a trip to Vegas. If they manage to reach their goal, money gets debited off the donators’ credit cards and put into the creator’s account. If they do not reach the goal, the project is marked as “failed” and no money changes hands.
Kickstarter makes its money off your money – claiming 5% before tax or credit costs, which is fair for a site that does not support itself in any other way. One would be advised, however, to add this to the calculated amount needed.
Since the project works through Amazon's Flexible Payments Service, unfortunately only US citizens can currently start projects. However, pledging – and thus the receiving of awards – is open to everyone. Kickstarter says they are working on making project creation open internationally, and we can only hope that they will do so soon.
Rockethub
Rockethub is another site focussed on creative projects, with “the goal of liberating creativity and driving the new creative economy”.
The members are divided into “Creatives” and “Feulers” and at the end of the allocated time-frame, a project is either “fully Fueled”, or “scrubbed”. Metaphors aside, the site works in the same way as Kickstarter, with a few small differences.
The biggest is that they use PayPal, so yes, since PayPal is now in South Africa, you can start a project too. This does, however, mean the site itself is intermediary as far as money is concerned (PayPal does not offer the same all-or-nothing services as Amazon yet). Feulers convert real money into virtual currency called RocketFuel to fund projects. Each user keeps a bank of this RocketFuel on the site that can either be donated or cashed out at any time. Once donated, if a project is unsuccessful, the Fuel gets transferred back to the donator before any actual money gets paid out.
Another difference is that the site itself provides incentives (aside from those offered by the Creatives), called “badges” for completing certain tasks.
Rockethub also makes money off your money, by taking 8% of the accumulated amount should your project be successful. However, only 4.5% of this goes to the site, the rest covers PayPal transaction fees. No money gets taken off if you fail to reach your goal amount.
IndieGoGo
IndieGoGo is much wider-spread than the above two, and open to any ideas – not only creative ones. You can use it to fund a project that you still want to start, or one you have already completed but wish to expand or promote – such as selling pre-orders of a book.
It is open to Visa, MasterCard or PayPal and funders have up to 120 days to donate to your project. Unlike the other sites, you do not have to get all-or-nothing. You can set your “disbursement” level – the level of funding after which you will start to receive payments. However, if you reach your goal, the site will pay you 5% of that goal as a reward.
It sounds all roses, but in actual fact the 5% comes out of the 9% marketplace fee charged on funds raised, bringing your fee for raising funds down to 4% - outside of the credit, Amazon or PayPal transaction fees you are also liable for. Still, it works out at about the same as the other sites with the added bonus that you can receive money as you go.
Of course, funding a project on this site means you have to be extra careful, as there is no way of getting your money back once you have donated it. |
