Month: June 2021

In 2006, a young entrepreneur was running a support platform for video bloggers. He called it fundavlog. 

Keen on spreading the word; he started a blog explaining the idea behind fundavlog and coining a term for the concept he was trying to introduce. 

I have used a recent buzzword within fundvlog babble. That word is Crowdsourcing. My first interpretation of it was a broad one… one that can be applied to generalities surrounding concepts/observations such as ‘smart mobs,’ ‘wisdom of the crowds,’ ‘new economies,’ ‘open-source,’ and ‘self-sustaining communities.’

…

But I have decided that another similar term can be used to explain the general ideas being presented here. And I think that term is ‘Croudfunding.’ Money is the root. Money incubates, inspires, and give rise to good content. Money provides new and/or rejuvenated opportunities. — Michael Sullivan

Michael figured that building a community from an online ‘sphere’ was a challenge but not impossible. He looked at the idea from different angles and completely out of the box. He was very impressed with mediaventure.org, both the initiative and projects funded through it.

He wanted fundavlog to raise money for projects like mediaventure.org. But unlike mediaventure.org, he wanted the focus on content creators rather than the industry.

Although his project failed, he came up with two basic rules for crowdfunding:

Rule #1 Not to pilfer facilitated funds.

Rule #2 Absolute transparency.

Crowdfunding is based on “reciprocity, transparency, shared interests and, above all, funding from the crowd.”

If you haven’t read yesterday’s article, I suggest you read it first and then come back to the current one to understand how crowdfunding can be your prime strategy to write and sell books.

Crowdfunding is not a marketing platform.

Most people make the mistake that they think crowdfunding is a marketing gimmick, just like Mailchimp or LinkedIn.

That is not true.

Crowdfunding is a sales platform just like Amazon.

It is a place where you can test your book idea and sell it even before you have written it. 

Isn’t it cool?

Before I get into details to describe the difference, let me clear a few more concepts about crowdfunding. 

There are typically three types of crowdfunding: 

1. Reward crowdfunding, where you raise your funds by reaching out to supporters, who receive a small gift or product sample if they pledge a certain amount.
2. Debt crowdfunding is where you receive a loan and pay it within a specific time frame — some prefer this over a bank loan because it can be much faster.
3. Equity crowdfunding means you give a portion of company ownership to the people who provide you with funding.

Although Kickstarter works on the Reward Model of raising money, one thing to understand is that you are, in fact, raising a debt which you will have to pay in the form of the product which you have specified in the pledge.

So when you hear someone say they raised $1M on Kickstarter, they haven’t raised any money at all. They have, in fact, pre-sold their products.

Ben Einstein has written an excellent article to explain the misconceptions about money raised on Kickstarter. Have a read of it. The link is below.Crowdfunding is Debt
Kickstarter, Indiegogo and other crowdfunding platforms are often misunderstood. It definitely isn’t investment: It’s…beneinstein.medium.com

Crowdfunding is one more market.

It’s one of the rare self-publishing markets that offer to pay you in advance. It also has a great financial incentive, paying roughly 92% of your list price.

But once your campaign has run its course, it’s pretty much over until the next time. The platform isn’t designed for long-term sales.

Since 2009, Kickstarter has helped raise over $5B in revenue for nearly 200,000 successful projects.

Of this, publishing rates $185M on 18,000 successful projects. Publishing is sixth out of fifteen potential categories. That’s an average of $10,000 per successful project, but it’s not exactly a linear curve. Only 4,200 projects have made $10,000 or more—still, a respectable 23%.

Gaming is the biggest category. The reason being Gamers adopted crowdfunding years ahead of writers and readers.

Readers are traditionally anti-technology. It took Kindle more than a decade to be accepted. Even now, given a choice, people prefer paper books to digital books.

But pandemic changed that big time. All of a sudden, there is a surge in eBook and audiobook sales.

However, writers’ participation at Kickstarter is increasing. Several bestselling authors are launching their books on Kickstarter.

Michael Sullivan, a bestselling fantasy and scientific-fiction writer, has successfully run eight campaigns; his last campaign raised $168,000.

Leo Babauta of Zen Habits campaigned to raise $44,700 for printing and publishing his book Zen Habits: Mastering the Art of Change. 8,211 backers pledged $244,255 to help bring his project to life.

Elena Favilli and Francesca Cavallo started a project to raise $40,000 to publish Good Night Stories for Rebel Girls — 100 Tales to Dream Big. That humble children’s book packed with 100 bedtime stories about the lives of 100 extraordinary women from past and present, illustrated by 100 female artists from all over the world, raised $675,614, much more than the wildest imagination of the creators. Their second campaign was even bigger, which raised $866,193.

But no one can beat New York Times bestselling author Brandon Sanderson’s records of raising $6.8M.

Crowdfunding can be a very influential market.

The important thing to keep in mind is that Kickstarter or any other crowdfunding site is one market. A very influential market.

Even a career-defining market.

It can be a complete bust, but only if you treat it lightly and give up too early.

Even if you have a few failed attempts, it doesn’t matter. Where else can you get the word out for your project and get paid in advance?

For many writers, Kickstarter is becoming their launching strategy. Once you have run a few campaigns, you will know how much effort to put into it and how much reward you will get from it.

Fear of the failed campaigns

A false hurdle to starting a Kickstarter campaign and any long-term Kickstarter success is the fear of what happens if your campaign fails to fund. 

There is no doubt that some of your campaigns are going whether you work at them casually or aggressively.

But does it matter?

You fail at submitting your articles to reputed publications.

You fail at getting your manuscript accepted by the traditional publishers several times.

You fail at selling your book on Amazon.

Failures are just the stepping stones to success.

So what is my game plan?

Publishing hasn’t hit the same critical mass in the audience as Gaming has, but the potential is there. 

Every writer who will use crowdfunding will improve the market and bring more audience to the platform.

That is what we need to do.

I intend to study Kickstarter for six months to a year before launching my first campaign. 

During that time, I will support several campaigns both in publishing and other categories. 

All that exposure will help me understand what kind of books do better on Kickstarter.

There is no secret to crowdfunding. Crowdfunding rewards ingenuity and hard work. Writers are familiar with both.

References:

1. Archived blog on fundavlog.
2. Crowdfunding Your Fiction: A Best Practice Guide by Loren L. Coleman.
3. Kickstarter Stats

Disclaimer: I am learning about Crowdfunding. If my understanding is incorrect or the information doesn’t align with facts, let me know, and I will correct those.

Photo by Nicholas Green on Unsplash

(What I am finding is more interesting than cryptocurrency)

I have always been mesmerized by the concept of crowdfunding. 

Not because of the stories about people raising millions of dollars for their project, but because of many other reasons:

• It is a great way for creators to get the word out for their projects.
• To find out if anyone else is interested in their project
• Get enough money to start the project.
• Sell before they actually build 
• Reason to go actually finish and deliver the product.

But my interest had been superficial. I had never gone to a crowdfunding site to find out what kind of projects are being funded, who are floating them, and the benefactors.

Until recently, when I bought a book bundle (where multiple authors get together and release a number of books at low prices), and one of the books was Crowdfunding Your Fiction: A Best Practice Guide by Loren L. Coleman.

The book revived my interest, and I started going to the crowdfunding sites just like a new writer would explore Medium. It is early days but what I have discovered so far is really interesting and encouraging.

What is crowdfunding anyway?

According to Loren Coleman, a veteran in crowdfunding, it is a little bit eBay, a little bit Etsy and a whole lot of speculation. 

You have a project you want to create, a story, a board game, a piece of technology, you post your idea on the crowdfunding market and make a promise. 

If X number of people agree to give you Y dollars each, you will create the item in Z amount of time and send all your backers a copy.

That’s it.

There is no rocket science to it. 

Although it is considered a new concept, the core idea of “the crowd” funding ventures is nothing new.

The history of crowdfunding.

Between 1200 –1800 traders used to finance shipping ventures. The trading expeditions used to be very risky, expensive, and yet exceptionally profitable. Traders would get a share of the profit or bear a part of the loss. This approach would provide shipping companies with a sensible risk management strategy.

In 1713, a young poet, Alexander Pope, raised money to translate the ‘Iliad.’ Alexander Pope was quite keen on translating Homer’s epic poem, ‘The Iliad’, into English but lacked the necessary resources to publish it. He asked donors to pledge two gold guineas to support his work in exchange for having their names published in the book. He was perhaps the first one to run a reward-based crowdfunding campaign and successfully completed a creative project.

In 1783–84, fans crowdfunded Mozart’s tour. Mozart was performing three piano concerts in the Viennese concert hall but didn’t have enough money to travel. He sent an invitation to prospective backers offering concert manuscripts in exchange for financial support for the tour. 176 backers donated enough funds to make his tour happen.

In 1885, New Yorkers donated millions to install the Statue of Liberty. The Statue of Liberty was a diplomatic gift from the French people to the US. But the efforts to raise funds for its pedestal stalled. When all means failed, Joseph Pulitzer decided to launch a fundraising campaign through the newspaper. More than 160,000 New Yorkers chipped in. $100,000 was raised in five months.

Digital crowdfunding.

The modern digital crowdfunding has its roots in 1996–97 funding of British rock band Marillion. Marillion’s fans raised $60,000 through an internet campaign to support their tour to the United States.

The first online website, “fan-funding,” to raise funds for artists, was launched in 2003. Soon after ArtistShare platform was established where artists could seek funding from their supporters to cover their production costs in exchange for free, early access to their album, song, or another piece of art.

The first peer-to-peer lending platform Zopa kicked off in 2005 in the UK. Zopa was followed by Lending Club and Prosper in the US in 2006.

In 2007, the Australian Small Scale Offerings Board (ASSOB), which is considered the world’s first equity-based crowdfunding platform, was established.

After the 2008 financial crisis, people turned to the internet to seek funding. IndieGoGo and Kickstarter, launched in 2008 and 2009, respectively, made crowdfunding a household word. Many other platforms started, and in just five years, crowdfunding grew 1000%.

To date, people have raised more than $34 billion worldwide using these platforms.

Whatever your reason for raising money, there is a crowdfunding site for you.

Just how much money can be raised by crowdfunding?

In few words, much more than your target.

In 2015, Pebble Technology started a campaign to raise $500,000 to build a smartwatch. They were at the right time at the right place. This was their second Kickstarter campaign which beat their original Kickstarter record from 2012 by over $10 Million dollars. They raised $20,338,986.

The biggest amount ever raised is by Cloud Imperium Games which has raised over $317 million for the development of their video game Star Citizen, breaking a record funding volume for a single project. They have been crowdfunding since 2012, both through crowdfunding platforms such as Kickstarter and their own website.

Travel Tripod by Peak Design, Goal $500,000; Raised $12,143,435.

The World’s Best Travel Jacket, Goal $ 20,000; Raised $9,192,055.

The Veronica Mars Movie Project, Goal $2,000,000; Raised, $5,702,153

Okay, these some of the extra successful projects. 

For every successful crowdfunded project, there are many unsuccessful projects. 

But that is not the bad news.

In fact, the news is mostly good for crowdfunding.

In July 2018, The Conversations (a research-based news and analysis publication) analyzed Startnext, (the biggest German crowdfunding platform), to figure out what was behind crowdfunding’s success? 

At that time Startnext had more than 100,000 pledges to more than 2,000 projects. They gave The Converstaions access to their whole database. 

This is what they found:

• It was never too late to get a campaign on a successful track — provided its creator manages to get a surge in pledges rolling.
• Attracting a lot of support in the first day or two was considered a crucial indicator of quality. The Conversations analysis found that even projects that fell short of this average path to success, succeeded. Nearly 90% of the projects that are under track after two-thirds of the campaign still become success stories.
• Even more strikingly, 40% of severely under-track projects still make it in the end. These are projects that are more than 70% off their targeted amount with a handful of days to the deadline.
• A large fraction of successful projects (23%) were late bloomers. Meaning the average crowdfunding campaign started off with a healthy amount of pledges, levelled off in the middle of the funding phase, and then got a boost in the last few days.

Their biggest insight, it is never too late with crowdfunding.

Crowdfunding is best learned by participation.

Just like Medium or a social media platform, crowdfunding is a community bases activity. It can be best learned by participation. 

There are many platforms. Some are listed below. 

• Best Overall: Kickstarter
• Runner-Up, Best Overall: Indiegogo
• Best for Nonprofits: Causes
• Best for Creators: Patreon
• Best for Personal Fundraising: GoFundMe
• Best for Equity Crowdfunding: CircleUp
• Best for Business Loans: LendingClub

Source: The Best Crowdfunding Sites

Hop on to anyone and participate. Follow and back campaigns. You can invest with as little as $1. There is a merit in doing that because then you will start getting emails about how the campaign is going. 

Build sample campaigns for yourself, even if you don’t intend to launch everyone.

Research by surfing your preferred categories at least weekly and other categories at least monthly. 

Watch the failed campaigns too, you will learn a lot from them.

When a project interests you for content or just for the campaign, back it. Leave a word of encouragement under comments. Encourage good campaigns.

References:

1. The History of Crowdfunding
2. Crowdfunding success and failure: what actually happens during a campaign.
3. Top 20 Most Funded Kickstarter Projects of All Time (2019).

Let me know what your thoughts or experiences are about crowdfunding.

In my next article I will write about crowdfunding your book project.

Photo by alex bracken on Unsplash