Before accepting a $2 billion buyout, the makers of the Oculus Rift virtual reality system raised $2.4 million on Kickstarter. Source: Kickstarter.
Ever since Facebook agreed to pay $2 billion for Oculus VR, crowdfunding campaigns have been in the news. Which ones are hitting the mark with backers now? Read on to find out.
Creative vs. equity crowdfunding
First, let's talk a bit about the changing nature of crowdfunding. In 2012, the JOBS Act opened the doors for U.S. small businesses to raise up to $1 million from individual backers in exchange for equity. A number of platforms allow this, including Crowdfunder.com.
There's just one problem. Title III of the JOBS Act has yet to be implemented. For now, only "Accredited Investors" with $1 million or more in investable assets, or at least $200,000 in income during each of the last two years, can invest.
Creative crowdfunding campaigns face no such restrictions, and they're as popular as ever. Kickstarter says that 7 million people have pledged $1 billion to fund more than 69,000 different creative projects. Indiegogo says that 9 million people visit the site monthly in search of new projects to back.
What's winning on these platforms now? Here's a closer look at 2014's top crowdfunding campaigns:
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Portable cooler with mixer, bottle opener, USB for electronics, etc. |
$13,285,266 |
Kickstarter |
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Portable music player that delivers vinyl-quality sound. |
$6,225,354 |
Kickstarter |
|
|
Interactive app to help kids read. Expanding to Web, classrooms. |
$5,408,916 |
Kickstarter |
|
|
Quiet, space-efficient 3D printer that fits on a desk. |
$3,401,361 |
Kickstarter |
|
|
Wireless, in-ear headphones uses Bluetooth or 4GB drive for playback. |
$3,390,551 |
Kickstarter |
|
|
Cooperative board game where players battle zombies to survive and win. |
$2,849,064 |
Kickstarter |
|
|
Portable molecular sensor reveals chemical makeup of objects. |
$2,762,571 |
Kickstarter |
|
|
Pre-sales event for exclusive access to craft beers from Stone Brewing Co. |
$2,531,898 |
Indiegogo |
|
|
Feature-length sci-fi comedy movie from the team at Rooster Teeth. |
$2,480,099 |
Indiegogo |
|
|
Billed as the world's first family robot. |
$2,289,606 |
Indiegogo |
|
|
Feature film covering the activities of convicted murderer Kermit Gosnell. |
$2,241,043 |
Indiegogo |
|
|
Solar panels durable enough to walk, drive, and park on. |
$2,200,341 |
Indiegogo |
|
|
Smart motorcycle helmet with heads-up display, rearview camera, and GPS. |
$2,014,710* |
Indiegogo |
|
|
New season of the YouTube show TableTop, hosted by Wil Wheaton. |
$1,413,154 |
Indiegogo |
Sources: Kickstarter, Indiegogo. *As of this writing; campaign still open.
Each project resonates for a different reason. And yet, I see a few patterns:
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Kickstarter is the king of crowdfunding. Every big-dollar campaign originated at Kickstarter, while Indiegogo got the interesting underdogs. Just a coincidence? Perhaps, but it's tough not to notice when the top Kickstarter (i.e., Coolest) takes nearly six times the top Indiegogo campaign (i.e., Stone Groundbreaking Collaborations).
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Known brands do better. Pono Music appears to have a great product, but having musician Neil Young lead the effort must have helped. Similarly, Wil Wheaton led the crowdfunding campaign for TableTop, the YouTube shows he hosts, when Google cut back on direct contributions to some shows.
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"A-ha!" moments matter. When creator Ryan Grepper places a functioning blender atop the Coolest, you know this isn't some ordinary cooler. That's an "a-ha!" moment that gives would-be backers a reason to take the next step. Many did.
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So do causes. Backers also want to feel like they're a part of something bigger. In the case of the Solar Roadways project, contributors may feel like they're helping to save the planet. Those backing the Gosbell movie may think that's a story that needs telling. Rooster Teeth fans may feel similarly about the Lazer Team project.
Many products and services won't be right for crowdfunding campaigns. Investors should take note of this list anyway. Founders who do well surfacing "a-ha!" moments, tapping into causes, and winning endorsements, are more likely to win in the marketplace, and earn big returns for their investors.
