The best crowdfunding sites – a comparison

Crowdfunding is a popular way to finance private projects and start-ups. A crowdfunding campaign is used to launch an appeal for donations, sometimes with a funding target and reward system for backers (those who donate to the campaign), although this is optional. Thanks to crowdfunding, many interesting projects from a wide variety of subject areas have already turned designers’ dreams into reality. Projects include fundraising campaigns for charities, the design and production of personal, everyday objects, as well as artistic projects.

The main advantage of crowdfunding is that it does not rely on a few, rich investors, but instead on a large number of interested private individuals – hence “crowd” in the name. If the project sells itself, funding momentum can pick up within a group or community, which increases how quickly the project progresses, and its popularity. Transparency and communication with your backers are key factors in a successful crowdfunding campaign.

The increasing popularity of this form of financing has led to a wide range of crowdfunding sites where you can present and manage your campaign, and also process any donations your campaign receives. The most popular websites have managed to integrate themselves into the language of crowdfunding: “I kicked off my project” has become part of crowdfunding jargon. The platform kickstarter.com is the most popular worldwide, but over the years other good competitors have developed, some of which are more specialized than Kickstarter and draw a specific crowd.

The choice of a suitable crowdfunding website depends on a few factors. For example, you can plan your project as a private individual, or as a start-up. The industry which your project is part of, and the target group you want to address, as well as the crowdfunding model you use and the size of your project, are also factors which will influence which crowdfunding site you choose. Furthermore, the conditions and fees of the respective platform are just as decisive as the question of how it deals with failed projects and embezzled donations.

The idea of crowdfunding itself is fairly old. Going back even to the 19th century, book printing was financed by donations from those interested in the book. Even the Statue of Liberty in New York was co-financed by donation campaigns, which raised a total of 160,000 US dollars to complete the base construction. However, crowdfunding in the modern sense only became an easily accessible financing model based on the social and globally networked structure of Web 2.0 with the launch of the crowdfunding sites Indiegogo (2008) and Kickstarter (2009).

The campaign pages at Kickstarter are stylish and clearly formatted. In the header, Kickstarter shows how much money the project has already collected, how many individual backers have already participated, and how much time remains to achieve the financing goal. Under “campaign” the developers present their project and list the rewards, stretch goals, and other important details of the campaign. Under “updates” you can inform your backer base and other potential interested backers about the progress of the project in the form of a timeline. Registered users can post suggestions, criticism, and praise under “comments.”

The “community" section shows interesting and important information about the backer base and how it is spread out. In addition, some supporters who have already gained some recognition in the Kickstarter community are mentioned here. After all, it is good publicity for a project if dedicated and famous investors could be brought on board – even if the focus is on crowd funding, it never hurts to have the extra support.

A problem that the crowdfunding community has to face, and that remains unsolved by Kickstarter, is how to handle the successfully financed, but nevertheless failed projects. A lot of individuals’ money has gone down the drain, because developers broke off the respective project after successful crowdfunding without reimbursing the donated money. In some cases, there were simply no more updates to certain projects, which then had to be registered as inactive, and the backers were simply abandoned. Whatever the reasons, crowdfunding is always a risk investment. Kickstarter does not seem to be actively looking for a solution to the problem – the rather short rules of Kickstarter do mention it in brief, but not enough to tackle the problem.

Kickstarter has also been criticized for influencing the success of projects too much itself. “Staff pick” badges show the Kickstarter team’s favorite projects. This enables Kickstarter to control which projects attract more attention. However, it is not clear exactly how a project can earn the badge, as the criteria for this do not seem to be easily accessible.

The navigation of the website is not as straightforward as it could be. If you want to see all projects in one category it often takes a while to get to the right page. Until you get to this page, only a selection of projects will be presented, e.g. projects that are close to the financing goal or have already generated a lot of attention. Many visitors simply don’t see most of the projects, because they don’t trawl through the pages and filters of the website. This is a disadvantage for projects which haven’t had much coverage or support yet.

Donations to a GoFundMe project can be made via credit card. After donating, you can also leave messages on the campaign’s page, depending on the type of campaign: e.g. recovery wishes, encouraging contributions, or requests for further donations. The focus of GoFundMe on social projects can also be seen in how the campaigns are categorized by the site itself: education, medical, charity, emergencies, and commemorations are listed first, while common crowdfunding categories such as creative projects and companies don’t play such a big role.

GoFundMe is also on top of things in terms of customer support. If you want, you can consult so-called “coaches” who help to make the campaign page as attractive as possible. The GoFundMe help center also provides relatively detailed guides on how to use the crowdfunding site. Interested backers can also find out about their rights, and how to process donations. In the event of a mistaken donation, or a fraudulent campaign, GoFundMe will provide a contact form if a donation made should be refunded. The operators also promise to control the funds very strictly, and to ensure that all donations go to the right address. If the security measures fail, GoFundMe even agrees to reimburse lost amounts or to pay the difference in donations itself.

However, GoFundMe has an issue in the way it is perceived, because too many personal projects end up on the website. Because private individuals can be sponsored here for their personal plans, many GoFundMe projects have already led to minor scandals. Donation requests from people who want to have their wedding financed is an example of the more innocent kind of personal project, but still does not align with the crowd-funding mindset. Quality control at GoFundMe is not considered particularly well developed, so well-intentioned projects are sometimes lost in the mass of mini-campaigns.

When it comes to its design, Indiegogo has a modern, minimalistic style. The simple structure of the website directs visitors’ attention to the campaigns. Navigating this crowdfunding site is smooth and simple. It is also well structured, especially the way the projects are sorted. In addition, projects can generally be sorted by popularity and funding strength. Otherwise, they are divided into the usual commercial categories and subcategories.

Indiegogo’s special feature is that you as project creator receive most donations immediately. Since the majority of donations are made via the PayPal payment service, there is no need for a waiting time for the donation to be deducted from your account. Indiegogo also offers payment by credit card; however, these donations will not be credited to your account until about two weeks after the end of the campaign. The platform charges the standard 5 percent fee for each donation, with credit card payments at an additional 3 percent plus a fixed 30 cents.

Indiegogo has a few ground rules which must be observed before starting a project. Project leaders under 18 years of age need the permission of a parent or guardian to start a campaign. In addition, projects which aim to collect money for illegal activities, or where the basic idea is absurd or unrealistic, are deleted. Perks which offer drugs, weapons, or gambling rewards are prohibited, and campaigns that promote any kind of physical or psychological violence are banned.

Apart from these common-sense rules, Indiegogo sets no limits to its projects, making it quite an open platform in comparison to its competitors. However, some filters are missing that prevent nonsensical or immoral projects from ending up online on the website. The overall quality of the projects is not, generally speaking, that high, although that does not mean that there are not ingenious projects on the site.

Indiegogo does not take responsibility for the content of individual campaigns, and does not assume any responsibility in cases of fraud. The “trust & safety” protection program is based solely on trusting the interaction between the individuals in the community. After all, in the event of problems, the site provides a special service that can be contacted around the clock. Otherwise Indiegogo mainly relies on personal responsibility: potential backers are encouraged to analyze the campaigns in detail before making a donation, as well as to ask questions and to express concerns. Project creators are asked to ensure full transparency, and to communicate regularly with backers.

It is worth mentioning the extensive education center, which offers a crowdfunding for beginners guide with comprehensive information, as well as tutorials and webinars. However, it is fair to question whether any project creators actually make use of it.

In addition to the fixed monthly donation, Patreon also offers a payment method that comes close to a typical subscription. You can determine a fixed sum from backers when you upload or send something, e.g. a new video. Subscriptions can be adjusted or cancelled at any time. Backers often increase their monthly contribution if you add a new funding target and combine this with certain promises such as even more regular content.

Due to the subscription model, the community aspect is particularly strong at Patreon. The subscribers not only ensure you receive regular income, but also act as a feedback source. The interaction with this community is even more important than with traditional crowdfunding platforms based on one-time donations. Finally, you will be actively supported by your backers, whose personal commitment to your project is much stronger due to their monthly payments. That means that at Patreon, community work is the most important aspect if you want to successfully finance your projects over a long time. It is essential that you include this regular effort in your planning.

This crowdfunding site has relatively relaxed regulations about what kind of content is put online. Only violent, and pornographic content, is banned. Nevertheless, Patreon seems to have certain rules that are not fully communicated. One controversial issue was when a YouTuber project was banned in July 2017, in which the YouTuber requested donations for activity in the Defend Europe group to document the violent blockade of NGO ships. Patreon defended their ban of this project stating that they did not want to promote projects which harm other people. There was also criticism when Patreon deleted the project page of an anarchist group. Patreon was accused of double standards, but promised to improve their policies and evaluation processes.

Seedrs’ design is sophisticated and professional, mixing good design with easily accessed practical information. Navigating the site is easy, and finding essential pages such as the FAQs or transaction policies is a straightforward, with guides and help centers for investors and project managers alike. The projects pages themselves are formatted well, showing the team behind the project, as well as all the essential information in various tabs. A project summary can be found at the top of the page, and gives a snappy introduction.

You can pay for your pledge via credit card, or through your investment account. The security of the payments is guaranteed by Stripe. If you can only pay via a bank transfer, then you can transfer it to Seedr via your investment account with them.