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The Crowdfunding Revolution: Making Your Choice
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The Crowdfunding Revolution: Making Your Choice

May 5, 2011 Article Start Previous Page 2 of 3 Next

The biggest core difference that separates these crowdfunding services is the funding model. Kickstarter and ulule both use an "all or nothing" funding model, meaning that no money exchanges hands until a project's deadline is reached, and only if the project has also reached or exceeded its funding goal.

IndieGoGo and 8-bit Funding both use a "keep it all" model where funding is paid immediately to the project, regardless of whether or not the project reaches its funding goal by the deadline.

RocketHub has a model it calls "All & More", which is a "keep it all" model that further rewards creators who reach their funding goals with tickets to its incubator-like "Launchpad Opportunities" service. (Both IndieGoGo and RocketHub also release half of their service fee to projects that successfully meet their funding goals as an added incentive.)

So, although only 400 IndieGoGo projects have successfully reached their funding goals, over 22,000 IndieGoGo projects have at least gotten some funding through the service. Likewise, RocketHub counts 94 projects that have reached their funding goals, but has distributed "over half a million dollars" among all of its projects.

Brian Meece, CEO of RocketHub, points out that a "keep it all" method means that "a creative can aim high with the confidence of a supportive safety net." Creators can rest assured that every dollar their project has raised is money in the bank, and don't have to worry about losing everything if they're just a few dollars short when the deadline strikes.

On the other hand, Kickstarter co-founder Yancey Strickler argues, "The importance of 'all or nothing' is that it protects both the creator and the backer. As the creator you know you're only obligated to follow through if you receive the funds that you said you needed, so you're not left having to fulfill obligations when you raised only $40 of the $40,000 you were trying to raise.

"And for backers there's 'safety in numbers'; you're only supporting something that's fully funded and you don't have to worry about 'where is this money actually going to go?' the way you might if there wasn't that sort of threshold that has to be reached."

Cédric Bégoc, community manager for ulule, agrees. "What happens if you don't reach the goal? You don't have enough money for the making of your project. What happens if we give you the money anyway? You end up making a sloppy project, because you don't have the means to fulfill your ambition. You are disappointed. And you disappoint your supporters and your fans.

"But, yeah, the crowdfunding site has taken its commission during the process. On the contrary, we believe the good way to use crowdfunding is the clear one: you need a budget, you succeed. At the minimum you get the budget, then you make the best of it, and no one is fooled."

Adherents of both funding models encourage creators to reapply if they don't reach their goals; an "all or nothing" project that doesn't reach funding can often succeed by reorganizing as a smaller project with a lower funding goal (as in the case of the "You Meet The Nicest People Making Video Games" project on Kickstarter), and "keep it all" projects can re-apply for their same goal minus the money they made previously, often reaching their final goal after several "rounds" of funding.

Deciding what funding model to use for your video game project is primarily a matter of how flexible your budget is; if you need a specific amount of money for a particular engine or assets, and you're willing to wait a month or two for the funding deadline, you're going to want an "all or nothing" model. On the other hand, if your project's expenses are already covered and you're committed to finishing the game regardless of how much funding you receive, then you'll probably want a "keep it all" model where your fans can cheer you on (and help you pay rent) with their preorders.

Many of these services have added their own unique features to help them stand out from the crowd. RocketHub awards users badges for doing specific things on the site like launching a project, backing a project, backing a successful project, etc. which Meece says has been a big hit with its users. RocketHub is also distinguishing itself from other crowdfunding services with a feature it calls "LaunchPad Opportunities".

Says Meece, "Think of RocketHub as an incubator for creatives with crowdfunding being the first step. We are in the process of lining up LaunchPad Opportunity providers for the next year -- and yes, some will include video game-oriented opportunities."

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