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Who needs Kickstarter? Projects look outside the box for new crowdfunding

Who needs Kickstarter? Projects look outside the box for new crowdfunding


Independent projects dodge fees and grab data, but face a harder road

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Indie Kickstarter
Indie Kickstarter

On August 1st, a campaign for the space simulator Star Citizen raised its 15 millionth dollar. It was enough to fund the first installment of the game and put the developers on track for the full $21 million they need to finish the whole thing. Along the way, backers will get access to exclusive ships and early peeks at game modes that are still in development.

The story has all the elements of a classic Kickstarter or Indiegogo success story: an established name (Roberts created the classic Wing Commander series) comes back from obscurity and reconnects with a rabid fan base that decides to fund a new project directly.

"It's mostly meant for one-off creative projects."

The only difference is, they didn't need a platform. Star Citizen did have a Kickstarter, netting a full $2 million, but the bulk of the fundraising happened on their own site, where the team built its own donation meter and collected donations directly. That required a little more logistical work, but also let them wriggle out of Kickstarter's 5 percent fee — which in this case, would have cost the project a hefty $750,000.

With the concept and process of a successful crowdfunding campaign now established in the mainstream, projects are increasingly bypassing the services that pioneered large-scale crowdfunding and simply going to the fans directly. Soylent, the infamous food substitute, raised $1,000,000 on its own site. "We didn't really fit into Kickstarter's design," says Soylent CEO Rob Rhinehart. "It's mostly meant for one-off creative projects. If you want to raise funding for an idea or a business like us, then Kickstarter is not really amenable to that."

Kickstarter's fee would have cost the project $750,000

Rhinehart turned to his fellow Y Combinator alumni at Crowdtilt, which was working on its own white label crowdfunding software. Because the software was still in private beta, Soylent didn't even have to pay for the service — and most funders never knew the difference. "A lot of people still referred to it as a Kickstarter, even if it wasn't on the site," Rhinehart says.

"It will be a simple thing, as simple as launching a blog."

In other cases, projects have turned to independent crowdfunding to get around Kickstarter's tightening terms of service. Scout CEO Dan Roberts launched his smart-lock project just weeks after a similar product, Lockitron, had been kicked off the platform for terms-of-service violations. In a clarifying blog post, Kickstarter placed new restrictions on hardware projects, banning product simulations or renderings and placing Scout in a difficult spot. But after moving the campaign to an independent platform, Roberts found the alternative wasn't as bad as he thought. "You do give up Kickstarter's established base of users," Roberts says, "but you gain more flexibility, and you're saving a decent chunk of money." In addition to the money, Scout was able to keep pre-orders open after the project hit its fundraising goal, as well as hold onto valuable customer data that Kickstarter blocks on privacy grounds.

At the same time, the market for white-label crowdfunding software has seen surprising growth in recent years. InvestedIn makes crowdfunding software on a licensing model, and has hosted $31 million in crowdfunding deals since it launched in 2011. CEO Alon Goren says most of that has come in the last year. It's not much compared to the $320 million that was pledged through Kickstarter in 2012, but as crowdfunders learn more about their options, Goren thinks the independent option will become the default. "It will be a simple thing, as simple as launching a blog," he says, "It’s just a matter of time."

Crowdfunding doesn't belong to Kickstarter

The hardest work has already been done, now that Kickstarter has pioneered the idea of crowdfunding. In the four years since the company's launched, it’s become a commonly used term — but crowdfunding doesn’t belong to Kickstarter. Now that the practice is established, anyone can try their luck, and Kickstarter will be competing with all the newcomers for market dominance.

The site still has plenty of advantages. Both Scout and Soylent pointed to Kickstarter's aggressive marketing efforts as a potential benefit. When contacted by The Verge, Kickstarter reps pointed to the site's active internal community as worth the price of admission, with more than one in four backers returning to back another project, along with an array of anti-fraud tools and economies of scale. If you’re not a coder or you don’t want to deal with payment processing, there are many reasons to stay in a manicured marketplace. But the days when people refer to every campaign as "a Kickstarter" may be numbered.