Kickstarter, Pros and Cons

Kickstarter has become the go-to place to get funds for iOS game developers. But it’s important to realize that crowd-sourcing funds can be as much of a hassle as a blessing in some situations. Let’s take recently successful Kickstarter project Star Command as an example.

Developer War Balloon set a goal of $20,000 for their Kickstarter project for upcoming game Star Command. The project actually raised almost double in funding for the game at about $37,000. In a recent post on their Kickstarter page, War Balloon described where that money actually went and how the team is actually $50,000 in debt.

$2000 immediately didn’t happen because of transactions that didn’t go through, Kickstarter and Amazon Payments took about a $3000 cut, and $10,000 was spent on prize fulfillment for the pledgers. With the remaining $22,000 that was left after that, the team spent $6000 on music, $4000 on attorney fees, $2000 on poster art, $1000 on iPads, and $3000 for PAX East. Only about $6000 ended up as income for the team.

Some tips from War Balloon, “Keep the attorneys out of it.” They felt like the operating agreements were a waste of time and “a nice piece of napkin paper probably would have done just as well.”

Kickstarter was definitely a positive force for their development. But it isn’t always the the swimming pool of money that it seems to be for even the successful projects.

If you’ve ever had an idea you believed in—something that could potentially change the world but lacked the funds to bring it to life—chances are, you’ve thought about crowdfunding. And for many, the go-to platform for turning ideas into reality is Kickstarter. Since its launch, it’s helped thousands of creators, from tech innovators to artists, bring their ideas to life. But as with anything, there are ups and downs to using Kickstarter. I’ve done the research and broken down the pros and cons to give you a clearer picture of whether this platform is right for your next big project.

The Pros of Kickstarter

1. Access to Capital

Let’s face it—finding funds to kickstart a new venture is one of the hardest parts of entrepreneurship. That’s where Kickstarter shines. Instead of going through traditional means like bank loans or pitching investors, you can turn to the crowd. Anyone can back your project, no matter where they’re from, as long as they believe in your idea. According to Forbes, millions of dollars have been raised through Kickstarter, helping launch everything from tech gadgets to indie films. I’ve seen creators raise enough funds to go from a prototype to mass production, all with the power of backers supporting them.

2. Building a Community

One thing that’s often overlooked is how Kickstarter allows you to build a community of fans and followers. You’re not just asking for money; you’re bringing people into your vision. Think about it—these people aren’t just backers; they’re the ones who will spread the word, give you feedback, and help you grow. This sense of community is one of the reasons why creators keep coming back. Entrepreneur has highlighted how successful campaigns lead to media coverage and more exposure. Your project gets noticed, and the audience you build during your campaign could be your most loyal customer base.

3. Marketing and Validation

Another major advantage of Kickstarter is the ability to test your idea in the real world. Before you even start production, you can see how many people are actually willing to pay for your product or service. It’s like a pre-launch test, helping you gauge interest and make adjustments before diving in fully. One of the best-known success stories is Pebble Watch, which raised millions on Kickstarter. As reported by Kickstarter, this project went from a simple idea to becoming one of the most funded projects ever, all thanks to its Kickstarter campaign.

The Cons of Kickstarter

1. All-or-Nothing Funding Model

While the Kickstarter platform offers a great way to raise money, there’s a catch: you have to meet your goal or you get nothing. This can be stressful for creators, especially if they’re relying on the funds to bring their project to life. If you don’t hit your target, your backers aren’t charged, and your project doesn’t get funded. This pressure can sometimes lead to campaigns setting overly ambitious goals, which often leads to failure. As noted by Inc., many well-intentioned campaigns have ended in disappointment due to this funding model.

2. Fees and Costs

Another thing to consider is the fees that come with running a campaign on Kickstarter. While there are no upfront costs, Kickstarter does take a 5% commission on all funds raised. On top of that, payment processing fees (around 3-5%) are charged, which can eat into your total. So, while you may raise a large sum, it’s essential to factor in these fees when planning your funding target.

3. Crowded Space and Competition

With millions of projects launched on Kickstarter, standing out can be tough. According to Kickstarter’s Annual Report, the competition on the platform is fierce, with new projects launching every day. Even if you have a great idea, it’s no guarantee that your project will get the attention it deserves. Many entrepreneurs spend months promoting their campaign before they see significant traction. And without the right marketing strategy, your project could easily get lost in the crowd.

How to Succeed on Kickstarter

1. Have a Clear Plan
   One of the most important things I’ve learned from successful campaigns is the importance of having a clear, well-thought-out plan. From your pitch video to your reward tiers, everything should be designed to capture the attention of potential backers. The Kickstarter Blog offers many tips on how to create an effective campaign.

2. Set Realistic Funding Goals
   It’s easy to get carried away and set a high funding goal, but being realistic is key. The more achievable your target, the more likely you are to get support. As per Harvard Business Review, setting realistic expectations can not only boost your chances of success but also attract more backers who feel confident that they’re backing a project that has a high likelihood of success.