Several months ago we listed out some of the key elements that make a successful business. One of these key elements is funding. Obviously, funding will help you in all stages of your business. Whether you’re researching, developing your business, or even hiring someone to manage your funds, you’ll need money to do it. You need money to make money as they say. In this article, we’re taking a closer look at funding help for inventors in Austin, specifically the fees and funding structure of crowdfunding.
To get it out of the way, here’s a quick definition of crowdfunding. It’s a means to fund your project or business by raising small amounts of money through a large number of individuals. If you’re confused about what crowdfunding is, we strongly recommend you read this article about crowdfunding first before you go any further.
Two of the most popular crowdfunding sites are Kickstarter and Indiegogo. Both platforms are great for consumer hardware products (not so much for software though). One of the most common questions we get is: “what are the funding options and what are the fees?” Understandable, here’s a quick look.
Probably the thing you’re wondering about the most. If you’re going through Kickstarter, it’s going to be all or nothing. You can set a fixed amount as your goal for a maximum of 60 days. This amount also can’t be changed once your project launches. They will only release your funds after you reach your set campaign goal.
Indiegogo gives two options for crowdfunding help for inventors in Austin: fixed or flexible goals. Fixed is the same as Kickstarter where you can aim to hit a set funding target. Flexible goals allow you to receive funding even if you don’t hit your target. Keep in mind, however, if you opt for a flexible goal, this approach puts a lot more risk on the backer as they don’t have any guarantee that they’ll receive the product if the campaign is not successful.
Both Kickstarter and Indiegogo charge a 5 percent fee on all funds raised. Additionally, both charge a transaction fee on every pledge. At the time of writing, Indiegogo has a transaction fee of 2.9 percent transaction fee plus $0.30. Similarly, Kickstarter charges 3 percent + $0.20 per pledge. Indiegogo also charges a transfer fee ($0 for those with a US bank account) for their international clients. This transfer fee is applied every time they send money to your bank account. However, fees are only applied to successfully funded Kickstarter campaigns, Indiegogo campaigns with fixed goals, and any amount for Indiegogo campaigns with flexible goals. If a Kickstarter or Indiegogo campaign with a fixed goal is not successfully funded, then there are no fees.
So now you know how much it might cost to get help for inventors and how they can start to receive crowdfunding. When you browse through some of these sites, it seems like anyone can do crowdfunding as well. In passing, you might think to yourself it doesn’t take much to get started. Just pick a crowdfunding site, upload a few pics of your product, whip up a couple of quick paragraphs, maybe shoot a video or two, and watch as your digital coffer overflows with pledge after pledge.
The more you browse through the different products on these sites, however, the more you notice why certain products simply stand out from others. One great example is our client’s Clasp Magic, a device that easily attaches clasp bracelets. They were fully funded in three days on Kickstarter! The captivating tandem of a cleverly written hook and eye-catching pictures and videos is unbeatable. And upon this realization, you might think to yourself, “how in the world am I going to compete with that?”
Luckily, there’s help out there to even the playing field for small businesses, startups, and inventors against their corporate counterparts. They’re called LaunchBoom. They’re here the new way to successfully crowdfund to provide crowdfunding help for inventors. So once you have that prototype decided on a crowdfunding site, check out LaunchBoom first before trying it out yourself.
About: MAKO Design + Invent is the original firm providing world-class consumer product development services tailored to startups, small manufacturers, and inventors. Simply put, we are the leading one-stop-shop for developing your physical product from idea to store shelves, all in a high-quality, cost-effective, and timely manner. We operate as one powerhouse 30-person product design team spread across 4 offices to serve you (Austin, Miami, San Francisco, & Toronto). We have full-stack in-house industrial design, mechanical engineering, electrical engineering, patent referral, prototyping, and manufacturing services. To assist our startup and inventor clients, in addition to above, we help with business strategy, product strategy, marketing, and sales/distribution for all consumer product categories. Also, our founder Kevin Mako hosts The Product Startup Podcast, the industry's leading hardware podcast. Check it out for tips, interviews, and best practices for hardware startups, inventors, and product developers. Click HERE to learn more about MAKO Design + Invent!