How to Make a Small Fortune on Kickstarter or WeFunder Without losing a Large Fortune!
By: Patrick Kennedy Thomas
Tags: Angel Investors, Equity Crowdfunding, Crowdfunding, Kickstarter, Indiegogo

How to Make a Small Fortune on Kickstarter or WeFunder Without losing a Large Fortune! Patrick Kennedy Thomas Apr 29·6 min read

How Did we Get from Kansas to Oz?

You and your team of intrepid entrepreneurs, technicians, and designers have spent sleepless nights, weekends, and every thin dime to develop technology to transform the world for the better, no, the greatest, a new golden age. Only problem is you are now exhausted, broke and have tapped out all your friends, family, and angel and investing networks. But the world needs your product like it needed the invention of fire, the wheel, the Bronze Age, the Sistine Chapel, the Gutenberg Press, the microprocessor and, of course, the Iphone.

Talk to banks? That’s hilarious. What was the last innovation a bank funded? CDs? Your rich uncle? He wants you to invest in plastics. VCs don’t talk to you, they talk at you, and you don’t understand a single word they said; something about rounds and unicorns and their junior year lacrosse crush at Choate. Selling a kidney is painful, short-term, and might be illegal depending on the laws of your state.

Crowdfunding! Yes, my god, yes. Post some pics, a draft of the prototype, a video of the prototype sitting on your kitchen tabletop looking somehow cute and yet awesome, dash off peppy Mad Men copy, show your team looking like those astronauts in the Right Stuff with a soundtrack that would make Wes Anderson weep. Throw in a bunch of acronyms, swooping shots of the earth from space, remind them you’re slaying a multi-billion-dollar market with your killer app and then stack that cash!

We thought so too, ten years ago when Kickstarter and Indiegogo were new and WeFunder just a gleam in the Y Combinator’s tech mavens’ eyes. We were a small team of digital, PR, and marketing professionals who had worked on political campaigns, non-profits fundraising, and our own projects ranging from community theatres to international street dog rescue. The 2008 Recession had laid bare the fragility, inequality, and stacked deck of crony capitalism and Kickstarter and Indiegogo seemed to be a better way to launch innovative tech, design, and art and also empower everyday people to get in on the ground floor.

The honeymoon period was short, feverish, and nearly erotic in its intensity. New York Makes a Book was the first Kickstarter campaign and funded for $3,239 within two days. Allison Weiss got three times her funding goal to make a fantastic album. The blogger Daring Fireball recommended The Masters campaign and helped it raise $50,000 in a month. Then the big one: TikTok + LunaTik watch raised nearly $1M on a $15,000 goal. Elevation Deck raised $1,464,706 in only six hours later. Double Fine Adventure raised $1M in less than a day and $3,336,371 total.

Those were heady times, innovation and even revolution was in the air, a Brave New World of technology, visionaries, and designers being supported by citizen pledgers and investors. Neil Young has done it. Charlie Kaufman. Joan Didion. David Fincher. Spike Lee. Did we mention Joan Didion? If it was good enough for those masters of the universes than it was good enough for the us and our clients: nobodies who wanted to be somebodies.

The Dark Side is Stronger:

Every story has a dark side, and since those heady times there have been as many failures as successes, campaigns that overpromised and underdelivered, companies absconding with funds to some far-flung beach with their prototypes merely sketches and their pledgers left holding the bag. The tornado that took us to Oz inevitably landed us back in Kansas or Dorothy’s house landed on us or pledgers instead of Glinda.

Kickstarter is very forthright with their numbers. At a Meta Level: they have had over 200,000 successful campaigns with $5.7 B pledged, with 71 M total pledges, and nearly 20 million backers. Impressive Stats.

There’s at least two more layer to it though. A “successful” campaign means a campaign that met their initial goal which is often set artificially low so that it’s blown through the first day to increase the phycological confidence of the pledgers, the ranking on Kickstarter and also Google, and likelihood the product will be delivered as pledgers herd together. Herd behavior, it’s called in the industry. Told you there was a dark side.

Secondly, the cost of launching a campaign with over a $100,000 goal on Kickstarter is $20,000 to $50,000 including a professional shot video (assuming you aren’t a wiz at video editing), prototypes, vendors of all kinds, PR, and the biggest cost of all: digital marketing.

See, the battle for Kickstarter success is won or lost on Facebook and even the best digital marketing agencies shoot for 3 X to 5 X return on spend. If you reach 3 X, subtract the cost of goods as 1 X, and the cost of staff as 1 X and you broke even. If it drops below 3 X (as it often does) than you are losing money and the paradoxically the more you raise the more you lose. Some agencies promise 5 X, 10 X, 30 X to get around this Valley of Death. They are lying.

What about going alone? DYI. Old School Punk. You can do that. Some do and it works beautifully, but again the numbers aren’t encouraging. Also, be prepared to work sixteen hours a day for six months before the campaign, a couple months non-stop during the campaign, and six to twelve months after to deliver. And not on all the cool, groovy stuff you like working on, but SEO, analytics, answering the same question slightly differently worded a hundred times a day only to receive another slight variation two minutes later from the same person.

The Hell Realm of Digital Marketing Agencies:

Most big campaigns have a digital marketing agency that handles most or all of their marketing ranging from producing the campaign video to designing the campaign page to email and FB marketing and everything in between. Kickstarter lists some of the top contenders here: https://www.kickstarter.com/experts

Most agencies charge from $10,000 to $20,000 to start and some charge a significant portion of the proceeds too. They boast of their $1 M + campaigns and much of that is true. Keep in mind the 2–3 X rule though and you realize the client is paying $350,000 in FBs ads to reach $1M, then Kickstarter takes 5%, the processor another 3% to 5%, and the agency 5–10%, and all of a sudden that $1M is $450,000. Still a lot, but you have to make and ship the product and already gave half your income away on day one.

How do you break out? There have been 545 $1M plus campaigns out of over 200,000. Only 3% of campaigns raise over $100,000 and 18% raise zero, most raise between $1,000 to $10,000. There are currently over 30,000 campaigns on Kickstarter and 10,000 on Indiegogo. Many media and blogs focused on crowdfunding receive between 100 -300 email pitches per day to feature campaigns new launches. They ignore them unless they come from a high-end PR firm (budget: $25,000.)

A Better Way: Equity Crowdfunding on WeFunder

After ten years in the business, we are switching to equity funding campaigns exclusively for companies seeking to raise $1M on WeFunder. It’s not just all the craziness, chicanery, and outright fraud of the agencies. It’s that Kickstarter and Indiegogo have both been so successful that there is no way they can support the tens of thousands of campaigns on their platforms. Compare Kickstarter and Indiegogo to WeFunder:



1.) Why compete with 10,000 campaigns when you can compete with 225?

2.) Why raise funds for a one-time product when you can raise equity for a scalable business?

3.) Why rush to deliver that product when you can take your time and go through several iterations of technology before getting it right?

4.) On WeFunder, investors are confident that you have been vetted by the SEC including a criminal background check on all principles, reviewing the company’s last two year financials, and business partnerships, contracts, and sales.

In November 2020 the SEC amended crowdfunding rules, which the SEC calls “Regulation Crowdfunding.” The new rules, which went into effect on March 15, 2021 allowing companies to raise $5 million every 12 months by selling securities through regulated, online crowdfunding portals such as WeFunder, SeedInvest, and SearchEngine, and Crowdfunder.

You can raise up to $1,070,000 while still reaching out to non-accredited investors and tapping into WeFunder’s list of nearly one million investors.

There are some good agencies that drive WeFunder campaigns though they charge an arm and a leg. Aurora Projects charges $20,000 upfront and 20% of the total raised. IdeaPros requires the client has $500 K in sales to launch and then they partner with $200K and take 35% of the equity.

Let’s talk and see if it’s a match.

www.weraise.fund