If you’re a small food business with very little equity, crowdfunding can be the perfect solution to jumpstart your brand. But before you even start planning out your campaign, you’ll need to choose the best crowdfunding platform for your product. Here’s a quick rundown of the top three crowdfunding platforms for food and beverage brands.
PieShell
Who it’s for
PieShell is a rewards-based crowdfunding site that was created specifically with food and beverage companies in mind. Unlike other crowdfunding sites which allow creators from any field to start a campaign, all projects on PieShell are related to food and beverages. This includes food and beverage products, cafes, restaurants, pop-ups, food tech apps and more!
Fees
PieShell uses a stepping-stone crowdfunding model where project owners start by creating a series of goals. Funds are then guaranteed for each goal met once the project is over. PieShell charges a 6% fee on the final amount collected, with 1% of that fee going to a food non-profit. Card payments are processed using Stripe, with a processing fee of 2.9% + $0.30 per transaction.
How it works
Project owners start their campaigns with a “critical ask” first goal, which they can then follow with “want” and “dream” goals. This allows for smaller, more realistic goals, without preventing the possibility of raising more funds once the goals are met.
A large part of PieShell’s platform is arming each project owner with the tools they need to achieve as successful a campaign as possible. Known as the incubation process, each project starts out with access to project blueprints, marketing plans, and media kits, enabling them to be fully prepared before the campaign even begins.
What you need to know
According to PieShell, 75% of food or beverage related campaigns fail on other crowdfunding sites. To help food-related businesses successfully achieve their goals, PieShell focuses on creating a food-oriented community, where supporters are more likely to share an enthusiasm for food than those on other crowdfunding sites. And unlike other platforms where gifts are given automatically for each donation tier, supporters on PieShell can opt out of rewards, which allows all of the funds raised to be used toward the business.
Kickstarter
Who it’s for
Kickstarter is aimed at creators in a variety of categories including film, publishing, arts, comics, games, tech, design, illustration, foods, and crafts. Kickstarter requires that every project must produce something upon completion, such as a book, retail product, or film.
Kickstarter also offers a platform for small campaigns called Quickstarter. Designed for small-scale projects, Quickstarter requires that the funding goal remains under $1,000 with a campaign no longer than 20 days.
Fees
Kickstarter uses an all-or-nothing funding model. If projects are not fully funded backers will not be charged. For successfully completed projects, Kickstarter retains 5% of the total funds. Kickstarter uses Stripe to accept card payments, meaning there is also a 3% + $0.20 payment processing fee per pledge. For small pledges under $10, there is a discounted “micropledge” fee of 5% + $0.05 payment processing fee per pledge.
How it works
Kickstarter is a crowdfunding platform where creators are able to raise money for projects that result in tangible products (such as books, retail products, or films). Creators establish a funding goal, which is the amount of money they need to fund their project. Bakers pledge money to the projects of their choice in return for rewards.
Creators are also able to give rewards to their backers through a system of gifts. The exact gift is determined by the amount a backer provides. Lower level tiers may (ex: their name listed in the credits of a film), while higher level tiers generally reward backers with a copy of the finished project or exclusive bonuses.
What you need to know
Kickstarter is a very well known crowdfunding platform. While you can invite friends, family, and other interested individuals to check out and possibly contribute to your project, you will also have access to a broad audience of backers that might otherwise be unavailable.
You also have the option on Kickstarter of raising your funding goal if the original one is met. Known as stretch goals, this is a way of adding extra features to your product for more funds raised.
But while Kickstarter can be a great way to launch a business or fund a new product (especially for smaller brands), there are a few drawbacks to the platform. While you may be able to begin a project at a low cost, in most cases, you will need to invest a bit of money before your project even becomes live. Kickstarter doesn’t allow photorealistic mockups of products to be used so you will need to have created a prototype for backers to view. You will also need to have a solid marketing strategy, as well as a detailed timeline for delivering products to backers on time.
Crowdfunding on Kickstarter is also not a sure thing. Since it is all or nothing funding, there is a risk your project may not meet your funding goal, especially if it’s set unrealistically high. According to Kickstarter the success rate for funded projects is 36.27%. If you decide to crowdfund for your project, making sure you are fully prepared with marketing and product development information before you start.
Indiegogo
Who it’s for
Indiegogo is a donation-based crowdfunding platform aimed at entrepreneurs. Originally started as a way to raise funds for independent films (hence the name), Indiegogo now accepts also creators to run campaigns in 24 different categories.
Fees
Indiegogo does not charge any initial setup fees for beginning a campaign. There is a 5% fee charged on funds earned, and a payment processing fee through Stripe of 5% + $0.30 per transaction. There is also a $25 transfer fee if you do not have a US-based bank account.
How it works
Unlike Pieshell or Kickstarter, Indiegogo does not require a project to fully meet the funding goals to receive money raised. Instead, project owners have a choice between flexible funding, or keeping the money earned without having to reach the goal, or fixed funding, keeping the money raised only if you successfully meet your goal.
If a project owner chooses to use the flexible funding route, however, they are still responsible for fulfilling the perks promised to backers. For this reason, flexible funding should only be used if you will still be able to achieve your campaign goals even with a smaller amount of money.
There is also the option to include stretch goals in a campaign if the original funding goal has been met. These stretch goals are not meant to finance the existing project, but instead can be used to fund additional goals connected to the project (for example introducing new color options for the product, different sizes, extra features, etc.)
What you need to know
According to data analyzing the 2015 campaigns for 5 different crowdfunding platforms, Indiegogo had a success rate of only 13%. However, it’s important to note that Indiegogo has a much higher number of campaigns at any given time than other platforms such as Kickstarter (7,000 live campaigns vs. 4,000). Additionally, with the flexible funding model Indiegogo uses, it is possible to still raise funds for a project without fully meeting the funding goal.
