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Published 13 November 2013 11:42, Updated 14 November 2013 11:09
Kickstarter works with Australian bank accounts from today - whether crowdfunding will work for your project is less certain.
Crowdfunding hit a milestone on Wednesday with campaigns on arguably the world’s largest platform, Kickstarter, available to those with an Australian bank account, however meaningful data on the industry is sketchy and it remains “a sideshow” compared to traditional venture capital, according to a prominent digital analyst.
The business models of the two major American-owned crowdfunding platforms in Australia, Kickstarter and Indiegogo, and local contender Pozible, are based as much on providing “marketing and public relations exposure” as they are on actually bringing projects to fruition, says managing director at Telsyte, Foad Fadaghi.
Telsyte produces detailed market data on Australia’s group buying industry, however Fadaghi says “success metrics” for the major crowdfunding sites are difficult to come by.
“What I think’s happening is that entrepreneurs are using crowdfunding as a calling card - ‘look, I got people to pledge $40,000 for this widget, now let’s go offline to do the deal that will actually commercialise it’.”
Fadaghi believes the industry will be taken more seriously when the success of projects can be tracked beyond reaching a fundraising goal, and there is information on, for instance, the proportion of projects that go on to deliver a finished product within the promised timeframe.
According to Kickstarter’s own statistics, less than 44 per cent of the projects it has launched reached their funding goal - and 40,000 of those 60,000 unsuccessful projects got less than 20 per cent of the way. Pozible claims a 55 per cent success rate, while Indiegogo was at presstime yet to respond to a request for success metrics.
The Australian launch of Kickstarter is being watched closely by Billy Tucker, the founder of group buying site Cudo, who’s now behind a string of start-up concepts including parcel delivery solution Locked Bag.
Tucker has a major clothing e-tailer interested in trialling the tamper-proof delivery bags, but needs $20,000 to $30,000 to get an initial run manufactured.
“I’ll be interested to see the kind of projects that appear on Kickstarter and what is successful,” Tucker says.
He would use crowdfunding in the way Fadaghi describes - as a proof-of-demand which could be presented to a venture capital investor.
“But my problem with a lot of the crowdfunding platforms around at the moment is that they seem to be dominated by musicians and arts projects, so you’ve got to think they’re attracting an audience which isn’t necessarily looking for something like Locked Bag,” Tucker says.
The entry of Kickstarter has set off a wave of competitive tussling among the three dominant crowdfunding sites. For instance, Indiegogo just announced an Australian dollar payment option, while Pozible proclaimed it would now accept pledges in bitcoins.