Part 2: Three steps to finding the best crowdfunding platform for your food or farming project

March 1, 2015 by Frontline Copy
food farming crowdfunding campaign

 

by Faith Attaguile

Need your food or farm project funded? If so, navigating through the hundreds of available crowdfunding sites can be a daunting task. Here’s how to find your way.

My last post gave you a list of action items needed for your crowdfunding toolkit. You can download that list here:

Crowdfunding Campaign Action Toolkit

Let’s assume you’ve already gathered your crowdfunding team together. This post explains how to find the crowdfunding platform best suited for your sustainable farm or food project.

Follow these three steps and you’ll be on your way:

food farming crowdfunding campaignStep One:
Choose Your Funding Model

Crowdfunding sites offer different types of funding models. So, before you can choose a host to use for your campaign, you must choose the funding model best suited for your project. You have four to choose from:

1. Debt-based model (also known as peer-to-peer)

CrowdsUnite lists 80 platforms here, with KivaZip at the top. Kiva may be unique in offering “0% loans for small businesses doing good things.”

I recently lent money to Riva Rock Farm through KivaZip to help them to buy cattle, horses, expand their products and keep their store open:

food farming crowdfunding campaign

As you can see, the project was successfully funded. I’m I looking forward to following their progress!

Most other Debt Funding platforms return the lent principal with interest, even if only a small amount, to the backer.

If your food or farming business is creditworthy, this model might be the place for you. It certainly was for KivaZip’s Reber Rock Farm!

2. Equity-based model

Backers of projects on these platforms pick up a “share” of your business. This works like an investment, not a loan. CrowdsUnite lists  84 equity crowdfunding platforms of this type.

Start-ups often use this platform to get their business off the ground. But be warned: You’ll have to go through a strict vetting process to be accepted in this sector.

If you’re a sustainable agriculture startup you might check out AgFunder.com to see if it’s a good fit.

3. Donations-based model

This sector is for nonprofit or altruistic projects only. Most platforms here do not offer rewards. CrowdsUnite lists of 159 websites in this category. (Note that some platforms like IndieGoGo show up on both the donations-based and rewards-based lists.)

4. Rewards-based model

These platforms take on a huge variety of projects and usually don’t distinguish between for-profit and non-profit businesses. The big difference between this model and donations-based platforms is this model always offers rewards for specific donation levels. Go here to see about 141 rewards-based platforms listed by CrowdsUnite.

If your food or ag business is for-profit, go right to this list. You’ll find the information you need to note the platforms that may be most suitable for your project.

These four crowdfunding types all require similar prep work to plan, design and run your campaign to success.

Food farming crowdfunding campaignStep Two: Compile Your
Crowdfunding Platform List

Let’s say you’ve chosen the rewards-based format to fund your project. Rather than googling for the sites that offer this model, find a crowdfunding aggregator website that can give you the starting list you need.

There are several out there, but for our purposes let’s use CrowdsUnite’s list of rewards-based crowdfunding platforms.

Go ahead and browse through these sites. Find five whose terms of service:

  • Fit your project needs.
  • Host other food or farm projects (their active backers could become your backers, too).

As you browse these sites, note the following:

1. What project categories do they offer?

You’ll find that some rewards-based platforms are category-specific (like gaming, health or music). Most, however, host a variety of categories.

Note that while you’ll often find “Food” categories, you won’t necessarily find “Farm” or “Agriculture” categories.

Don’t be put off by this.

Kickstarter, for instance, offers a “Food” category, but nothing for “Farms.” But when I searched for “Farms,” 100 projects came up. That’s because if you set up your project under the primary category “Food” a subcategory choice of “Farms” comes up. Here’s a screenshot of four of these successful projects on Kickstarter:

food farming crowdfunding campaign

 

On the other hand, Indiegogo has “Food,” “Environment,” “Small Business” and “Education” categories (among others). You’ll find farm projects in several of these categories.

Here’s a screenshot of their current farm projects, and some categories they’re under:

food farming crowdfunding campaign

 

For Farm/Agriculture projects, there are some new kids on the crowdfunding block you might want to check out:

  • Barnraiser. They describe themselves as “… a community for the millions of people who want to ensure that sustainable food and farming becomes the standard.”
  • WeTheTrees. This platform is the only one I found on CrowdsUnite that uniquely hosts campaigns in the farm/permaculture/sustainability niche.

Here are some other candidates for your food or farming projects:

And of course, take a look at Kickstarter and IndieGoGo while you’re at it. But these are just suggestions. Be sure to check out the rest of the platforms on CrowdsUnite as well.

2. What funding types do they offer?

Here, you’re going to have to make yet another choice.

Let’s say you’ve chosen rewards-based crowdfunding for your funding model. Now you must choose the type of funding you prefer. You have two choices:

  • All-or-nothing, where you receive funding only if you reach or exceed your goal.
  • Flexible, where you get whatever you raise whether or not you reach your stated goal.

Kickstarter, for instance, is an all-or-nothing funding type. IndieGoGo offers both types of funding.

Here are some things to consider for each one:

The all-or-nothing funding type:

  • Generates greater motivation to reach goals because either you get it all or you get nothing.
  • May promote greater confidence in backers knowing you won’t get funding unless you do the hard work necessary to reach your goals.
  • Is more compelling to backers because they aren’t charged unless you reach your goals.
  • You’ll know you can ship your rewards on time because you’ll have the funds needed to do that.
  • Allows you to go to your backers in the last days of your campaign and say if X numbers of them increase their donation X amount, they’ll be key in helping you reach your goal.

I recently donated to a successful Kickstarter campaign, “Drone on the Farm”:

food farming crowdfunding campaign

 

Flexible funding type:

The upside to this model is that you keep whatever money you raise. Even though that sounds sweet, are you sure that whatever you raise short of your goal will be enough to cover the costs of:

  • Making/shipping your rewards?
  • Platform fees/credit card fees?
  • Advertising costs?
  • People hired to write your story/produce your video/design your website?
  • Other costs?

If you choose the flexible funding type, be sure you know your bottom line costs. You want them covered with whatever flexible funds you raise.

3. Know the fees charged.

There are two types of fees you’ll run into:

  • Platform fees charged for hosting your project.
  • Credit card fees charged for processing backer donations.

Make note of these fees for each platform you check out. They can vary widely. While credit card processing fees hover around 4%, Kickstarter’s all-or-nothing funding type charges 5% on funds collected.

For both flexible and all-or-nothing funding, IndieGoGo charges its projects 4% if their reach their goals. However, IndieGoGo charges 9% on money earned and kept for flexible funding projects that don’t reach their goals.

4. Pay heed to platform community size.

  • How many active backers does the platform have?
  • How does the platform rate for customer service?
  • What’s the success rate of the projects it hosts?
  • Does it offer guidance on how best to set up your campaign page for that website?
  • How do you accept payments on that platform?

Of course, if a platform you’re looking at has thousands of active backers, that doesn’t necessarily mean this site is the best one for your project. But it is something to consider. Why? Because platform backers can become your backers, too.

I’ve backed three projects on Kickstarter. That makes me a potential backer for you!

Food Farming Project crowdfunding campaignStep Three: Discover
the Secrets of Successful Campaigns

For each crowdfunding platform you’ve chosen as a possible candidate to host your project, dig deeper and find five successful and five unsuccessful food or farming projects.

For both categories, consider these questions and write your answers down for each successful/unsuccessful campaign you’ve chosen to consider:

  • What was (or wasn’t) engaging about their video and project story?
  • What were their donation structures? What seemed to work the best? The least?
  • What made the offered rewards compelling (or not)?
  • Did they have accessible websites and social media accounts?
  • What works for you about their campaign page? What doesn’t work for you?
  • What were the key factors you think contributed to their success? To their failure?

When you’re finished, you can make comparisons that will help you arrive at an informed crowdfunding site choice.

And you can use your discovery of key factors contributing to the success (or failure) of other campaigns to your advantage when it’s time to design and develop your own campaign page.

In my next post, we’ll cover five key actions necessary for a successful farm or food project launch.

Stay tuned!

Do you have any suggestions for other good food and ag crowdfunding sites?

Do you have other ideas on how to choose a crowdfunding platform I haven’t included here?

If so, I’d love to hear from you! Contact me here or add your comments in the box below so we can begin a conversation.

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