On The Other Side Of The Kickstarter Economy, Projects Are The Customers

Crowdfunding projects collected $2.7 billion last year. Now, new businesses are vying to help them--and make profits of their own.

Kickstarter and other crowdfunding sites helped projects raise $2.7 billion last year, according to one estimate. But that’s where their help ends. PR, fulfillment, manufacturing, packaging, and other operations are generally all left up to project creators who are unlikely to have expertise in any, let alone all, of these fields.

This inexperience can result in fundraising goals that are unrealistically low, overly aggressive emails to journalists, overseas manufacturing disasters, and missed deadlines. But it has also helped jump-start a small secondary industry around servicing crowdfunded projects. There are crowdfunding-specific PR companies, advertising products, fulfillment centers, pledge management software, and online stores. Several project creators interviewed for this article say they get one or more pitches a day from businesses that find them through their campaign pages.

To many of these businesses, the tech vertical of crowdfunding sites are the candy stores of potential customers. They’re packed with new businesses that have a pressure to deliver and a willingness to experiment. “If they’re willing to experiment with a Kickstarter or crowdfunding,” says Chris Tsai, the cofounder of an e-commerce startup called Airbrite, “then it’s much more likely that they’re going to adopt technology like ours.”

Tsai and his cofounders originally set out to create a general e-commerce company. Then they entered tech accelerator Y Combinator, where they met several veteran crowdfunders and realized that associating with crowdfunding was a the perfect lead-generation strategy. They launched a product called Celery that made it easier to take pre-orders. “When we first started out with the regular platform it was [the] slow way," Tsai says, "but once we tied ourselves to this movement of crowdfunding and pre-orders and hardware, we picked up the volume much more significantly.”

How Airbrite works

As an e-commerce service, the company had picked up “hundreds” of users. With a crowdfunding boost, however, Celery quickly grew to “thousands” of users. After fulfilling their pre-orders, these merchants will likely begin to take regular orders, at which point transferring to Airbrite’s regular e-commerce product is a matter of flipping a switch.

A PR firm called Brainiacs From Mars is using crowdfunding project customers in a similar way. About 18 months ago, Brainiacs spun off a company called Fundzinger, which specifically caters to crowdfunding projects. For $375, Fundzinger will reach out to 9,000 to 20,000 journalists with a press release (for an extra $150, it will throw in a list of those journalists). Another option allows crowdfunding campaigns to exchange 7% of their final total raised for a full-time project manager.

Fundzinger CEO Romeo Mendoza says that though he devotes half his staff to the crowdfunded projects, they account for only about 15% of his business. What’s more valuable is their potential. “Our goal is to develop relationships with these Kickstarters, because they need help beyond just their 35 or 40 days,” he says.

Not that crowdfunding isn't a big enough business on its own. The concept of crowdfunded lead generation worked so well for a manufacturer called Dragon Innovation, for instance, that its founders decided to focus entirely on the genre. Though the company began as a general production consultancy for small hardware projects, it announced earlier this month that it will open a crowdfunding platform of its own. All featured projects will be from clients, who pay a fee for help navigating the manufacturing process.

Navigating all of these options can be confusing. Daniel Haarburger, a Stanford senior who has run two successful Kickstarter campaigns, recently launched what he hopes will be a resource hub for crowdfunded campaigns. Called Harness The Crowd, it includes a recommendation list sourced partly by companies that have emailed him to offer their services. Though the business model isn’t set yet, one option includes sponsored recommendations for these sorts of companies--which means that not only would crowdfunding have a swarm of businesses preying on its projects, but that this swarm would have its own business.

As Airbrite's Tsai puts it: “It’s a very hot market right now.”

[Image: Flickr user Michael Swan]

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3 Comments

  • Bill

    Great post I own a small digital marketing company the does front end crowdfunding consulting, and on the back end we offer video production and marketing, integrated digital marketing consulting and management,  and webdesign after the crowdfunding. Crowdfunding is creating jobs, businesses, and wealth for our economy right now as we speak, so I can't wait to see the results of equity crowdfunding on our innovation economy.

  • Suleman Ali

    A secondary industry for crowdfunding sounds exciting. It means that crowdfunders will have a lot more certainty about the infrastructure that will be available to them, which should make things a lot easier.