(Flickr photo via JMRosenfeld)

There’s change in the air.  Entrepreneurs I talk to can smell it.  Especially those that are focused on consumer products.  The smell of money.  They whisper about it in hushed tones.

Kickstarter.

Money just waiting to be scooped up.  From consumers eager to buy the “next big thing.”  Before it’s even is a “thing” at all.

Thanks to recent high-profile successes like the Pebble: E-Paper Watch which broke the $10 million barrier for funding (so successful it had to be closed to new backers to preserve fulfillment for those who had already pledged) to Amanda Palmer’s campaign that just broke the $1 million barrier for a music project, and Double Fine Adventure which raised $3.3 million, crowdfunding has exploded in interest amongst businesses as an alternative to more traditional means of funding a new venture.

And in many ways Seattle game companies have been leading the way with a number of high profile campaigns.

No less than five Kickstarter campaigns with roots in the Seattle gaming community have netted almost $3.5 million in funding in the last few months.  For comparison, the total VC funding for games in the Seattle area last quarter was $10 million (and Q1 was somewhat of an outlier in this regard, usually it is far less).  So by this (admittedly rough) comparison, pre-development funding from consumers already equals 35 perccent of that from VCs.

Keep in mind that only 25 percent of Kickstarter campaigns for games succeed (as opposed to lightly less than half for campaigns of all types).  Why have Seattle companies been so successful?  That can be traced to a number of factors.

Here are a three:

1. They understood that crowdfunding is fundamentally an exercise in consumer marketing and as such, brand and vision matters.

Jordan Weisman

Whether it is an existing IP, an individual with a personal brand, an innovative look, or an understanding of your target audience, to be successful at crowdfunding is to fundamentally understand what it takes to motivate a consumer to action.  How to present consumers with a credible case why you are the right company to deliver this product, instilling confidence that you can, and conveying your vision and personality in a compelling and likable manner are all key.

Taking your customers on a journey from barely-awareness to desire.  In about 2 minutes.  When you have a brand, or are yourself a brand, communicating these becomes much more straightforward.

As Jordan Weisman (co-founder of Harebrained Schemes and creative force behind Shadowrun Returns and its successful $1.8 million Kickstarter campaign) put it:

“A few of us [well-known game designers], like Tim Schafer, Brian Fargo and I, have a known reputation and our projects already have many fans. That is an advantage we have, but even if you don’t have that reputation, you can still establish yourself and inspire potential backers.  If you don’t come in with a known reputation, you have to build it and present a good representation of what it is that you want to make. Be yourself. Just like traditional investors, backers are investing in people.  Your goal is to inspire.”

2. They embraced the fact that in some important respects, crowdfunding is just another “conversion funnel.”

Camouflaj's Republique

Many consumers enter, a few pay, most do not.  The same “dismal mathematics” of Internet ads and free-to-play games applies to crowdfunding.  Successful teams spend considerable time in low-cost/no-cost means of driving traffic to their campaigns, including PR and media outreach, social networking and activating fan communities.  And then you must constantly tune your pitch and your offering as your backers (and more importantly those who do not back you) let you know what speaks to them and what does not.

Republique, a campaign from the local game studio Camouflaj, developed an update schedule for their campaign well before launch, but still had to make major “course correction” changes, including changing the platforms they would support (from just iOS to include PC and Mac).  The teams’ nimbleness and ability to react quickly undoubtedly contributed to their success.

3. They understood that crowdfunding requires commitment

Successful crowdfunders do their homework.  And they plan and staff accordingly.  Managing the questions, comments and concerns of thousands, perhaps tens of thousands of backers over the course of a campaign is a significant commitment of staff time.

Managing a relationship with a few VCs or angels is one challenge, answering forum postings, emails, and keeping up with personal correspondence with over 36,000 is an entirely different scale of problem you must solve.

Most companies that I speak with — both those with successful campaigns as well as those whose campaigns — ultimately fail. All agree that they failed to recognize how time-consuming it would be.

I’ve seen Kickstarter and (and its peers) described not as a company but as a social movement.  That’s hype.

But crowdfunding isn’t going away.  It’s going to increase as companies become more proficient with marketing their products, and as consumers become more acclimated to paying a little to secure hot new product, from hot new companies, before they’re released (and in some cases before the first line of dialog is spoken) or the first line of code written.

Jon Kimmich is a contributor to and the editor of The Crowdfunding Bible and CEO of Software Illuminati, a consultancy to digital media and entertainment companies.  In a previous life his job was to spend Microsoft millions to acquire game companies (such as Bungie Software).  You can follow him on Twitter @JonKimmich.

Comments

  • guest

    Good read.

  • mgaldzic

    For a contrast with “consumer” driven crowdfunding checkout what Microryza are doing with science funding. This new start-up is the Vox populi of raising money for research projects. For example, one project is trying to answer, “How to save pollinators and evolve the tradition of beekeeping?” They’re based here in Seattle and at http://microryza.com on the web ;)

  • http://www.facebook.com/profile.php?id=94500172 Kyle Kesterson

    If anybody knows crowd funding, it’s Jon Kimmich! Thanks for the read, always insightful and relevant information.

  • http://www.facebook.com/lydia.rossa.1 Lydia Rossa

    KICKSTARTER IS HORRIBLE. Do NOT use Kick Starter for your campaign. It’s BAD! The people there are thieves!

  • Todd

    This was a good read. This article goes to the heart of what models gamers should follow to become successful at raising funding. http://fundgang.com

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