For startups today, there's more than one way to raise the capital to get their business up and running. Traditional fundraising rounds with venture capital firms and registered angel investors are still an option, but many founders are increasingly turning to equity crowdfunding as an alternative.
With crowdfunding, startups can connect with millions of potential investors, any of whom could also be future customers and brand ambassadors. Successful crowdfunding projects could avoid becoming reliant on just one or two backers and raise more capital than they'd be likely to access through traditional venture funding, in a manner that's better suited to fast-moving tech or innovative web3 projects.
But like everything in the world of business, crowdfunding success doesn't happen on its own.
Marketing agencies that specialize in crowdfunding campaigns emphasize that with so many campaigns competing for investors, you can't expect people to find yours unless you bring it to their attention.
Using paid ads to market your crowdfunding campaign is vital nowadays to ensure you cut through the noise. You need a carefully planned marketing campaign that includes raising interest and securing pledges before the launch, providing engaging content throughout the campaign, and applying paid promotion to reach your target audience.
What many founders might not realize is that this makes marketing spend one of the more important crowdfunding statistics.
There is a plethora of crowdfunding platforms to choose from, including general platforms like Kickstarter and Gofundme, startup crowdfunding sites like StartEngine and Wefunder, and smaller platforms focusing on niche sectors like women-led startups, tech startups, or startups in a specific geography. With so many options, it can be hard to know which is the best crowdfunding platform for startup funding.
Among the many crowdfunding stats for founders to check out, like success rates, fees, and effective campaign types, we recommend that you also examine how much each platform spends on marketing.
Media intelligence tools like AdClarity offer insight into how much different companies are spending on paid marketing on different channels, including social media, search ads, in-app advertising, and programmatic display ads. By searching various crowdfunding platforms and comparing their results, you can see which ones direct the most funding towards paid promotion for crowdfunding campaigns.
However, there's a caveat. If a startup is running a campaign on StartEngine, for example, and they use Facebook ads to promote it, they'll drive traffic to their page on the StartEngine platform. As a result, it appears that the ad was placed and paid for by StartEngine, but the startup is the one spending the money.
If you're not aware of this, you could end up with a mistaken impression of how much each platform spends on paid campaign promotion for its users. But when you have full knowledge and understanding of the metric, it's valuable in helping you choose a crowdfunding platform. Here's why.
Every crowdfunding platform takes a slice of the total amount raised by each campaign owner, as a platform fee, which means they have a vested interest in seeing your pitch succeed. The more money you raise, the more the platform receives in fees. That's why some platforms supplement your budget for paid promotion, or provide services for a fee to help you run your marketing campaigns.
The platforms which appear to be spending the most on paid ads are likely to also be the ones that are the most committed to helping you succeed. It's a sign that they encourage users to be active in promoting their campaigns, offering more support and resources to help you with your marketing, even if that doesn't extend to paying for ads themselves. It also indicates that you'll be sharing a space with active, energetic users who are likely to raise their full amount, and that kind of success can rub off.
Once you have crowdfunding stats about which platform spends the most on paid promotion, you can combine it with other data to derive deeper insights. For example, if you know that a platform supplements founder promotions with their own money, you can put that together with marketing spend data and get a better idea of how much the platform itself spends helping promote campaigns, and how much different founders put into it.
In general, the crowdfunding sites which head the rankings for marketing spend are usually the ones that provide the most support to their users and whose fundraisers see the most success for their campaigns.
It's not easy to identify the best crowdfunding platform. Every site understandably trumpets their own successes and advantages, and it can be difficult to filter through the data and gain a clear understanding of the pros and cons of each option. That's why many founders seeking to raise capital through crowdfunding turn to an experienced agency to help guide them through the maze.