09/12/2012 04:36 pm ET Updated Dec 06, 2017

Crowdfunding 201: Once More Unto The Breach?

By: Lucas McNelly

In the return of Crowdfunding 201, filmmaker and crowdfunding pundit Lucas McNelly brings us up to speed on the project that ate up his summer. As always, it's educational.

Well that didn't work.

We aren't going to get into why, at least not right now. We're all a little burned out and in 4 Of A Kind overload. It's just not something I want to explore yet.

In the final tally, it counts as a loss, but when you've got a campaign that got more than twice as many backers as the filmmaker had Twitter followers at the start and managed to become a trending topic in two different countries, there's potential for growth. If you're wondering, Kickstarter campaigns don't trend on Twitter. I can't think of a campaign that's ever trended in the U.S., which doesn't mean it hasn't happened. But if it has, I can't tell you when.

While there's a lot to be happy about, none of it really matters if the project doesn't get funded. So...what now?

Seemingly everyone, from crowdfunding veterans to random people on the internet, seems to have an opinion about what Marchetti should do next. And while he's in a unique position of having probably one of the more well-known failed campaigns on record, it's a question that a lot of filmmakers face. So what are the options for 4 Of A Kind?

1. Quit

This is the least attractive option because you don't get any money and you don't get to make a movie. Say you raised 5% of your goal and worked really hard to get that. Chances are it ain't gonna happen. Maybe you should work on something else and put this project on the back-burner for a bit? Maybe crowdfunding isn't your thing? There's no shame in that.

2. IndieGoGo

Here's a shortcut for you.

If someone says, "it's a shame they didn't use IndieGoGo because then they could have kept all that money they raised," then you're safe in completely ignoring that person and their opinion on all things crowdfunding, pretty much forever. It's such a patently stupid thing to say that it can only come from someone who lacks a fundamental understanding of what makes crowdfunding work, and, probably what makes human beings tick. It's that idiotic.

The ticking clock of the all-or-nothing campaign drives these things so very much. The message changes from "hey, this is cool" to "OMG, they're going to lose all of that money!" Exhibit A is a campaign like 4 Of A Kind that raised nearly $28,000 in the final day. How much of that is driven by the all-or-nothing aspect? Virtually all of it. So to say, "they'd have that money if they'd used IndieGoGo" is just wrong on every level.

Having said that, re-launching the campaign on IndieGoGo is an option. Just don't make the mistake of assuming you'll raise anything close to what you raised the first time around. I haven't seen a study yet of how much inflation Kickstarter is responsible for, but I'd be shocked at anything below 20%. I could easily see a justification for any number between 20% and 60%. For some projects, you could argue the number is even higher.

Here's the big risk with IndieGoGo: maybe the worst result in crowdfunding is raising money for a project you have no chance of ever delivering. You basically just shoot yourself in the foot and have to figure out if you should return all the pledges or fight a battle you can't win. A friend of mine compares it to handing a filmmaker a ticking bomb. It's hard enough to finish the project if you hit your goal. But try and do it with 25% of what you need...or less. You put yourself in a difficult situation where you might be better off not having raised the money at all.

But all of that is dependent on the film and dependent on the circumstances surrounding it.

3. PayPal, etc.

I know a filmmaker who ran a Kickstarter campaign that came up short, one that was tailor-made for the transition to grabbing donations on PayPal via their website. They had it ready to go and rolled it out minutes after the Kickstarter campaign ended.

They were able to maintain around 8% of what they raised on Kickstarter. Eight percent.

Of course, that's only one example and you could use something like ignitiondeck on your Wordpress blog, but it's essentially a Kickstarter clone without the most important aspect. It's a fancy PayPal button. Or another version of IndieGoGo. Either way, it's a really, really terrible fit for a project like 4 Of A Kind. Easily the worst option.

4. Kickstarter

And that leaves Kickstarter.

There's a certain appeal of going back via the same general route, a "once more into the breach" approach. All of your existing backers have an obvious familiarity with how it works and all of your media is set up for the specifics of that platform.

Then it's a question of where to set the goal.

If you had a rally, like 4 Of A Kind did, there's bound to be some attrition in how much of that money you can get back. People increase their pledges in the final hours. People back a campaign without really knowing what they're backing, mostly because they're caught up in the excitement. So how much is that? 10%? 20%? It all depends. You're naturally going to lose some people, but you're also gaining more days for outreach. You should, in theory, be able to replace some of that attrition with new people. With some luck, you can exceed the previous number.

So what do you go for? Well...that depends.

You should, if you ran the campaign well, have a much better idea of your audience. You should know what worked and what didn't to get people through the door. Ultimately no one knows better than you what's possible. You know who gave what. You know when they gave it. Easy, right? Well...that depends.

There's also the question of how much risk you're willing to take on.

You can break your project into component parts and raise money for all of those separately. Or you could attempt to get as close to what you ended on, essentially going for a number near the level you've established. could go for it. Unless something has happened, your project's budget hasn't changed. What cost $10,000 still costs $10,000, right? Probably. Again, that's an internal question. Only you really know.

Either way, those choices in that re-launch will tell you a lot about the filmmaker. Do they play it safe? How safe do they play it? In a way, it's more fascinating than the original campaign. The project creator has more information about the backers and the backers have more information about the project. So what do they do with that information?

Ultimately, though, that second campaign will be judged the same way as the first one: does it get funded?

Lucas McNelly is the filmmaker behind A YEAR WITHOUT RENT, UP COUNTRY, BLANC DE BLANC, and GRAVIDA. He worked on the 4 Of A Kind campaign. He hasn't lived anywhere in a long time.

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