WHAT IS CROWDFUNDING ABOUT?

Someone comes up with a good idea for a cool gadget, an innovative product, a useful service, or — as in our case — a board game, and they would like to make their project a reality. However, they do not have the resources to finance the production costs, and they do not want to borrow money from a bank. Instead, they decide to raise the money with the help of their target audience, who would probably buy the product anyway if they saw it in a shop. Basically, the creator asks their audience to provide the funds for the production and publication, and in return, the backers get a lot of good deals and freebies — things they would not be able to get in a shop. If the creator manages to convince their audience that their product is good and that they can deliver it, and if they manage to attract enough backers, then the creator receives the money in advance and manufactures and ships the product that the backers paid for. In an optimal case it is a cooperation: a useful, innovative, and fruitful exchange for all parties (but more on that later).

A SHORT HISTORY OF CROWDFUNDING

It is not such a short story as one would think, because crowdfunding is not an invention of the 21st century. One of the first examples of crowdfunding is the “saving” of the Bank of England in 1730, when the community of London merchants raised the necessary gold to restore the value of the pound, saving their own money in the process. Another early financing system was the publication of so called war bonds. A useful example is the (relatively unknown) War of 1812 between the United States and the United Kingdom: to finance the war, the parliament of the United States raised 11 million US$ from its citizens to defend the country against the British army. We could also mention the Hungarian war bond published during World War I: starting in 1914, the Hungarian Parliament collected 235 million dollars’ worth of forints from its citizens. Another interesting bit of trivia: in 1885, when the US government could not source enough money to build the pedestal for the Statue of Liberty, Joseph Pulitzer (who gave his name to the prize) advertised a financing campaign in the leading article of the The World. 160,000 backers raised the necessary funds, not to mention that (as a sort of early Stretch Goal) Pulitzer got 50,000 new subscribers for his newspaper.

The first modern crowdfunding took place in 1997, when the British rock band Marillion raised $60,000 for their US tour via an internet campaign targeting their fans. They let the genie out of the bottle, although in the early years this kind of financing was used almost exclusively in the art and music industries. As the first serious initiative, Artistshare was created in 2003. A few years later, independent platforms appeared that still lead the market today: IndieGoGo started in 2008, Kickstarter in 2009, and crowdfunding initiatives supporting humanitarian projects, such as GlobalGiving, Kiva, or Wokai, became increasingly popular.

The Importance of Crowdfunding

Kickstarter has given the board gaming community many games that might never have been published without it: Gloomhaven, Scythe, The 7th Continent, Conan, Dark Souls, or the many games from CMON which are now famous and sell in huge numbers (Zombicide or Blood Rage, just to mention a few). Put into numbers, the ten most successful Kickstarter games raised a total of $60 million with the help of some 450,000 backers! Designers and publishers who are important and famous today would not be there if not for Kickstarter. When they were unknown beginners, the community decided to give them a chance and put their trust in them. “Kickstarted” games make up a tenth of the 100 best-rated games on BoardgameGeek. A final illustration of the importance of crowdfunding: games published on Kickstarter now make up 15-20% of the total sales of the American board game market.

Everybody wins!

Crowdfunding is a win-win situation for those involved: the creator, i.e. the publisher, and the backer, i.e. the gamer. But what does this mean in the case of board games?

The most important argument for crowdfunding is that it gives creators, who otherwise would not have the capital to enter the market, a chance to prove themselves.

The publisher’s benefit on Kickstarter is that they can optimise their game: during the campaign they can see right away if players are interested or not, and the result of the campaign tells them how many copies they have to manufacture. A Kickstarter campaign is a huge challenge, like voluntary market research with high stakes and product optimisation. The publisher will avoid the mistake of not manufacturing enough copies, resulting in potential buyers remaining unsatisfied; they also avoid manufacturing too many copies, resulting in games gathering dust in the corners of warehouses. What is more, the “customers” give the publisher the full amount needed to produce and publish the game, which is a huge help, especially for new publishing houses.

What do Backers get out of it?

First of all, they provide invaluable help simply by being there. There is emotional value, a good feeling, in contributing to the creation of something. It also has a rational consequence: the backer gets to play the game if the campaign is successful.

However, the crowdfunding business model offers backers an even greater reward. Here is an example: a publisher runs a campaign for their game on Kickstarter, and backers can get it for $75 during the campaign. The funding goal, i.e. the necessary amount to fund the game, is $50,000, so the creator needs around 700 backers. If they manage to reach the amount, the game is funded and the backers receive their game in 6-12 months.

However, the publisher can say that should they reach $70,000 instead of $50,000, they will add an extra game element because the production cost is lowered by the greater number of ordered copies. The extra money can be used to reward the backers. This is what we call Stretch Goals. The next free add-on comes after $90,000, the one after that at $110,000 and so on. The more people back the game, the longer the Stretch Goal list becomes, and the more free content the backers receive. The game from the example is Blood Rage, for which the creators raised $900,000 instead of the original $50,000. For their original $75 pledge the bakers ended up receiving $250 worth of stuff, in the form of 28 Stretch Goals. When the game entered retail this amount of extra content could be bought for $250, whereas the original backers only paid $75. It turned out to be a good deal for both parties.

It is important to mention another good motivation for supporting Kickstarter games: exclusive content. This is content that is not going to be available in retail versions of the game, and it will not be available for separate purchase after the campaign has ended. These exclusive elements boost the value of the game: should you ever decide to sell it, you could get a price way above the originally pledged amount.

How does it all work in practice?

1. The creator plans, prepares, and tests their game, creates the budget, organises production, and then launches the (usually month-long) campaign with a set deadline. They try to convince as many people as possible that the game they designed and prepared is good, worthy, and doable.

2. At the beginning of the campaign, the creator sets the minimum amount (the funding goal) they need to reach to be able to manufacture the product in a profitable way. They provide backers with a “motivation list” telling them what they could receive should different levels of funding be reached. These are the Stretch Goals.

3. Backers can choose to support the project at any time during the campaign. They choose the pledge level they find most attractive.

In order to do this, they need to sign up to Kickstarter, either with their email address or their Facebook profile. Note that during the sign-up process they need to provide their banking details because Kickstarter debits the money automatically, should the project be successful.

Transactions via Kickstarter are completely safe, and there have never been any major issues. Their financial provider is Stripe, which is one of the biggest financial providers in the US.

4. If the project is not good enough and fails to meet its funding goal, the campaign is deemed unsuccessful and no money is transferred: nobody collects any money from the backers.

5. If the project meets its funding goal, it is deemed successful. Kickstarter automatically debits every backer with the amount they pledged.

If for some reason a backer does not have enough money in the given account, they have six more days to before Kickstarter tries again. After this six-day period the system automatically cancels the pledge and it does not attempt to collect the pledged amount again.

6. Shipping costs are added to the pledge, and usually there is a table with information on the costs at the bottom of a campaign page. Often the shipping cost for your country is automatically added to your pledge, but there are also campaigns where shipping costs are settled later, via the Pledge Manager. The creator tries to offer the best shipping conditions and usually ship the finished game via a delivery service. If the product has the EU-friendly label that means that there is no further tax or customs duties to pay for the game, so you only pay for the pledge itself plus shipping.

7. During the campaign the publisher sets a shipping deadline. This is usually 6-12 months after the campaign ends. Over the course of this period the creator informs backers about the manufacturing process with updates on Kickstarter or per email.

8. When the product is ready the publisher sends a follow-up email to make sure the shipping address is still the same and the game is shipped.

About Risks and Honesty

Kickstarter is not a shop, but a fundraising platform. The money you pledge is officially considered as a donation and the games you receive are complimentary copies in exchange for your donation. Theoretically, it is possible that a creator runs away with the money and never delivers the game, but this is almost unheard of in the board game category: since the 2009 launch of Kickstarter this has happened only once (and the backers were eventually paid back).

Kickstarter users are protected by American consumer laws, so any misuse of the received pledge money could be punishable by law. As far as we know, to date no board game project has disappeared and no creator has run away with the backers’ money (unfortunately it has happened in other industries). In other words, there should be nothing to worry about.

However, there are two real risks when using Kickstarter. Firstly, there can be (potentially significant) delays in delivery, and unfortunately this occurs relatively frequently. Secondly, sometimes the product backers receive is not of the quality the creator advertised or what was expected. We will do our utmost to keep to our deadlines.

KICKSTARTER TUTORIAL

Quick guide to Kickstarter

Creator

The publisher of a board game and usually also the designer. Clicking on the “Created” link next to their photo will bring up a list of their previous projects. The “See full bio” link offers more information about them, while clicking on “Contact me” allows backers to communicate directly with the creator. They are usually helpful and answer backers’ questions.

Funding Goal

This is the minimum amount needed to make the game possible. If the campaign fails to reach this amount, the game is not made and the backers are not debited with the amount they pledged.

Reward

Everything the creator offers the backers in return for their pledge.

Pledge Levels

In most cases you can back a project using various predetermined amounts. There is a description of the rewards for each level: the more money you pledge, the more value you normally receive.

Backer

Someone who financially supports a project. If you decide to support a project by selecting the pledge level which seems the most attractive to you, you are “backing” the project. It is important to note that Kickstarter is not a shop, but a crowdfunding platform, the creator effectively collecting “donations”. By their donations backers make the creation of the game possible, and in return the creator provides them with a copy of the game (and often promotional gifts).

Manage your Pledge

You can change your pledge level at any time during the campaign. You can even decide to cancel your pledge. No money is ever collected from your account until the successful end of a campaign, and in the case of an unsuccessful campaign, no money is collected at all.

Stretch Goal

Extra rewards in the form of bonus content you normally get for free if the funding exceeds a certain level. The more people back a project, the more money is pledged: thus more Stretch Goals are unlocked, which in turn motivates backers to select a higher pledge level, to buy paid add-ons, and to share information about the game with their friends, hoping they would also back it and unlock further Stretch Goals.

Kickstarter Exclusive

Game components and gifts which are only available during the Kickstarter campaign are called “Kickstarter Exclusives”. They cannot be bought after the campaign or in retail. This exclusive content and games that contain it have a much higher value and can often be sold for a higher price later — potentially for several times the original pledge value.

Add-ons / Optional Buys

Paid add-ons are extra content that is not free. They either belong to a higher pledge level or backers add the price manually to their pledged amount. In most cases, these optional add-ons can also be added after the campaign (in the Pledge Manager).

Pledge Manager

The platform where backers can manage what exactly they would like to use their pledge for. Backers can also pledge further amounts in order to get additional rewards.

Shipping Cost

The cost of shipping. There are projects where this is partly or completely calculated into the pledge, but this is rare. The descriptions of pledge levels clarify whether or not the shipping cost is included. There is usually a table at the bottom of a project page with information on shipping costs to different countries. If a backer’s Kickstarter profile is complete, Kickstarter can automatically calculate and add shipping to our pledge level. Sometimes, however, this has to be done manually, or the shipping cost is calculated and paid separately later, after the end of the campaign.