Comics / Spotlight

Your Business Model Is in Trouble if You Rely on Kickstarter

By Hervé St-Louis
April 27, 2012 - 08:14

Sorry guys, but someone had to say it. Kickstarter is a crowdfunding site where promoters can post projects and have them funded by anyone who wants to support the project. Crowdfunding is not a new idea. I worked five years ago for the grand daddy of the crowd sourcing community Cambrian House where we had a lot of related projects and platforms going on. We had something called the Robin Hood Fund (which has since changed its name to Greedy or Needy after a threat of lawsuit by a competitor). On Robin Hood, people could beg others for money by creating YouTube videos or writing cool blog posts. No valid reason was needed. Just asking for money was enough. Fellow ComicBookBin colleague Andy Doan @AndyDoania with another buddy who worked there, Don Holmsten created FilmRiot which works in many ways just like Kickstarter, except for the independent film industry. Their project had a sound business case, but they were too early in the crowdfunding game and their project was derailed by internal politics and sabotage from Cambrian House. Oh, and the lawsuit against their domain name by competitor didn’t help. But that’s history for both Don and Andy. I witnessed most of it and feel sorry their project failed.

Cambrian House (now called Chaordix) had its own crowdsourcing platform where anyone could collaborate on projects, such as building  the next Twitter competitor, or something like that. I was exposed to the business case, did a lot of research myself. Learn about all the buzz words – you know the long tail (anyone still building a business using the long tail as an argument – and I know quite a few, needs to be fired right now). Crowdsourcing and crowdfunding are not bad per se, but knowing what I know, with five years of hindsight, I know better than to put all my eggs in that. Nothing beats a well formatted business plan with strong financial focus and sound economics. Unfortunately a few success stories from Kickstarter have embellished the picture and make anyone think that they too can publish their comic books using Kickstarter – and not have to pay for the production themselves.

For anyone lacking in business education, and that includes 98% of people working in comics these days, please refer to the classic series I started over six years ago on business plans for the comic book industry. It’s a classic because what I wrote on your behalf and for free for you, six years ago, is as relevant as ever, especially in this age of Kickstarter fandom.

Like I said, there’s nothing wrong with Kickstarter per se, if you know what you’re doing. The problem is when people rely exclusively on Kickstarter to finance their comic book projects while ignoring the fundamentals of financing a project and a business. A lot of people will be burnt, including promoters and the fans that support their projects. Unlike many, my real worry is not the promoters who start a Kickstarter project and never deliver, while taking money away from gullible fans. My biggest worry is promoters thinking Kickstarter will magically solve all of their money problems and will entice them to take on projects they would not normally because of financial constraints and lack of skill.

As a joke, I created a Kickstarter project for ComicBookBin about two months ago. Never really paid attention to it. But If I did, I’d know what to do with it and it would be part of a complete business plan and project strategy blue print ready to use the Kickstarter platform the best way. Unfortunately, that’s not how most people use kickstarter. They view Kickstarter more like the Robin Hood Fund rather than Film Riot. It’s an easy place to ask for money with little responsibilities toward the business being built and the audience supporting the project.

Kickstarter, in business terms is included in the parts of your business plan related to financing. Financing has always been a problem in the comic book world. it’s expensive and time consuming. The financial components of your plan explain how you will not only produce and market a product. It’s also about fix costs – the cost of operating your business on a daily basis. Recurrent costs like monthly bills related to your Web site hosting, your business phone line, mailing products to customers and stores. A real successful Kickstarter campaign can raise enough money to cover both fixed and non-fixed project costs. But is it fair for your supporters to bare the costs of you operating your business? I think not. A sound financial plan should have at least two separate source of funding. Fans should not be paying to keep your business alive. If you can’t find other means to keep your business alive, then maybe you should not be in business. But promoters don’t understand that. Recently, I even saw a call by a comic book promoter begging the comic book community to pay for their appearances, travel and hotel for the San Diego Comic-Con. If you can’t pay your own way to San Diego, why would anyone pay for you?

Kickstarter is project-based. Thus when you post a project, the money collected should go towards funding the actual project’s production and marketing it. It should not cover anything else, like your trip to San Diego (not that’s not marketing, that’s boosterism and being a parasite). Kickstarter encourages promoters to stop investing in their projects themselves and to stop relying on alternate sources of funding like angel investors and bank loans. It shifts all the risks to the multiple faceless supporters online who are credulous enough to pay in. I have a bridge in Florida I can sell you. Your Kickstarter should have clean and transparent ledgers so supporters can see where the money went. At most Kickstarter should probably finance no more than 30% of your project. If you’re able to come up with the remaining 70% through other sources of funding, like bank loans, angel investment or bootstrapping, then your business has greater chances to survive and thrive. It means you probably understand business fundamentals too and will be very careful with any money you have, including the one you raised through Kickstarter.

What has happened is that many promoters now use Kickstarter as a marketing engine instead of a financial tool – or they mix the two without really understanding how it works. Here’s a good business tip. Only use Kickstarter as a marketing tool if you have existing comics people can see or if you are working with a well-known creator that can bring a solid return on your business. In other words, if Diamond Comics or Image Comics would normally reject your project because they don’t see intrinsic values in the project submitted, then maybe you should not use Kickstarter as a marketing tool and only use it for its financial capabilities. Diamond and Image Comics both have a very good insight into what will sell and what will not. Having John Byrne as your illustrator brings intrinsic value to your project and will guarantee some sales. Using the work of this unknown Filipino or Brazilian artist to promote your project, no matter how good he is, is a mistake. He brings no intrinsic value to your project no matter how cool his artwork is. He is a nobody until he has sold thousands of comic books and been hailed as the next coming of Christ.

Now some smart promoters have been using Kickstarter the right way. Some actually publish their comic books as Web comics or create the contents in advance and only ask for help in deploying it on another format, like print after the material has been created. In other words, they have financed the project through other means and use Kickstarter only to publish the project. Their operations and the initial investment in the project were accomplished through other financing means. That means that they took the initial risk for their project themselves. Before fans can even begin to support their projects, they can see the intrinsic value of the project and thus are not dealing with a fly by night operation that may or may never deliver.

Kickstarter is not about removing all risks from your project and unloading it on others. It’s your freaking project for God’s sake. If you’re not willing to take a risk on your own project and think others should do so on your behalf, because you think you’re the second coming of Christ, you don’t deserve to be in business or to have the wisdom of the crowds help you finance your project. You deserve to fail.

Last Updated: August 31, 2023 - 08:12