Frequently Asked Questions
- Why another crowdfunding platform?
- How does it work?
- Can anyone make a campaign?
- Can I edit my campaign after I create one?
- What if someone creates a camaign for $1,000 and I'm the only pledger?
- How much of the campaign funding goal does Pennyseed take?
- What's the lowest amount a pledger can pay?
- Is my pledge visible to others?
- If I get a lot of pledgers, won't a lot of the pledge amount just be processing fees?
- What if I'm not willing to pledge the maximum possible pledge amount?
- What incentives do people get for pledging?
- What are some potential use cases?
Why another crowdfunding platform? There's already Patreon, Kickstarter, Gofundme, Gumroad...
Though there are several ways for people to monetize online, each have their pros and cons:
- Money comes from users
- Hard to Share and reach more people
- Price is arbitrary due to no overhead
- Worry about Piracy and Torrenting
- Users pay a regular fixed amount
- Users can access all content
- Users still pay even if no new content is created
- Users have to subscribe for a period just to watch a single piece of content, cancelling after
- Users pay a regular fixed amount
- User payment is distributed amongst creators based on streamed content
- Pay-per-Stream model can be exploited
- Rewards replayability over quality
- Incentivizes Creators to exploit fans to stream their content multiple times for cheap prizes
- Users have to subscribe to an entire Network even when they just wanna watch 1 or 2 creators' content
- Content can be free
- Can Share and reach more people
- Incentivizes Creators to generate clickbait content
- Money comes from sponsors, not viewers
- Creators are beholden to sponsors, compromising content
- Money comes from Users
- Content can be Free
- Quality over Quantity, since more content doesn't mean more donations
- Users aren't sure how much to pay (nor how much the Creator needs/has)
- Unstable income due to irregular donations
- Users can be emotionally manipulated into donating
- Money comes from Users
- There's a clear goal for users to reach
- Content can be Free
- Once passed the goal, anything extra could've gone to other Creators they supported
- Winner-takes-all approach where few popular Creators get the bulk of the potential pledges
- Irregular pledge amounts lead to pandering to large pledgers who contribute most of the funding
- Money comes from Users
- Free advertising from wearers
- Users who want to support the Creator may not want that particular product
- Creators are incentivized to sell cheap products for high prices for greater profits
- Manufacturing & Shipping Fees
From these current solutions we noticed the following:😔 Problems
- Arbitrary Pricing with no guarantee of a stable income
- Little incentive for supporters to encourage others to contribute
- Creator has to do extra work for money (merchanidise, commissions, side jobs, etc)
- The Creator wants everyone to enjoy it
- Most of the money goes to living expenses
- Fans aren't paying for Content - they're paying for Future Content
- A "Split-the-Bill" Model that divides the Funding Goal by the number of Pledgers
- Specify a minimum number of pledgers to ensure a maximum possible pledge amount so pledgers aren't scared of paying too much
- A Minimal Design that doesn't try to be a Social Network
- Creators are guarenteed the Exact Amount they specify
- Pledgers are incentivized to share the Campaign to reduce their Pledge Share
- Minimal Design allows for a wide range of emergent applications and extensions
How does it work?
- Create a Stripe Account to receive payments
Create a Campaign specifying the following:
- Campaign title + description
- Funding Goal
- Minimum number of pledgers
- (optional) Maximum number of pledgers
- Pledgers login, add their payment information, and pledge to your campaign
By the end of the deadline:
- If the minimum number of pledgers are met, all pledgers are charged (funding goal)/(number of pledgers) and the campaigner gets exactly how much they set in the funding goal
- If not, then no charges are made and life goes on :(
By the deadline, if the Minimum number of Pledgers is met:
- Each pledger is charged (Target Amount)/(Number of Pledgers), which is sent directly to the Campaign Creator
Otherwise, if the Minimum Number of Pledgers isn't met:
- Nothing happens; life goes on
Can anyone make a campaign?
This is an experiment and is limited to people in the United States. Any campaigns you create must be approved by us before the deadline for any charges to occcur.
Can I edit my campaign after I create one?
After you create a campaign, you cannot edit it, including the title, description, funding goal, min/max number of pledgers, and the deadline. This is to ensure the pledgers know what they're going to pay and when.
For instance, if you want to raise $1,000 with a minimum of 1,000 pledgers, each will pay at most $1 before processing. If you changed the minimum number of pledgers to 100 after people have pledged then they'll be paying at most $10 which wouldn't be fair.
What if someone creates a campaign for $1,000 and I'm the only pledger? I don't wanna end up paying $1,000!
All campaigns require a minimum number of pledgers that ensures a maximum possible pledge amount will be paid.
For instance, raising $1,000 with a minimum number of 100 pledgers ensures that if less than 100 people pledge then no one will pay anything. However if 100 people pledge then each will pay $10, which is the most they'll ever pay. Any more than that will be less than $10 (e.g. if 200 pledge then each pays $5, if 500 then $2, and if 1,000 then $1)
How much of the campaign funding goal does Pennyseed take?
None. If a campaign is successful each pledger pays an equal share of the funding goal, and the campaigner gets exactly how much they asked for; no more, no less.
However, due to Stripe's processing fees (2.9% + 30¢ per transaction) the campaigner would get less than they asked for.
We fix this problem by increasing the pledge amount so the final amount after processing fees will equal the ideal pledge amount.
For example, if 1,000 people pledge to raise a total of $1,000, then each would not pay $1, but around $1.34, since (1.34 - (1.34 * 0.029 + 0.30)) ≈ 1.00
What's the lowest amount a pledger can pay?
The minimum possible pledge amount is determined by the maximum number of pledgers a campaign can have.
For example a campaign for $1,000 with a maximum of 100 pledgers implies the least a pledger will pay is $10 if there's 100 pledgers by the deadline. Ideally you wouldn't want a maximum number of pledgers but if a pledge represented pre-orders for some limited set of physical objects then it'd make sense.
However, while the campaign creator can set a maximum possible number of pledgers we set a maximum possible number of pledgers to ensure pledgers will pay a minimum of $0.50 due to Stripe's minimum charge amount.
Is my pledge visible to others?
All pledges are anonymous, being neither visible to the public nor the campaigner themself.
If I get a lot of pledgers, won't a lot of the pledge amount just be processing fees?
It's true that as the pledge amount decreases the larger the bulk of the pledge payment due to processing fees. For instance if you raise $1,000 with 4,000 pledgers each will pay $0.25, which becomes $0.57 when processing fees are added.
As inefficient as this may seem, we think it's way better than having a small percentage of followers pay larger amounts, which usually results in a lower profit for the creator.
Of course down the road we could look at ways of optimzing this:
- Asking Stripe for custom pricing due to our unique model
- Asking for outside investments to cover part of the processing fees
- As customers pledge to multiple campaigns, we can charge them in one lump sum (e.g. 2 pledges at $1 each would be $1.34 + 1.34 = $2.68 separately, or $2.37 as a single transfer
- Customers can put larger amounts into an digital wallet that we can subtract from when they make pledges, e.g. adding $103.30 ($100 after processing) to a wallet and pledging $1 100 times (vs pleding $1.34 individual 100 times resulting in $134 total)
- Providing alternate payment methods that have lower fees (e.g. cryptocurrencies), though that may be tricky due to conversion rates
What if I'm not willing to pledge the maximum possible pledge amount?
If you're not willing to pay the maximum pledge amount, you can just wait until more people pledge and the (funding goal) / (current number of pledgers) is low enough for you.
For instance a campaign raising $1,000 with a minimum of 100 pledgers implies a maximum possible pledge of $10. If you and 99 others pledge by the deadline then you'll pay $10. However you could not pledge and just wait for more than 100 to pledge before you pledge yourself, e.g. if 500 people pledge so you'll be paying around $2.
Although this would work campaigns may not succeed because everyone's waiting for everyone else to pledge first. Instead the campaigner can increase the minimum number of pledgers.
But later on we may add a feature where you can "pledge later" and automatically pledge when the campaign reaches some pledger-defined pledge amount, e.g. waiting for 500 pledgers so you ensure you'll be paying $2 despite the actual minimum being 100 pledgers.
What incentives do people get for pledging?
At the moment Pennyseed is just a glorified donation website with some logistics. Ideally the satisfaction of having supported your fellow person should be enough, but that isn't enough nowadays.
However, if people who actually knew how to make real production web applications took over, you could use your pledge as a key to access special content and stuff, similar to Patreon and Gumroad.
A cool incentive would be for a creator to have recurring campaigns where each campaign's funding goal raises an extra $100 or so that gets distributed to pledgers from previous campaigns, like a dividend.
This would incentivize people to not only support their favorite creators, but incentivize people to pledge much higher amounts for niche creators that may have very few followers (e.g. someone with 50 followers that needs to raise $1,000, each paying $20).
What are some potential use cases?👩🎨 Artists
- Artists can use the basic Pennyseed model to maintain a stable income
- Content can be made free to the public, making it easier to gain more and more followers
- Pledgers can access "bonus content" using their pledger id
- Earlier pledgers can receive a "dividend" as later campaigns pay a percentage back, crowdsourcing "Content Curators" as people look for new artists to support early
- Different "Pledge Types" can be defined, allowing some pledgers to license the Artist's content. If the Pledger is also a Pennyseed user, they can forward a percentage of their Campaigns to the Original Artist's Campaign
- A Campaign can be made to cover all costs of the Event (venue, catering, staff)
- People can attend by Pledging, using their pledger id as a ticket
- The more "tickets" are sold, the lower the ticket price, incentivizing pledgers to get others to attend
- Different types of "tickets" can be defined, from selling individual days for multi-day events
- A "Maximum Pledgers" can be specified to ensure not "too many" people attend
- A "Minimum Pledger Age" can be specified if alcohol is involved
- Like Artists, API developers can use the base model for a standard income
- Pledgers can use their pledge id as an API Access Key to use the API
- The Pledge Amount can be based on API usage
- A Campaign can be made to cover the cost of the device (e.g. a Coffee Machine shared by a Coworking Space
- People use the IoT device by pledging, using the pledger id to access the device
- The Pledge Amount can be based on usage (pledge multiple times for multiple uses) or a single pledge for "full access"
- The Campaign can be set to be the day before its return policy, allowing the Campaigner to return the IoT device when the Campaign isn't met
- A Recurring Campaign can be made to cover the total cost of running the Space (Rent, Utilities, Staff, Insurance, Maintenance)
- Pledgers can use their pledge id to access the CoWorking Space, encouraging more people to join to lower costs
- Pledge costs can vary based on attendance or usage of provided IoT equipment
- Events can be hosted in the Space, whose venue costs are coupled to the rent costs
- Startups and Unemployeed attendees can pledge indirectly with future earnings
- Pledges can act as "shares"
- A Recurring Campaign can forward a percent of Compaigns to past Campaign Pledgers, acing as a dividend
- Product Startups can treat Pledges as Preorders, setting a Maximum number of Pledges for a fixed set of products