Funded Today Review: We Spent $33,000, Here’s the Pros and Cons
The post Funded Today Review: We Spent $33,000, Here’s the Pros and Cons appeared first on Fundraise.net.
Our campaign raised $177,226 on Kickstarter, and another $30,000 on IndieGoGo and in product upsells. We launched the campaign ourselves, and brought on Funded Today after we raised $64,000.
Once all was said and done, we paid Funded Today $33,452.17 to market our campaign for us.
I’m often asked: “would you recommend working with Funded Today? What are the pros and cons?”
This article is the answer to that question.
Overview: What is Funded Today?
Funded today is a Kickstarter marketing agency.
They primarily focus on using paid Facebook and Instagram ads to market your Kickstarter. They work with IndieGoGo as well, but the majority of their work is on Kickstarter campaigns.
Funded Today also has a few other services, such as PR and cross promotions, that can help the campaigns they work with. That said, most of their work is through Facebook Ads.
The Process of Working with Funded Today
Funded Today is very proactive when it comes to reaching out to campaigns. Or, to put it another way, they’re quite salesy
Their reps will want to get you on the phone, and will start trying to sell you their services right away. Personally, I think it’s in a campaign’s best interest to wait until later in the campaign before starting a contract.
If you and Funded Today decide to work together, they’ll ask you to sign a contract. Once the contract is signed, they’ll ask you to pay a due diligence fee, as well as decide on your percentage fee.
Once these numbers are agreed on, Funded Today will get started. They’ll start by running a bunch of ads to see if they can get you campaign profitable. They call this the due diligence phase.
Assuming they’re able to get your campaign to work, they’ll then start scaling up ad spend. You’ll be included in their newsletter to their past backers, as well as be included in their cross promotions.
Once the campaign is over, you’ll be invoiced a fee, based on a percentage of your total campaign. Once it’s over, they’ll then ask if they can work with you on IndieGoGo as well.
How Funded Today Markets Campaigns
Funded Today markets campaigns through a few channels:
- Facebook Ads,
- Cross Promotions,
- Mailing their list,
Facebook Ads is really the workhorse of the campaign. In our case, it was responsible for ~90% of the sales Funded Today brought in.
They have a large catalog of both lookalike audiences and past Kickstarter buyers to run ads against. They also have a fairly proven formula, and experienced marketers who know how to work with Kickstarters.
Their cross promotions process helps make cross-promotions easier. But it’s also something you can do yourself, without Funded Today.
The mailing list did generate a good burst of sales for us. It was only a few thousand dollars, so not a crazy amount.
Finally, PR. Funded Today helped us get into a few small publications, but I don’t think it really generated a ton of sales. I’ve heard from other campaigns that they did help with PR for them, so I think this one is a little more hit or miss.
At the end of the day, Funded Today is really a Facebook Ads marketing agency. All the other marketing strategies are just added gravy on top.
Funded Today’s Fee Structure
Funded Today has two fees:
- Due Diligence Fee (approx $4000)
- Percent of Campaign Fee (approx 35%)
The Due Diligence fee is due upfront, before they do any marketing work for you. This is a mix of them seeing that you’re serious, and also provides the budget for their initial Facebook Ads tests. This fee is anywhere from $3,000 to $7,000. Ours was $3,500.
The further along your campaign is, the lower the due diligence fee is. In other words, if you only have $1,000 in pledges so far, the fee will be much higher than if you already have $50,000. This is because Funded Today is trying to de-risk the campaign before committing to it.
If you’ve already proven that a lot of people want to back the campaign, it’s less of a risk for Funded Today to take it on. If they have to figure out the audience, sales pitch, and viability of the campaign, it will take them more Facebook Ad spend (i.e. money) to make it happen.
The Percent of Campaign fee is a percentage of the total campaign, minus the starting amount you had before Funded Today got involved. For example, if you started working with Funded Today when your campaign had $50,000 in pledges, and ended with $200,000, and have agreed to give them 35% of your campaign, you’d multiply 35% by the additional $150,000 raised, and pay Funded Today $52,500.
Important Note: Many campaigns include shipping in their rewards structure. For example, $100 for the reward, including shipping. Since Funded Today uses the headline number to calculate their fees, you will pay the percent of campaign fee on your shipping as well. Make sure to factor this into your calculations, or charge shipping after the campaign rather than building it into your rewards structure.
What’s the Biggest Risk to Working with Funded Today?
The biggest risk to working with funded today is losing your due diligence fee.
In other words, it’s common for Kickstarter creators to pay $5,000 to test out Funded Today, not generate many sales from it, and to lose their initial $5,000 investment.
The percent of campaigns that pass the due diligence phase isn’t public. But from talking to other Kickstarter creators + from speaking with Funded Today, my sense is only about 35% of campaigns make it through.
In order to move past due diligence, Funded Today needs to feel confident that they can profitably market & scale the campaign moving forward. If they don’t, your fee is forfeit. Because of this, I’d personally recommend waiting a little bit before starting to work with Funded Today.
When to Start Working with Funded Today
The chances of a failed due diligence are much higher if you start early.
In other words, if you start working with Funded Today when you have $0 in funding, your chances of failing are a lot higher than if you started when you have $30,000 in funding. Since $3,000 to $6,000 is a good chunk of change, for most campaigns it’s better to sign with Funded Today after you’ve gotten your campaign off the ground.
Waiting to start with Funded Today has an added benefit: you have a better negotiating position, for when you start working with them. They’ll require less money upfront, and require a lower percentage of your funds in the end, because they already know you’ll probably be a profitable client for them.
This is exactly what we did in our campaign: we got to $60,000 in funding first, then brought on Funded Today, when we saw our sales tapering off.
If we didn’t bring on additional firepower, our campaign would probably have ended at $90,000 or so. Funded Today helped us bring in an additional $80,000.
To learn how to we brought in the first $60,000, in other words how we launched strong without an agency, click here.
Who Should or Shouldn’t Work with Funded Today?
You should work with Funded Today if:
- Your campaign is already successful, and you want to supercharge it. For example, you’ve already raised $30,000, you had some ads that performed well, and you want to take it to to $200K.
- You have a relatively high budget, and are OK with the risk of losing an upfront fee.
You should not work with Funded Today if:
- You’re on a small budget, and you’re at below $5,000 in pledges. The chance of not passing due diligence is high, meaning you’ll spend $3000 – $5000 and still not have a successful campaign.
- If you can’t afford to lose the Due Dilligence fee, it’s best to wait until your Kickstarter can cover the cost of the fee. In other words, if your margins are 40%, then wait until you have $12,000 or so before starting the process.
Does Funded Today Decrease Your Profit Margins?
Before started a Funded Today campaign, it’s crucial to think through your profit margins.
For example, Funded Today charged 31.33% on our headline price. Because that price includes shipping, it actually means their rate is around 41% of your gross margins.
- Your Product: $60
- Shipping: $20
- Total Headline Price: $80 (what your Kickstarter sales counter says)
- Funded Today Commission @ 31.33% of $80: $25
- FT commission as a percentage of product: $25 / $60 = 41.66%
Since most physical products have margins of 30% to 45%, it’s very likely that once you start working with Funded Today, you won’t have any real profits at all. Under certain circumstances, this is OK. For example:
- If you have no tooling & molding costs, and can go directly to manufacturing. In this case, you don’t make money on Kickstarter, but you get a large customer base right out of the gate.
- You plan to raise money from investors. We did some of this for our campaign. Use Kickstarter to generate buzz and credibility, and use the momentum to raise money right away.
- You have a large budget to begin with (savings, existing company profits, etc) and can sustain the low profit margin until you get the product to market.
If you do have large tooling & molding costs, and don’t plan on raising money from investors, and don’t have a lot of money – the pinch on your margins can be difficult to work with.
In either case, I’d strongly recommend getting out a Google spreadsheet, and charting out your expected margins carefully in different scenarios. What happens if you raise 20K? 50K? 200K? 500K? What will your take home be, after all Kickstarter fees and Funded Today fees?
Note: one option to mitigate the shipping fee issue is to charge for shipping after the campaign is over. That way, the “headline” Kickstarter number only includes actual pledges, and not shipping. I don’t think this is common practice on Kickstarter, but it’s not uncommon either.
Pros and Cons of Working with Funded Today
In short, here are some of the pros and cons:
- Funded Today has a lot of Lookalike Audiences & past Kickstarter buyers, so their chances of getting Facebook Ads to work is fairly high.
- Their “done for you” approach lets you focus on interacting with backers.
- They make cross-promos a lot easier to handle.
- Their email list is huge, pretty effective for marketing Kickstarters.
- Their sales team is quite pushy.
- There’s no refund on the due diligence fee, and it’s common for campaigns to not pass due diligence. In other words, it’s common to spend $3,000 to $5,000 only to find out they can’t help you.
- They take 30% to 40% of your campaign’s funds, which can drive your campaign into negative profit margins.
- They take a percentage of shipping, in addition to the campaign itself.
At the end of the day, we were glad we worked with Funded Today.
I think our campaign would have ended around $80,000 or $90,000, but instead we were able to generate $172,266.
We didn’t make much margin on the Kickstarter campaign, but the increased sales helped us negotiate lower prices with our manufacturers and better terms with our investors.
To learn more about how to launch a successful Kickstarter campaign – including how to get your first $20,000 in sales, so you can go into a Funded Today negotiation with momentum behind your campaign – take a look at our Kickstarter training program.
The post Funded Today Review: We Spent $33,000, Here’s the Pros and Cons appeared first on Fundraise.net.