An indie studio that successfully doubled its Kickstarter funding target has warned that the money earned through crowdfunding can disappear faster than expected.
In October, War Balloon Games raised $37,000 for its iOS project Star Command – having initially asked for $20,000 – but has claimed that expenses for the Kickstarter reward process were far greater than it had anticipated.
Kickstarter is a tiered system where people earn certain privileges for pledging cash.
In the case of War Balloon, those who pledged $100 or more would have a poster delivered to them as well as other such deliverables.
These prize fulfilment costs amounted to about $10,000 of the game's total funds, the studio said.
“Our kickstarter earned $36,967 after asking for $20,000 so that was incredible,” read an update on War Balloon's Kickstarter page.
“To begin with, we didn't get all of that. We lost about $2,000 to no-shows; just people that pledged and the funds did not transfer.
“That got us down to $35k, and kickstarter and Amazon Payments take their portions, which got us down to right around $32,000.
“Now, right off the top you had $10,000 for prize fulfilment. That includes printing the posters, the shirts and shipping everything (thanks Australia).”
From the remaining $22,000, the company said it spent $6,000 on music, $4,000 on legal costs, $2,000 on poster art, $1,000 on iPads and $3,000 to exhibit at PAX East.
That left the studio with about $6,000 for development costs, it claimed, which was taxed as income.
The studio says it has taken on $50,000 of debt as part of its plan to finish the project.
“If we had to do it again, we would have probably had the price point a bit higher for the t-shirts and posters, as those turned to be a very large expense,” the company claimed.
“We also would have included the cost of a 3rd party fulfilment house - we just aren't equipped or skilled in that area, and it was (still is) something that we struggle with.”
War Balloon said, if it had a second chance, it would forgo attorney expenses.
“We got a little nervous after we received all the Kickstarter money and wanted to make sure our business was set up correctly. We registered our LLC, got operating agreements, but in hindsight a nice piece of napkin paper probably would have done just as well.”
The post continued: “Rewards are something to watch out for as well. We just didn't fully appreciate the cost of printing 200 posters, shirts, and more than anything shipping.”
War Balloon nevertheless believes the project wouldn’t have materialised without the kickstarter funding.
“We're extremely confident were going to hit our summer release date and that never would have happened without you guys,” the post concluded.