Since its founding in 2008, GoFundMe has raised $3 billion on its platform, and $1 billion in the last 5 months alone.
GoFundMe has been in the news a lot recently, with PayPal considering purchasing the company, and the roll out of their new GoFundMe Guarantee to help protect donors and campaign creators.
Not to mention, I’ve been talking a lot about the platform, having written the Amazon ebook Crowdfunding Personal Expenses, which also talks about other fundraising platforms.
In the ebook, I talk about the best practices when it comes to raising money for medical costs, education-related expenses, and even volunteering costs.
I’ve been writing about crowdfunding for a long time and covering the growth of crowdfunding websites like GoFundMe, Generosity, YouCaring, GiveForward, and more. In this post, I want to explain some of the reasons that I think GoFundMe is so popular and what’s contributed to their success thus far.
I invite you to also leave your opinion by commenting on this blog post!
GoFundMe’s Competitive Advantage
GoFundMe has a few different competitive advantages when it comes to crowdfunding. First of all, they are a household name quite simply because they were one of the first movers in the space. When people see successful campaigns being run on your platform, they’re more likely to launch on your website should they want to launch their own crowdfunding campaign.
Many of these campaigns, like the GoFundMe for Jeff Bauman, who lost both of his legs during the 2013 Boston Marathon bombings, ended up also attracting media attention. This campaign raised $809,310. It’s easy to see that as GoFundMe’s database of donors and campaign creators grew, so too did the website. In May of 2016, the website hit 25 million donors.
Second, GoFundMe has done a wonderful job of driving recurring traffic via SEO optimization, as you can see below. They rank very highly for most key terms that relate to crowdfunding, fundraising, and different forms of funding.
Over the last few years, their organic reach has steadily increased, which has made their customer acquisition costs plummet. They don’t have to work as hard as the next person to acquire customers, in this case, campaign creators.
To seal the deal, they purchased Crowdfunding.com for $166,594 in 2013. Not only does this domain name rank highly in search engines due to the keywords, but it also drives a lot of qualified leads to the actual crowdfunding website, as GoFundMe is listed at the top.
It’s going to be very hard to supplant them in the search engine rankings, when both their main website and an authoritative domain rank so highly.
This is a huge competitive advantage in the long run. Of course, they also engage in other forms of marketing, like paid advertisements, blogging, and social media, but I’m willing to bet that if you looked at their company from the inside out, most of their success is due to positive media, their email database, and their search engine rankings (feel free to correct me if wrong).
The Engine Behind GoFundMe
I’ve talked a lot about how to start a crowdfunding website and how you can do it easily with a plugin like IgnitionDeck.
At the end of the day, most new entrepreneurs look at new raises on sites like GoFundMe and Kickstarter and get excited by the math in their head. If a campaign raises $100,000, you’ll get 5% or $5,000 as a fee!
While this type of math is tempting, it’s not the reason that GoFundMe can function as a sustainable business. In fact, it’s quite well known that most GoFundMe campaigns only raise about $1,000, and most of that comes from the campaigner’s friends and family. That would yield a $50 fee. Basically, people are paying to “rent” a website during their fundraising duration. I think it’s a win-win.
Of course, there will be campaigns that raise more or less than this amount, but it’s the sheer frequency of small and medium sized campaigns being launched on GoFundMe that allows the business to be sustainable. Seeing as there are no deadlines or limits, GoFundMe can also experience a recurring stream of fees from donations over time.
Interesting enough, GoFundMe also encourages users NOT to end their campaign, saying “Most users leave their campaigns live indefinitely as a lasting memory of all the wonderful comments and support they received.”
This is amazing social proof for the crowdfunding platform. When you come to the site, you’ll see all of these LIVE campaigns that are currently raising money. With so many campaigns, the website has a huge amount of credibility.
The Future of GoFundMe and Crowdfunding
In my opinion, I think that personal crowdfunding is going to go mobile at some point. In fact, I’d be curious to see the stats now from GoFundMe in terms of what percentage of donations are made through a mobile device.
Apps already exist like Tilt that allow friends to pool funds from a group. Apps like Venmo are also already super popular in my age demographic to send and receive money.
If I’m speaking bluntly, PayPal should have been the market leader in mobile payments, but they’ve totally dropped the ball on that. At least in my mindshare being a millennial, Venmo is one of the most popular in the US. China and overseas payments are a whole different story.
While I do believe that GoFundMe will continue to grow and that they have a bright future ahead of them, I think the next paradigm shift is going to be the mobile device for those who want to enter the industry. I also haven’t researched this too much, but if you’re from a non-native english speaking country like China or India and there is no major GoFundMe-style website, that’s a surefire business to start. Historically, these types of ideas transfer to other regions, as is shown by the Samwer brothers.
