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Ketto Business Model: How Ketto Makes Money

In 1885, France shipped the Statue of Liberty to the US. Designed by a French sculptor named Frederic Auguste Bartholdi and paid for by the French government, the Statue was to be a diplomatic gift to the US. But when the Statue arrived in New York, it was in pieces, awaiting assembly. The Statue’s granite plinth, the base upon which it was to stand, required $250,000, a large sum at the time.

The American Committee of the Statue of Liberty, a group tasked with raising the amount necessary, fell short by more than a third. Grover Cleveland, then New York Governor, dismissed using city funds to pay for the Statue. Even Congress couldn’t agree on a funding package.

When it seemed like all options had been exhausted and work on the Statue would be stalled, renowned publisher Joseph Pulitzer came to the rescue by launching a five-month fundraising campaign in his newspaper, The New York World. The campaign raised $101,091 from more than 160,000 American donors in five months, enough money to cover the last $100,000 needed to complete the Statue’s pedestal.  

The Statue of Liberty crowdfunding campaign is one of the first, most significant crowdfunding campaigns. It proved the effectiveness of collective fundraising powered by the newspaper, a relatively new distribution channel with massive reach. The advent and subsequent popularization of the internet would dwarf the reach of physical newspapers and other forms of media that existed prior. 

The first notable instance of crowdfunding using the internet occurred in 1997 when fans of the British rock band Marillion came together, raising $60,000 to underwrite a US tour. Since then, the effectiveness of crowdfunding has grown from strength to strength. GoFundMe, the world’s largest social crowdfunding platform founded in the US, has helped raise over $5 billion from 50 million donors

But what’s all of this got to do with Ketto, the subject at hand. Well, while the concept of donating money obviously existed in India long before Ketto and similar platforms showed up in the country, the birth of online crowdfunding platforms in the west acted as a catalyst for the idea to be implemented in India. 

After first hearing about crowdfunding in 2010, Varun Sheth, one of the co-founders of Ketto, connected with platforms abroad to understand their work. These platforms operated in various niches — some helped raise funds just for ideas, some to produce movies and music, and some for social causes and non-profits. Ketto, even though now more famous for social fundraising, would support all kinds of fundraising: medical fundraisingeducational fundraisingcreative fundraising, and more. 

Coming from a finance background, Varun didn’t have the skills necessary to start a crowdfunding website. All he knew was that it would be a site with a few functionalities. “I outsourced the development to an agency and the product was to go live in three months, but it took a year because nobody had an idea of what exactly needed to be done,” Varun stated in an interview with Livemint

Once the website work got completed, Varun decided to help non-profits raise money with an initial investment of ₹2.5 lakh. Six months into it, he came in touch with Bollywood actor Kunal Kapoor through the charity Akshara Foundation. Kunal, who was also looking to work on a similar crowdfunding concept, soon arrived aboard the Ketto ship. 

Ketto witnessed a few early fundraising successes, but there wasn’t enough donation volume. At the time, online crowdfunding was new in India, so Ketto struggled to build trust among donors. But things improved after the company landed an investment of $100,000 and onboarded Zaheer Adenwala, now Chief technical officer. With time, more and more Indian donors became convinced of Ketto’s efficacy due to its transparent dealings and the popularization of crowdfunding with the rise of other competing Indian platforms like Impact Guru.

At the time of writing, Ketto has raised Rs 1,110 crores from 55 lakh plus donors, facilitating two lakh plus fundraisers. But the question is, how do Ketto and more broadly, similar crowdfunding platforms make money. Most crowdfunding platforms operate on a commission-based model, taking in anything between 2% to 10% as a platform fee. Crowdfunding platforms also collect a transaction fee from donors apart from the platform fee, which usually goes to the payment service provider.

In the case of Ketto, the company offers three different plans for fundraising: standard, premium, and Plus & Amplify. Platform fees differ based on the plans, which have distinct features.

Ketto Fundraising Platform Pricing & Plans
Source: Ketto

However, what is important to note is that the transaction fee is applicable on all three plans, even the standard plan having a 0% platform fee. To put it simply, Ketto makes money from the platform fee, which varies depending on the fundraising plans, and a fixed 3% transaction fee, which remains the same irrespective of the fundraising plan. 

In the future, Ketto plans to drop its platform fees, moving towards a tip model wherein donors can give tips to Ketto so that it doesn’t have to charge any platform fee to the people raising funds. The tip model, if implemented, would make sure fundraisers get the maximum amount of donated money possible without putting the existence and sustainability of Ketto in danger. 

GoFundMe, the world’s largest crowdfunding platform, had already moved to a similar tip-based model in 2017 in select countries and was able to raise enough tips to fund operations. The tips, again, function as replacements for GoFundMe’s platform fees but transaction fees, levied by payment gateways, still apply. 

Apart from moving in the direction of the tip-based model, Ketto also plans to reach the non-English speaking Indian population through local Indian languages and expand its presence in other developing countries. 

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Ketto Business Model: How Ketto Makes Money
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Ketto Business Model: How Ketto Makes Money
Ketto makes money from the platform fee, which varies depending on the fundraising plans, and a fixed 3% transaction fee, which remains the same irrespective of the fundraising plan. 
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Muaaz Qadri
A Proud Computer Engineer turned Digital Marketer