When starting your business or passion project, you may look to crowdfunding for that extra bit of start-up capital to make your goals into realities. Crowdfunding can be a great way to raise money for your business or project, but it’s important to be realistic about your chances of success. According to Kickstarter, only about 65% of campaigns on the platform deliver their product on time. The relatively low success rate is due to a myriad of factors which include but are not limited to the ones given below.
The first one worth discussing is when campaigns set an unrealistic funding goal. It’s important to do your research and set a funding goal that is achievable and realistic for your campaign. If you set your goal too high, you’re likely to fall short and disappoint your backers. If you set your goal to low, then you will be unable to complete your project without asking for more money from your backers or elsewhere.
The next one is not having a clear and compelling value proposition. What makes your product or service unique and worth supporting? This is an important factor in any business offering a service or product. You need to be able to clearly articulate your value proposition to potential backers. With much competition in the marketplace, your product must stand out from the rest to receive backers hard earned money. You are looking for funding from a very large pool of people, which means your value proposition has to appeal to a large group of people. This factor may be the most difficult one to get right, but also proves the most essential as communication is key when it comes to crowdfunding.
Keeping in line with the communication factor, another reason campaigns fails is by failing to build a community around your campaign. Crowdfunding is all about building a community of people who are excited about your project. You need to reach out to potential backers and get them engaged with your campaign. Even when the goal is reached, there needs to be constant engagement after the backer has given their money. An urge to “take the money and run” may arise, though it is essential you act ethically and transparently to build trust with your backers. It is also important to keep backers informed of your progress throughout the campaign. Regular updates will help to build trust and excitement for your project.
The final element to avoid is not delivering on your promises. If you don’t deliver on the promises you made to your backers, you’ll damage your reputation and make it difficult to raise money for future projects. If you are lucky enough to achieve your funding goals, you then must reciprocate the good will and deliver for your backers.
In crowdfunding there are many campaigns that do not reach their goals and therefore do not deliver a product. If you were to go on Kickstarter or GoFundMe, you would find a graveyard of poor ideas destined to fail due to any combination of the aforementioned examples. However, an interesting example of a successful campaign that ended in a failure is the Zano Drone. The Zano Drone was a mini drone that could be controlled by a smartphone. The campaign raised over three-million-dollars on Kickstarter, but the company went bankrupt before delivering the product to backers.
Works Referenced:
www.trendscoutuk.com/blog/why-crowdfunding-campaigns-fail-and-how-to-avoid-them/
www.kickstarter.com/help/handbook/fulfillment
firmbee.com/crowdfunding-failures
www.floship.com/blog/_why-crowdfunding-campaigns-fail/
www.rainfactory.com/blog/4-ways-crowdfunding-campaigns-could-fail/
www.kickstarter.com/projects/torquing/zano-autonomous-intelligent-swarming-nano-drone?result=project. Accessed 17 Dec. 2023
Engine used: Copilot
The emphasis on a clear and compelling value proposition underlines the competitive nature of crowdfunding platforms. It’s not just about having a great idea; it’s about effectively communicating that idea to a wide audience and convincing them of its worthiness for their support
The article provides a useful overview of the common reasons why crowdfunding campaigns fail. It highlights the importance of setting realistic funding goals, having a clear and compelling value proposition, building a community around the campaign, and delivering on promises made to backers. By understanding and avoiding these pitfalls, entrepreneurs can increase their chances of success in crowdfunding.
Crowdfunding can indeed be a powerful tool for turning your business dreams into reality, but it’s crucial to navigate the challenges wisely. Your breakdown of common pitfalls in crowdfunding campaigns is both informative and insightful.