Why Do Most Crowdfunding Campaigns Fail?
After working with literally thousands of campaigns on our own site and speaking with campaign owners who have used a number of other crowdfunding platforms, several commonalities have emerged as to why such a high percentage of crowdfunders (about 60%) do not meet their monetary goal.
Granting that the underlying appeal of the project is there, crowdfunders who do not succeed in reaching their goal seem to strongly underestimate the amount of time they need to invest in preparing for and executing their campaigns. Even though the majority of entrepreneurs understand that crowdfunding is not a “post it and forget it” proposition, many still launch without laying the required promotional groundwork ahead of time. Running a crowdfunding campaign is literally a full-time job if you are going to hope for success. Most of the successful campaign owners with whom I spoke spent at least six months in advance of their campaign building both their personal and press networks.
More specifically, it is no surprise to find that funders are drawn to quality projects. It is a fact in the industry that projects with videos for instance are far more likely to receive funding than those without. Is your written pitch persuasive? Are your rewards of value? Is your team knowledgeable and accomplished in their field? Can you execute your project with the funding level you are seeking? Potential backers will evaluate all the components of your project before opening their wallets. Obviously success feeds success. If those who back you like what they see, they will enthusiastically promote your project to their own network helping to spread the word and ultimately helping you reach your funding goal.
Consequently, these factors play a key role in projects not reaching their goals:
- Too little time devoted to planning and promotion
- Project owner did not successfully engage their personal network
- Project owner did not build press relationships
- Campaign funding threshold set too high
- No video included
- Project owner had little to no background in project field
Having said this, I realize crowdfunding is more art than science. I know there are a number of dedicated entrepreneurs who invested an enormous amount of time in their campaigns but still did not hit their goal. But if you take the time to build a genuine following and offer a creative, heartfelt, and polished presentation you are more likely to succeed than to fail in your crowdfunding adventure.