Over the past 4 years I have been a keen and avid backer of a number of crowdfund projects. Over the 125 or so campaigns that I have backed and participated in on both Kickstarter and Indiegogo as well as some independent sites, at least a fifth of them have failed in some way. To provide some statistics, out of the 125:
106 campaigns were successful, 19 failed
69 delivered fully on their promises and delivery timing
Of the 106 that succeeded, 3 were restarts of a previous failed campaign
38 were late on delivery, 24 are still to be deliveredOf the ones still to be delivered, 15 are more than a year late and 4 campaigns are 2 years late.
5 have yet to fully deliver their remaining rewards to me after 3 years from the initial product offer
2 were outright scams (the creators had totally left the project) and 5 encountered legal issues
1 current campaign is in legal turmoil, while two campaigns is having trouble to keep going as an ongoing concern (one is a well known startup in the music player field)
1 campaign was fully refunded because the company didn't have the resources to complete the project
So with that out of the way, let's talk about why crowdfunds fail, and often fail so badly when they do.
Top reasons for crowdfunding failure:
1) No or poor initial plan
As my old secondary art teacher from Gibraltar used to say 'If you fail to plan you are planning to fail'. In whichever field of work that one does, planning is an incredibly important part of the process. And it is no surprise that of the ones that have failed to deliver, are ones which has not anticipated or put in any planning contingencies at all for the marketing, scheduling, testing, shipping or budgeting of their products. For example, shipping of parts to make a product takes time to design, make and complete. In addition to this, modern factories work in concert with other suppliers, and are often working to a tight schedule. Delays in shipping can be due to many reasons such as public holidays which means closure of the factory for a short period; lack of supplies or raw materials; or even due to an unexpected event, such as the Sichuan earthquake of 2014, which would have impacted supplies and logistics. So it pays to do things as early as you can.
2) No budgeting or firm accounting controls
Another major obstacle for a lot of the poor campaigns has been poor budgeting or poor financial controls from the beginning. Aside from taking the initial funds after the campaign was finished, many of the creators probably had never experienced having to control and budget a large amount of money especially if they reached into the millions, and some have encountered hardship after the initial funds ran out due to their inappropriated spending. One of the most famous recent failures in crowdfunding was for a 3D printer called Tiko. It raised over $3 million US dollars but has only managed to ship less than a third of the printers and has now announced it may never be able to ship the rest of the printers to its backers after complications.
3) Poor targeting of the market
Aside from poor planning and budgeting, another reason for the failure of a campaign is poor initial targeting of the planned market. The product or campaign one is planning to promote should be relevant to its readers and user base. Those that are not do risk difficulty in getting proper funding.
4) Poor campaign idea or execution of presentation
Another area of failure is a poor campaign idea or poor presentation of the idea at hand. Often on a failed crowdfund, the video presentation that I come across is very poorly made, looking like it was edited and recorded with a smartphone. If one is planning a crowdfund campaign, it serves to use the best possible skills and expertise for it, especially with the video editing and final presentation. We certainly did for ours. It goes without saying the more you put into it, the more you will get out of it, as with everything in life.
5) Over ambitious fund targets
Another top failure for some campaigns is over reaching ones target expected fund numbers. Whilst it is nice for one to reach a high number, a funding target too high will result in failure also if it fails to reach a certain amount of required backers for the project.
6) Poor delegation of work
It goes without saying crowdfund campaigning requires a lot of time and patience to complete especially when one is working in a small team. Which is why it is important to delegate the work wherever possible to others, especially with support or communication with backers. Creators should never try to take work on more than what is physically possible for them to do, because it takes a lot of time and concentration just to do one thing.
7) Poor usage of available support tools
With the advent of online services such as Slack, Pledgemanager, Evernote, Dropbox and BackerKit, usage of smartphone apps and traditional methods of process planning like GANTT charts, Microsoft Project, Excel and whatnot, it should be easy for creators nowadays to be able to manage and track their projects across any platform, deal with any situation at any time and plan exactly what needs to happen next (and do things faster as a result). Sadly of because poor knowledge of available working tools or in the process of applying them, creators are basically short-changing themselves when it comes to managing a campaign.
8) Poor communication with backers
Most campaigns I discovered have failed because of communication, or rather a lack of it with backers. More than half of the campaigns I've worked with, over three quarters have maintained a very poor communication strategy, often updating less than 2 months at a time, sometimes even longer. Creators who strive for success should realise that it all goes hand in hand with delegating work, that effort is placed on communicating with backers. If you fail to include a regular constant update stream for backers, it means that on your next project it is unlikely to be supported or even shared and tweeted by existing backers (because of their experience of your poor support) and existing backers may even upend your new campaign by sharing their grievances with new ones (if they feel what you had done before was poorly addressed). In the worst case scenario, new campaigns were shut at the request of older backers because of non-delivery of expected rewards from finished campaigns.
9) Lack of keeping promises
Last but not least, the biggest issue for failed campaigns is also because the creators never tried to fulfill their part of the bargain when it was completed, which leads to the campaign being reported and shut down. Of the 125 campaigns I had supported, two (Confederate Express and Mansion Lord) had scammed the backer base with no intent to honour the project or the pledges. This is disgusting behaviour and in the eyes of the law (in Washington state at least), is punishable with fines. State court orders Kickstarted game creator to pay $54k for failing to deliver
So let this be a warning to all crowdfunding scammers!
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