From financial support for healthcare to funding for businesses and travel, you can create campaigns for these in crowdfunding platforms.
In a crowdfunding site, you set a monetary goal and then encourage other users known as backers to donate to your cause. Depending on the site, you match these contributions with an incentive.
Once you meet your objective on or before the deadline, you get the funds straight to your account. Further, in sites like GoFundMe, you can extend the campaign, keep the extra money, or receive the amount whether it meets the goal or not.
Doesn’t all this sound attractive? It is, and yet not call campaigns are successful. Some even peg the success rate at only 50% or less. Why do around half of the objectives fail, and what can you do to avoid that?
The Crowdfunding Failure
The Toward the Data blog provides an excellent picture of campaigns in Kickstarter, one of the most popular crowdfunding platforms. Here are the major points:
- The platform launched over 430,000 campaigns from 2009 to 2019.
- Of the different categories, most projects were entertainment-related, such as film, music, books, and games. Tech then followed at 9%.
- Within the period, the success rate was less than 45%. Over 60% of the campaigns failed.
- Among the categories, theater achieved the highest success rate at 60%. The least likely to get funded were tech projects.
Why do a significant number of campaigns don’t succeed?
1. They might not match the demographics. For example, Kickstarter is more well-known among the creatives because of its founders. It can explain why tech projects don’t get as much support as entertainment-related ones.
2. The funding goal is huge. Based on the mentioned analysis, the average funding goal for successful projects was less than $7,000 compared to $13,000 for unsuccessful ones. Not meeting the objective doesn’t mean the campaign lacked backers. It could be as simple as the amount is hard to reach given the limited time.
3. The project lacked marketing. The best crowdfunding sites provide plenty of tools to promote the campaign to various users or backers. Some launchers, though, fail to maximize them. Others don’t know how to use these features at all.
4. There are other fees to pay. Crowdfunding sites are not charities. To sustain their business, they require fees or donations. GoFundMe, for instance, used to charge 5% for every donation.
How to Increase Your Success
Crowdfunding sites could spare you from the hassle of getting a loan for your needs. It could kick-start a business or even save a life. In many ways, the pros outweigh the cons. However, you need to learn how to increase your chances of success:
1. Compare various crowdfunding sites. GoFundMe competitors like Freefunder don’t charge fees but accept donations, the highest of which is 9%. That’s significantly lower than GoFundMe’s at 10% to 20%. Some sites have country restrictions too, so comparing their features is essential before you even launch a campaign.
2. Get aggressive in the early days of the campaign. As mentioned, a project needs marketing to succeed. You might have to intensify that during the first three days of the campaign to gain traction. The more people back it, the more the others are encouraged to do the same.
You are also likely to attract the attention of the site, which might feature you, or the media. In turn, your viral story brings more backers – and users – to the crowdfunding platform.
3. Engage your backers. If the platform allows you to provide incentives, create excellent rewards. Give regular updates, answer their questions, or respond to their comments.
When you use crowdfunding sites, you could win some, lose some. But you can reduce the likelihood of failure with these sensible ideas.