The question of a crowdfunding campaigns success is undoubtedly tied to whether or not the financial objective is reached, but there is more to it than that.
No campaign could be called a success if at it’s completion the project no longer had the opportunity to be launched. This is a very real risk when using crowdfunding, or any other type of business funding campaign.
Successful crowdfunding campaigns share many attributes, particularly today.
As with most types of marketing, it is necessary to be actively involved in that niche of marketing to stay current with its ins and outs.
- They meet their financial goal or exceed it.
- They protect proprietary information.
- They complete in a timely manner.
- They utilize multiple platforms.
- They don’t compromise the project’s core values.
- They keep the possibility of future funding rounds open.
- They do not violate equity or debt goals initiated for financial viability.
Failed campaigns obviously violate some, most, or all of the above. There are other risks of a more specific nature that need to be addressed.
There are segments of the business funding world that are not just unsavory, but also predatory. To put it bluntly, they are only in it to steal the business opportunities and deals of others.
Right away, many of you are thinking that you have ironclad nondisclosure and non-compete agreements to protect you. We have met with clients that has all of that and more. It matters little if those seeking to take advantage have deeper pockets than yours.
Crowdfunding campaigns usually fail for a combination of a number of reasons. The biggest though is that those running it may be experts within their business arena, they simply aren’t marketing experts, or even funding experts. Expertise in these areas comes from experience, and from being integrally involved in these endeavors in an ongoing fashion.
Trying to accomplish your full time work within a business while working outside your specialty to run any type of funding campaign is a recipe for disaster. Marketing a business and managing it are inherently opposing skill-sets. A plumber and an electrician are both important, but cannot do each other’s jobs.
Our team have seen first hand the results of extended an eventually failed crowdfunding campaigns. The resulting entity usually looks little like the business did at the outset. It is very common for attempts at flexibility for the sake of funding leaves team members unsure of who they are as a whole. A business that has lost it’s identity has failed, even if they eventually achieve funding goals.
Crowdfunding campaigns are designed to fund projects without burdensome debt. There are so many tools and shiny objects in the industry that it is easy for the marketing budget to get out of hand chasing that next magic bullet. Avoiding this is a huge key to successful crowdfunding.
Giving away equity in the project is another danger. There are times when this is actually desirable, but those are rare. If an investor brings needed expertise, or perhaps some synergy that increases a project’s profitability then giving up equity makes sense. If you are in the habit of offering up equity to everybody that comes along, this can appear desperate. It is a mindset that is difficult to overcome. Crowdfunding isn’t a vehicle to such investors, but may expose you to some.
It is truly impossible to list all of the ways your crowdfunding campaigns can go wrong, but this is a start. Stay true to what we marketers call your brand strategy and you will avoid most of the snares.
Our team would be happy to offer you a risk free consultation regarding your crowdfunding goals and needs.
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