Top 9 Crowdfunding Myths Debunked
A lack of skills and knowledge about crowdfunding within organisations is the biggest barrier to using crowdfunding, according to NESTA’s 2016 Crowdfunding Good Causes Report.
This lack of knowledge is exacerbated by the common misperceptions that exist regarding crowdfunding.
It is time to debunk these myths and set the facts straight in order to increase your chances of creating and executing a successful crowdfunding campaign.
Myth 1: It’s easy
While there are many examples of crowdfunding campaigns that have seemed like overnight successes--like Reading Rainbow’s Kickstarter campaign earning $1 million dollars in less than 12 hours--crowdfunding is not easy money nor is digital campaigning easy to do.
Similar to any other fundraising campaign, crowdfunding requires hard work. Many campaigns fail to meet their goals because they underestimate the amount of time necessary to plan ahead, prepare properly, and execute.
Myth 2: People always back great ideas
Great ideas are subjective. People don’t necessarily back great ideas, they support well-marketed campaigns that have been strategically designed and effectively targeted toward a specific audience. So it’s not enough to assume that if you put it out there, people will come.
Myth 3: The crowds are dumb money
The term ‘dumb money’ refers to investments or donations made by individuals who do not have an understanding of the market or do not have the information readily available to make informed decisions about donations; whereas ‘smart money’ implies donors have more market knowledge or better access to information regarding their donations.
The truth is that with the extraordinary amount of information available online, it’s highly likely that each of your campaign claims is going to be fact-checked by smart, resourceful individuals trying to decide if they should part with their cash. Furthermore, when they find their answers, they are going to share them with others which can increase your donor base. Basically, there’s nothing “dumb” about crowd money.
Myth 4: I’ll look desperate
Campaigns that seek to achieve an impact - developing something new, changing a situation for the better, or benefitting a particular section of society, region, building or environment - are always well received. Having a positive cause is not enough to raise money but it’s a very good start.
Campaigns only look desperate when they have been poorly thought out, don’t have clear messaging, and emphasize the negative aspects of not getting funded, rather than the positive change which can be made.
With proper planning and messaging, you’ll never look desperate - just effective.
Myth 5: People I know won’t want to back me
According to Kickstarter’s Frequently Asked Questions page, the majority of backers are actually supporting their friends’ projects. It is important though to make your approach with family and friends personal; approach them individually and explain why this project is meaningful to you (and in turn, why it should be meaningful to them).
Storytelling is a powerful thing, so if you can explain why they should care, they’ll be able to explain to others, which gives you the network and the reach you’ll need for success.
Myth 6: Backers come from platforms
Platforms do not provide backers, they simply provide the vehicle for which you will convey your message. Platforms may range in member size but that doesn’t equate to automatic backers, rather it shows the number of people who have supported a campaigns on that platform in the past.
Backers come from a combination of three subgroups:
- Your existing personal network of friends, family, and acquaintances like co-workers and neighbors
- Any subscribers, followers, or fans in your social media world
- The new audience you want to attract
Myth 7: It doesn’t matter who backs the project
Backers who support rewards based crowdfunding are investing more than just funds; they are pledging to support a creative idea or a meaningful cause. In essence, backers care.
It is important to understand who you want to back your project for two key reasons:
- If you go into a project not caring about who backs it, then you won’t be able to plan a targeted campaign and you’ll likely get lost amongst the thousands of other campaigns
- Often, incredibly influential and important people back projects, and if you don't pay attention when it happens, you won't be able to take advantage of their respective networks.
Myth 8: It doesn’t matter which platform I use
There are a wide variety of platforms that you can choose from and it is important to understand the nuances between each in order to identify which is best for your cause. Using the wrong platform could foreshadow failure before ever launching your campaign.
Platforms differ primarily in the type of finance offered and the specific sector targeted. Other differences include the amount of commission taken, or whether the platforms offer an “all-or-nothing” or “keep-what-you-raise” option.
Whatever you do, do not pick a platform on the basis of the perceived size of their "donor/backer base" or the idea that they will market your project to more backers. Platforms very rarely market projects to their backers, and the probability you'll be selected is extremely low. Other factors that determine appropriateness are far more important.
Myth 9: Once the campaign is live, the hard work’s done
Crowdfunding requires hard work from start to finish. Pressing the launch button doesn’t give you permission to sit back and watch.
In the hours, days, and weeks following the campaign launch, hard work is essential. Once a campaign is live, effort and energy needs to be put forth to continue to: grow your social media presence; provide reminders and updates to your network; monitor and reply to comments or questions on discussion boards; express your gratitude to backers; foster on-going relationships, and implement contingency plans if necessary.
Myths debunked: now what?
Digital fundraising is not easy. It takes practise, hard work and careful planning to get it right. Luckily we are on hand to assist; The Crowdfunding Academy, launching on the 19th of September, will contain masterclasses and courses to help you get the most out of digital fundraising for your cause.
For more information, visit http://thecrowdfundingacademy.org