Unfair Manipulation in Crowdfunding Campaigns

CFB News Wire, Valencia, Spain — — 06/03/2014 — Joaquin Vila-Belda, PhD, and CEO of LifeKeeper talks about the company’s experience in crowdfunding and presents a preliminary analysis explaining the initiative to promote a forum called “Crowdfunding: Improving fair play.”

A few days ago, LifeKeeper launched a crowdfunding campaign on a well-known platform. The goal was to find backers for the first personal mobile device that can help prevent myocardial infarction and stroke.

However, after the first days of the campaign, the results were poor. For LifeKeeper, it was surprising to see such lack of response to a campaign with such an important goal – “combating the most common cause of death in the world” – even though it offers discounts of up to 40% to its backers. The crowdfunding campaign can be found at http://bit.ly/1mu4N68.

Consulted experts have expressed that the team behind the project clearly has a very strong professional background, and the purpose and motivation of the project are clear and easy to understand.

Before concluding on this issue, an analysis of what successful campaigns were doing was carried out.

first-img (1)

First, a sample of campaigns with different subjects was selected, including some on technology applied to healthcare.

After the aforementioned analysis, an apparent common factor for obtaining success is the originators’ ability to manipulate results by providing funds at key moments. This created a feeling of success, and, more importantly, raised them in the rankings used by the crowdfunding platform, such that their campaigns appear in the best positions and in publicity campaigns of the platform itself.

A specific case was followed in which a campaign had collected more than a million dollars, even though in the platform’s forum and in the press it was argued that the proposed device is not really useful for measuring calorie intake as promised (*).

But how is this possible?

In the cases studied, the procedure used is as follows:

– The funding goal for the campaign is set low, for example, $50,000.

– On the first day of the campaign, friends, acquaintances, and so on make contributions. Also, the originator of the campaign provides his or her own funds via anonymous or virtual user accounts, such as, $30,000; bringing the total to more than the campaign goal.

– This gives it an excellent ranking on the platform, placing the campaign on the website homepage.

– The media reports this extraordinary (but manipulated) early success.

– This has a knock-on effect: people are attracted to success, and the contributions of real backers multiply.

– Having passed the campaign goal, the platform begins to pay out the money.

– These real earnings are used to keep the campaign popular with more fictitious contributions.

In the cases that were analyzed, the amount of money used for manipulation was as much as 10% to 30% of the funds apparently raised. In the case of the device for measuring calorie intake, an initial support of $30,000 led to contributions which appear to top a million dollars. It is hard to know what the real investment by backers was, but in the mentioned case, signs of manipulation appear until the last three days of the campaign.

Consequently, LifeKeeper decided to promote a LinkedIn forum called “Crowdfunding: Improving fair play”, with the goal of finding answers to the following questions: Is it possible that backers are being so badly cheated? Is this abuse frequent or infrequent? How can this be avoided?

The forum is open to anyone interested, and can be found here: http://linkd.in/1pxjla5

Contacts:

General Inquiries: Marc Martin info(at)lifekeeper(dot)pro
Website: http://www.lifekeeper.pro
http://www.linkedin.com/in/jvilabelda

(*) Citation

http://pando.com/2014/03/20/on-indiegogo-a-miracle-health-device-raises-730k-and-a-whole-load-of-red-flags/

http://pando.com/2014/03/31/as-more-experts-dispute-gobes-bullshit-medical-claims-indiegogo-still-refuses-to-pull-its-near-1m-campaign/

Tags: , , , ,

HEADLINE NEWS

Types of Crowdfunding for your Small Business  Small Business TrendsFor small businesses looking to bypass traditional sources of financing, crowdfunding is a great choice. Here's a quick primer on the types of crowdfunding. [...]

Northern Monk completes rebrand after £1.5m crowdfunding campaign  The Drinks BusinessLeeds-based brewery Northern Monk has completed a rebrand of its range and released new gluten-free and low-alcohol beers after raising £1.5 million in 13 ... [...]

Crowdfunding offers promise for women and junior academics  Times Higher Education (THE)Study's authors suggest women are better able to communicate the value of science to score public donations. [...]

Unpaid Fyre Festival Cook Wins Back Life Savings From Crowdfunding Campaign  TheWrapMaryann Rolle, who appeared in Netflix documentary "Fyre," earned over $139000, surpassing her $123000 fundraising goal. [...]

How To Set Yourself Up For Crowdfunding Success  ForbesIf you want your crowdfunding venture to become a wild success, it's important to prepare to give yourself the best shot. [...]

How Crowdfunding Works For Entrepreneurs  ForbesHow does crowdfunding work for startup entrepreneurs? Crowdfunding exploded onto the internet a few years ago. Since then early platforms like Kickstarter ... [...]

Woman crowdfunding to have vaginal mesh removed  BBC NewsVictoria Adams is crowdfunding to have it removed after the NHS refused to do so. [...]

Syrian refugee attack: Boy's family crowdfunding to sue Tommy Robinson and Facebook over 'defamation'  The IndependentLawyers representing a Syrian boy who was attacked at school are crowdfunding to sue Tommy Robinson and Facebook. Footage of the 15-year-old victim ... [...]

How Crowdfunding Is Helping Homeless People Turn Their Lives Around  ForbesUK-based tech startup Beam has developed a crowdfunding platform that's helping homelessness people upskill and pursue successful careers. [...]

CRE Crowdfunding Platforms Must Focus on Realistic Returns  National Real Estate InvestorCRE crowdfunding platforms need to focus on stringent underwriting and transparency to avoid misleading investors about potential returns. [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Fintech World Beat

2020fintech.com' title='https://2020fintech.com/' target="_blank" class='rtw_url_link'>2020fintech.com 2019 Blockchain Mastermind Series 2020fintech.com' title='https://2020fintech.com/' target="_blank" class='rtw_url_link'>2020fintech.com #blockchain #digital #realestate #fintech ulation pic.twitter.com/wJC04nwJyl

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |