Why do some crowdfunding campaigns fail?

by, Xiaochen Zhang, CrowdFunding Beat guest contributor,
Recently, I have been looking for a “worst practice” for teaching crowdfunding. The criteria are very simple: I am looking for a campaign in which the campaigner does everything possible to make it fail. I believe the power of “learning from failure”. It has been much harder than I thought for this task. Having been involved in many projects, I reinvented the following case to illustrate some of key points to the question: why do some crowdfunding campaigns fail?

Case: A NGO is raising $500,000 through a reward-based crowdfunding platform to make a film of a learning program. After two months, they have raised $100 from 2 backers. The campaigner comes to me for advice. After a diagnostic process, here is the result:

1. You are not doing the job: The campaign was launched 60 days ago. It has only been shared 5 times on facebook, o time on tweeter, 2 backers, and 0 update. These data may send, at least, six types of messages to the potential supporters:

1) you don’t have passion for what you are asking for;

2) you don’t have support from your own friends and family;

3) you don’t have the support from the community which you aim to serve;

5) you don’t have the required experience to market your campaign and make it successful;

6) you don’t dedicate time and efforts (or you are not serious) about the campaign.

With such messages, it is highly likely that your campaign will fail.

2. You are not supposed to use a video which is not specifically produced for this crowdfunding campaign: The video, for me, looks like a general promotional video for your organization. It doesn’t say anything about the film project. If the crowds didn’t get it from the video, they will not read the text to figure it out;

3. The numbers are not convincing: we, crowds, have a general idea of the costs in producing such a video/film. From video and the texts, you have not explained why you need so much more money than a video/film of its kind and how you will spend the money. If you are not correct about the costs of making the film, the potential backers may be afraid that you will just waste my money for nothing or you may use the money for other purpose;

4. Rewards category is not customized to the target group: Currently, your first category is pledge of $10. However, a big portion of potential backers for such a project group is full-time mums. They can give $1 easily for their good will but may hesitate to give $10 or more without good reason. You can add, at least, two categories below $10. This may result in a bigger number of backers shown on your campaign page. A bigger number of backers will surely provide additional confidence for other potential backers need to join force. Following the same logic, between $10-$50 and $50-$100, you may consider to create more categories than now to reflect the customized social and economic conditions.

5. Rewards are ill designed: There are many created ways to reward backers for a film project. However, your rewards are very unattractive for the target funding group. For each reward category, the design should be much more creative to add more value to backers. The current design left me a strong impression that you would only like to get the money but not to reward them for their contributions. To be more “generous” to the crowds doesn’t necessarily lead to an increase in costs if you are innovative enough. There are many good examples on this.

f. Beneficiaries are missing in the campaign: With $500,00, it is nobody’s goal. The video is a NGO’s promotional video without even mentioning the film project. The only voice from the video is you and other NGO members. Children and parents are not in the video. From the text, film maker is not the NGO. But the film maker is not mentioned in the video at all. To put all the information together, it seems to me that this is not the dream of anyone. After the film is produced, no one is benefited from it. It is just another video/film of a learning program. If no one ever wants it, why should it even be initiated, not to say, funded.
Written by
Xiaochen Zhang

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