How To Avoid The Top 5 Crowdfunding Mistakes

The biggest turn off to start a crowdfunding campaign is the fear of failing embarrassingly while everyone is watching. That is a real fear. To avoid that embarrassment, what can you learn from the ones that failed and the ones that succeeded?

Most campaigns that fail, fail really badly. Meaning they didn’t even make a third of the funding goal. Why is that?
Momentum is super important in a campaign.

An ideal campaign looks like this:

it kicks off strong
steadily gets in supporters
has a great finish

Easier said than done… I know. Here are the 5 most common mistakes and how to avoid them.

#1 Expect To Put Up A Campaign Page & Lay Back To Wait For Money To Come In

Sorry to break it to you. That ain’t workin. A crowdfunding campaign is a lot of work. Even if you did all possible work up front, like build a crowd, prepare texts, plan B’s, extra videos, social media posts, there is still a lot to do. You’ll need to answer emails, do interviews, network, react to changes and talk talk talk about your campaign. When people expect to wait for money to come in, it is often due the misconception that your supporters are backers browsing on the platform stumbling on your video and back it. That is rarely the case. You have to do the work. 80% of the backers found out about the campaign because of something you did. The more successful a campaign is, there more likely strangers come back your project.

TIP: Don’t expect any traffic from the platform, just be happy when there is.

#2 Not Doing Your Homework

Setting up a crowdfunding campaign is super easy. Anyone can set up a campaign and try it out. No strings attached. If you don’t reach the funding goal, you don’t have to pay any platform fees. But don’t get fooled by that low barrier of entrance. Especially if you are in it to kick off a business. No one will ask you for your business plan. No one will do the math for you. If you offer a perk for 80 EUR, you need to know that you can produce and distribute that perk for that amount.

Crowdfunding is a great way to test a market, but you should do research up front. Ask some people for feedback and check out legal restrictions and competitors beforehand to avoid bad surprises.

You are in to sell something. So know your target audience. If you don’t know who you are talking to, it is hard to find them and speak their language.

TIP: Take planning seriously and prepare it as if you have to convince an investor.

#3 Setting Your Funding Goal To High

The most tragic example of mistake number 3 is the Greek-bail out crowdfunding campaign. Tom Feeney, a regular guy from the UK wanted to take action to help Greek in their financial crisis. He thought we all like to go on holiday to Greece, drink Ouzo and eat greek food, why not do this via crowdfunding. He set up the funding goal at 1.600.000.000 EUR. 108.000 backers raised 1.9 Million EUR and he had to give it all back when he didn’t make the goal. He tried to redo the campaign with a flexible funding goal. But the momentum was gone. He only raised less than 300.000 EUR the second time. But this time he got to keep the money and give it to Greece. Imagine what big success it would have been if he would have set the funding goal at 500.000 EUR from the very beginning. The quite opposite example is “Ein guter Plan”. They set the funding goal at 15.000 EUR and there overfunding creating a hype around the project that ended at 190.232 €.

So to sum it up: Overfunding is sexy. Barely making your funding goal no matter how high it is, is not.

TIP: Keep the limit low, but have good stretch goals to make it attractive to overfund.

#4 Waiting To Build A Crowd Until The Campaign

Yes, you use a crowdfunding campaign to build a crowd. But it is much more powerful if you don’t start at zero. Momentum is super important for the success of a crowdfunding campaign. That’s why it is important to have a crowd up front that will back you in the beginning of your campaign. It makes it more likely for strangers to jump on the success train.

There is a strong connection between how many people you can reach and how much money you can raise. So you might jump to the conclusion that it makes more sense to have a long campaign. More time, more time to reach people makes more money. Reality shows that it doesn’t work like that. Lack of momentum is to blame. A campaign that drags on forever is boring, loses momentum and the sense of urgency that is part of a crowdfunding campaign.

TIP: Do a short campaign and take your time to build a crowd up front.

#5 Not Buffering For The Unexpected

Life is unpredictable. No matter how well you plan. So when promising delivering dates for your perks, always add a little bit of a buffer. If you manage to deliver a little but earlier, people will be thrilled. But if you promise a super fast delivery and then you don’t make it, you leave people with a bad impression. The same is true for the the pricing. Sure, you want to offer really good prizes, to make your perks irresistible, but add a little buffer for unexpected costs. The worst thing that could happen is that you end up with higher production costs and are in debt due your successful crowdfunding campaign and take forever to ship your perks. That’s what happened to the Coolest Cooler.

At first the Coolest Cooler seemed like a huge success. Due to miscalculation they are going down in history as the biggest kickstarter failure, caused by mistake number 2 and 5. The didn’t do their homework, underestimated the production and didn’t have a buffer. Ryan Grepper burned through the 2 million dollars raised with thousands of backers still waiting for their coolest cooler that they had already paid for.

TIP: Add a buffer on perk prices and delivery.

Don’t miss 3 Good Reasons For Crowdfunding (Besides The Money).

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