Has Crowdfunding Gotten out of Control? by Brad Hines 8-28-13 7:05 pm
You've probably been asked to take part in a Kickstarter. If it wasn't a Kickstarter, maybe it was an Indiegogo, Appbackr, Crowdrise, Bolstr, Funadable, Tunefund, or one of many more with equally goofy names (no offense guys). These crowdfunding websites, and people asking their friends and family alike to partake in them; seem to be all the rage. Is the concept getting out of hand?
Kickstarter denied my crowd funding site idea. Something about it not being an original idea. #elitists
John Nosta, author of digital health evangelist, and Forbes contributor tells me: Crowdfunding campaigns still absolutely have tremendous capacity in the marketplace to connect people's interesting ideas with like-minded folks who wish to see those products and services in the marketplace.
"Never before in the traditional VC model did we see this opportunity for anyone to take such a direct hand in bringing things to market as with the micro-funding aspect of the crowdsourcing model."
a crowdfund campaign launcher might simply be pitching a product to a crowd thats not that sophisticated
Still, with near weekly direct requests to take part in a friend or colleague's crowdfunding campaign, I began to wonder about failed ones, and in general if people are getting skewed expectations from them. I believe when entrepreneurs–or ones to be– see the success in a campaign, if that connection is bearing a new breed of entrepreneur who is entirely too eager and hubristic about the premise of being funded.
As Nosta and I agreed, the average entrepreneur with a campaign-to-be could have an excellent product, but then a poor presentation, or simply one that doesn't resonate with the viewers. Not all crowdsourcing campaigns will reach the people with the knowledge–say, technical understanding– like that a venture capitalist will have. Nosta tells me:
"A crowdfund campaign launcher might simply be pitching a product to a crowd that's not that sophisticated"
when talking about the nature of the average audience receiving the crowdfund campaign. This is an excellent point, and clearly a downside of seeking anybody to be an investor.
Meghan Gardner, Director of Guard Up, tells me about a failed Kickstarter campaign:
We had a failed kickstarter where we tried to raise funds to create a licensed program for educational adventures. We were just shy of our funding when we cancelled the project because we were hoping for more people to back us who were interested in play-testing the license.
We received very little exposure from Kickstarter - certainly not enough to justify their percentage of the fundraising. All of the funds were from our own network.
In the future, I would never work with Kickstarter again because if your product isn't something like a computer game or fancy item that people want to own, Kickstarter won't be much help.
It's probably better to do fund-raising on our own and not lose a percentage or the convenience of a brand name fund-raiser.
I think if there is a current problem with over-expectations in launching a crowdfunding campaign, I think that the good news is how it will correct it self in due time, as a free market system so naturally does.
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About the writer:Brad Hines is the president of YumDomains.com, and the founder of HungryKids.org. He is a digital marketing and social media strategist. A writer as well, he typically writes about Internet, business, and science trends. His best marketing advice is that marketing really comes down to story telling and how well you can do it. He can be followed on Twitter:Follow @BradHines