How likely is your crowdfunding campaign to succeed?

Originally published on Crowdfunding in a Canadian context.

The simple answer is that it depends on the project, the platform being used and other factors related to the specifics of the campaign. While the media is full of extraordinary stories of success, the reality is that many if not most crowdfunding campaigns do not reach their ultimate funding goals. Indeed, according to Massolution’s 2013 Crowdfunding Industry Report, the global average success rate for crowdfunding campaigns in 2012 was around 50%.

Platform

There does appear to be some variance regarding the funding success rate on various platforms, but these rates can be quite hard to compare between platforms. While the overall success rate for projects hosted on Kickstarter is just under 44% (as of January 2014), a recent analysis of Indiegogo’s site (article and raw data) shows a somewhat lower overall success rate of 34% if only projects that received more than $500 in funding are included in the analysis – and drops to less than 10% if all projects are included.

The discrepancy between these two platforms may stem largely from the difference in their funding models. Indiegogo will release funds even for partially funded projects, meaning that campaign owners are free to set very ambitious goals which may not be met. This practice may be driving up the number of unsuccessful projects. Indiegogo also has looser restrictions on what sorts of projects can be funded, which may encourage more speculative or riskier projects to appear on the platform.

Kickstarter campaigns, on the other hand, must reach their goal to receive any funds. This threshold requirement may also influence owners of Kickstarter campaigns to work harder to reach their objectives, or to set lower goals, as they will not receive any funding unless they are “completely” successful.

Indiegogo’s seemingly low success rate notwithstanding, larger, more established platforms with higher traffic tend to have higher success rates than smaller or emerging platforms, where a project might receive less exposure. For instance, Kickstarter’s current average success rate is just under 44%, whereas Rockethub, a smaller donation/reward crowdfunding platform, has an overall success rate of only 11%, as reported by crowdsunite.com.

Additionally, some platforms do extensive pre-approval or project curation, which can “artificially” inflate the success rate as many suboptimal projects may not receive approval. One such platform is the French-based Ulule which only accepts around 65% of applications, and thus can boast a total success rate of 54%.

We must thus remember to take comparisons of success rates between platforms with a grain of salt, as they are all slightly different. The overall success rate of a platform is affected by a large number of interacting variables: the size of the platform, its degree of pre-approval curation, the funding model (all-in or flexible), the campaign length, and the eligibility restrictions of the platform, to name a few.

Given the overall limited success rate, it is important to have a realistic understanding of the likelihood of success before committing the substantial time and effort necessary to run a crowdfunding campaign. Even with extensive research and preparation (see best practices), success is never guaranteed.

Recent research indicates that choice of platform may be the strongest factor influencing the potential success of a project.  Having said that, it is important to understand how other factors can impact your project’s chances.  Below, we have compiled information that outlines the different factors that may modify a campaign’s eventual success:

Key elements

  • Plan thoroughly – Globally, only 50% of projects are successful, but there are ways to maximize your chances by careful planning and research about similar projects.
  • Choose your platform carefully – The nature of your project will determine the best platform to fund it on. Consider factors such as success rate, the payout method (all-or-nothing or flexible), and restrictions on eligibility (e.g., Kickstarter permits only tangible, concrete projects, while Indiegogo will allow a much broader range of possible projects)
  • Momentum is key – Over 80% of projects that reach the 20% funding mark go on to be successful and the sooner that milestone is reached the higher the chance of success.
  • Take advantage of social media – The more widely you can distribute word of your project, the more support you will receive.
  • Pick the right duration – The optimal campaign length (according to Indiegogo) is around 45 days.

Detailed explanations for each one of these key elements are available on Crowdfunding in a Canadian context, the Canada Media Fund crowdfunding online resource.

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