Avoiding a crowdflop
It’s easy to see the appeal of crowdfunding. It’s the fun younger brother of traditional investment. You don’t need a hedge fund manager and a subscription to The FT to get on board – just a tenner and some allegiance towards the project you’re backing. The rewards aren’t necessarily monetary or even tangible either, although some do offer the potential for serious financial ROI. It’s the more emotional returns, particularly with social investment, that appeal – a sense of kinship, of identifying yourself as a certain sort of person with a certain set of interests or values. Most irresistibly, it offers you the promise of building a world that you want to live in rather than one shaped by the ambitions and wallets of a powerful elite.
It’s those crowdfunding projects that directly tap into this desire that are often the most successful. A local example of this is the Save Exeter Street in Brighton. Concerned by proposals to sell off the local church hall to property developers, a group of residents got together in 2012 to raise the £150,000 needed to buy it themselves. Anyone could buy £1 shares in the hall (with a minimum investment of £50) and effectively become a co-owner of this local space. Thanks to some impassioned local campaigning, and a shrewd grasp of the ideals and budgets of its target audience, the project raised the £150,000 needed within a year – saving the hall and putting a new spin on the idea of the church roof fund.
More recently, ethical supermarket hiSbe successfully crowdfunded the £30,000 needed to open a pilot store in Brighton offering a completely different kind of supermarket experience – one fuelled by people not profit. Some distinctive branding and tangible benefits (invest £10 and get £12 worth of vouchers to spend at the store once it opened) no doubt helped, but where it was also successful was in tapping into a genuine frustration – the monopoly of superstores – and presenting a credible alternative.
There is of course a graveyard of failed crowdfunded projects. A quick look around Indiegogo and you’ll find no shortage of projects with funds languishing way below the 100% mark. And tech vultures are still enjoying the spectacular failure of the Ubuntu Edge, which fell £15 million short of the £20 million it needed to go into production.
Most crowdfunding projects don’t have such grand aims. The average successful crowdfunding campaign has a goal of just £5000 . But a ‘build it and they will come’ mentality is just as fatal with these smaller scale projects as it is with those more ambitious . As with any kind of campaign, successful crowdfunding is dependent on a number of things – a compelling cause or offer, clarity of message, an understanding of your target audiences and smart use of social networks. Get any of these wrong and there’s a good chance of becoming a crowdfunding also-ran.
But beyond the fate of individual projects, what next for crowdfunding itself? While there’s seemingly an endless appetite for this DIY approach to funding, when anyone can crowdfund for anything – weddings, holidays, breast implants – are we at risk of crowdfunding fatigue? Without curation, there’s a danger it will lose its charm. Yet it is the very openness and almost anarchic spirit of crowdfunding that makes it so appealing.
Crowdfunding extends the possibilities of what we are able to achieve, liberating previously impossible co-ordination of people, purpose and money. But ultimately, like the web itself, it is a platform. And as the novelty of that platform wears off, it will be increasingly clear that it’s the strength of the story, and the energy with which it’s told, that wins out.