The world funded its first potato-salad this July, asking Zack Brown from Ohio to add over 2000 ingredients to it and have 500 backers assisting in his kitchen. Some say $50.000 for a potato salad is too much, but how about $13m for the coolest cooler?
With headlines like these popping up every week, one might think that crowdfunding is a matter of large numbers, with thousands of people from all over the world aligning for pre-sale offers and jumping on stretch goals.
A closer look at the crunched statistics reveals some small print.
Did you know that 72% of all the successful projects in the history of Kickstarter are ended at $10.000 or less and have under 100 backers? 85% of the projects hosted on Indiegogo have the same characteristics (raw data here). The statistics for smaller European platforms are similar according to a recent report, with the average project value at 12.500 EUR and 82 backers. Many successful Romanian projects featured on crestemidei.ro also have 100 backers or less. Both international and local platforms, with or without built-in marketing tools, are dominated by small projects. Could all these people have raised funds on their own?
You need roughly 100 backers and 30 days in many countries to raise $10.000. Reaching to complete strangers gives you a safe conversion rate of 1%, while talking to formerly known people can make the conversion rate as high as 20%. This means you have to contact from 500 to 10.000 people for a successful campaign. Reaching out to everyone you know and using some basic selling techniques can get you the needed 100 backers.
We believe in the power of big crowdfunding platforms, strong predictive algorithms, or one-click-away marketing tools and rely on these as secret ingredients to our resounding success. A viral campaign like the coolest cooler strengthens our belief in the existence of an unknown yet powerful crowd that offers ten times the money we ask for at one click away. In reality, 7 or 8 out of 10 successful campaigns are ended at $10.000 or less. Do their initiators secretly dream of the mysterious crowd and stretch goals? Maybe, but they also look for their 100 backers. And according to statistics, 100 backers are in almost everyone’s reach.
The impact of a large crowdfunding platform adds to the work projects do on their own for only few of them. You get featured on a renowned platform and benefit from the exposure to the unknown crowd only after you’ve done your part and contacted as many people as possible. Big platforms also offer a more structured experience if you’re not into setting up various apps, but you still need basic analytical skills to grasp the meaning beyond the numbers.
If you mostly rely on a platform’s instruments to reach your goal, you’ve already lost. A secret ingredient to a successful campaign is the work you put into it before launching. Crowdfunding platforms, incubators or business accelerators can only offer you tools to go with your passion. They work as amplifiers of your determination and expose the diligent ones to the judgement of the large crowd.