A few weeks ago, I ran into an entrepreneur who said, “I tried raising money on [a crowdfunding platform] but it didn’t work.” I’m sure he’s not the only one who’s had that experience. Crowdfunding isn’t a magic well of money. It’s just a new way to raise it.
Recently, I’ve connected with a number of successful social entrepreneurs and crowdfunders to learn more about common mistakes that social entrepreneurs make.
- Unrealistic expectations: Andrea Lo, CEO of Piggybackr, observes that a big crowdfunding mistake is “Unrealistic expectations in relation to setting high goals and expectations for press. People anchor to the long tail of projects they hear about in the media that raise millions of dollars. The reality is the average project raises just a couple thousand dollars just from friends and family. When reality doesn’t meet expectation, crowdfunders and supporters alike lose momentum.” She concludes, “It’s better to reach a lower goal and exceed it rather than set a really high goal and not even get close even if you raise the same amount.”
- “Build it and they will come”: Piers Duruz, Founder of KickstarterHQ (not affiliated with Kickstarter, Inc.) notes that a common mistake is “Taking an ‘If you build it (a project page on a crowdfunding site) they will come,’ [approach] without putting any thought into marketing it.”
Marketing: David Boyce, Founder and Customer Experience Officer at Fundly, notes that “Crowdfunding is a very powerful mechanism for funding social good, but many social entrepreneurs overestimate its power. The biggest mistake I see social entrepreneurs make with crowdfunding is to underinvest in marketing their campaign. It is tempting to believe that if you have written brilliant copy about an incredible initiative and uploaded that copy, along with photos and videos, onto a gorgeous crowdfunding page, people will be impressed and begin to fund your venture. What people, exactly, are going to do this? You have to get the word out before anyone at all sees your campaign. It’s like throwing a party. You can get the right caterer, DJ and venue, but if you don’t send out invitations, you won’t have a very good party. And if you don’t keep the momentum building toward the date of your party, you may also not have a great party.” He concludes, “You have to market like crazy to throw a good party, and you have to market like crazy to run a good crowdfunding campaign.”
- Small donations: Chris Camillo, a Texas super angel, author of Laughing at Wall Street and the producer of an upcoming documentary on crowdfunding, says a big mistake he sees is “Not actively soliciting small dollar pledges. An actively engaged donor who pledges just $1 while making a personal plea on your behalf to their 1000 person Facebook/Twitter network could turn out to be more valuable than an inactive donor who pledges $50.”