Many startup companies turn to crowdfunding these days to raise cash that will fund their new businesses.
Their reason is that the platform has really been highly effective at brining in money. Crowdfunding has really become so popular it might as well replace the traditional way of acquiring business funds through loans. According to research, around $34 billion is raised annually from crowdfunding campaigns. It is indeed a growing industry that experts project will get bigger every year. The massive amount of $300 billion is expected to be achieved by the year 2025.
Because it has become highly popular, a lot of people are having inclinations to fund crowdfunding campaigns. It is indeed very enticing to know that by sharing the money you have, a startup company can research for or produce an innovative product. Its success is like yours as well and you will be one of the first to own the product they’re about to launch. Nevertheless, no matter how popular the platform is right now, it is not wise to just jump right in as soon as you see a campaign for a product that interests you and hand over your hard earned money. There are risks that accompany backing up a crowdfunding campaign – there is always the possibility it will become a failure and you will not get the item the item or the reward promised and you will never see your money again.
ONE OF THE LATEST CROWDFUNDING FAILURES
Just recently, backers of the Spectrum Vega crowdfunding campaign remained disappointed because once again, the company failed to deliver their promised product. The original launch date for the delivery of the retro console that they based on the European 80s computer game ZX Spectrum was to be September of 2016. Obviously capitalizing on nostalgia, the campaign reached its target in no time with 5000 backers. Two years have passed and the company still has not delivered on its promise, not even showing as much as a glimpse of the product. Backers of the campaign made at the Indiegogo site are ready to get their money back. Despite the delay, though, the company insists that they can still deliver, provided they are given more time.
In this light, here are some things you can do in order to avoid backing up a crowdfunding failure.
DO SOME RESEARCH
You will be giving people you do not know your hard earned money, therefore it is wise that you do some research on who the people behind the startup company or the product is or are. Do the minimum research on the people and company behind the crowdfunding campaign you plan to back up, on Google, social media, and the account they have set up on the crowdfunding platform or site you are on. Make sure that you can answer these questions with your research – are they experts in the field they are into (in relation to the product they created)? Do they have previous successful crowdfunding campaigns? Are people saying good things about them? With only the internet as resource, you can get all the information you need to make sure you will get your money’s worth. Be extra careful with crowdfunding campaigns made by people hiding their identity. You should be able to know and trust the people you will be giving your cash to.
HOW REALISTIC IS THE PITCH?
Th pitch is very crucial for the success of a crowdfunding campaign – it has to really be a great one to entice people to back them up. As a consumer, you need to be careful examining a pitch. It has to be great and at the same time realistic. One of the reasons for failure in meeting delivery schedule is because the given time frame is not practical in the first place. Also, be sure to check out the breakdown of where the raised cash will go. Trying to hide this fact and not being transparent about it is one reason for you not to trust the campaign you are about to back up. A model of the product should be shown by the creators, even if it is just the prototype and not yet finished or perfected. This way, you know there is indeed a product in the works.