A holiday crowdfunding present
I discuss a list of successful crowdfunding strategies identified in a recent systematic review
The holidays are here! Time to kick back, relax, and watch those fucking annoying commercials that try to target your emotional, sensitive side, but which make you nauseated and sick to death of late-stage capitalism/early-stage neo-feudalism.
But rejoice, for this isn’t going to be a long rant about all the things currently annoying me. This one is intended to be a gift for you! At least, I hope it will be.
This one is for those of you who are crowdfunding your creative projects. Over the past year, I’ve done deep dives into specific papers to illuminate interesting elements that could optimize a given campaign.
Today is the big one.
Today, I’m diving into a systematic review1 to bring you the synthesized highlights from 60 different publications, covering hundreds of thousands of different crowdfunding projects between 2015 and 2023.
This is a crash course in the elements of crowdfunding that are most commonly associated with success. The details are discussed in the review article itself, but I’ll pull out the salient high-level findings to save you reading the entire thing.
Success factors
Project characteristics such as effective communication strategies (both verbal and written), strong visual appeal, community engagement, and strategic timing significantly influence success.
Critical factors influencing success include the choice of crowdfunding model, as all-or-nothing models tend to be of higher quality than those using a keep-it-all approach. Creator credibility is also a key signal of project quality and success, while platforms must employ effective prediction models and mechanisms to deter misconduct.
Geographical and cultural influences including social ties, shared values, social capital, and institutional environments significantly impact crowdfunding success. Engaged social networks and geographical proximity can mitigate the negative effects of distance, while shared cultural values enhance resource flow.
Backer Motivations and Behaviour
Backer motivations are influenced by a combination of reciprocity, pro-social framing, entrepreneurial signals, and visibility of contributions. Awareness of these influences are crucial for campaign design in order to appeal to both the social and self-interested aspects of potential backers and leverage social recognition.
Demographic influences, such as gender dynamics and visual cues, can also significantly affect backer behaviour. Thus, it’s important for creators to tailor campaigns to address biases and align with demographic-specific motivations. Specific actions for success include addressing gender disparity, and presenting trustworthy visual cues.
Marketing and Promotion Strategies
Social media's effectiveness depends on strategic timing, engagement, and cultivation of social capital. But beware, as over-promotion can diminish returns over time.
Effective marketing techniques involve leveraging online information, engaging with backers, tailoring communication to products, and considering geographical and social factors.
Rewards and incentives
Strategic selection of rewards, setting appropriate reward limits, understanding the influence of product types, and ensuring timely delivery and detailing/meeting specifications are critical success factors.
The perceived value of rewards is critical in driving backer engagement. Strategic use of cues, effective rhetorical strategies, and price discrimination can all impact perceived value. Creators should carefully craft their language and reward strategies to align with backer motivations and expectations, ensuring their campaigns attract and retain necessary support.
Project outcome and ecosystem
Success can enhance the credibility of ventures, attract other investment, and ensure long-term success. Creators should leverage crowdfunding for immediate funding and as a strategic tool for building credibility and mapping out a career.
In a nutshell
The main points to take away from this systematic review are the following:
Strategic campaign design is essential for creators.
Incorporating high-quality visual and vocal elements enhances campaign appeal.
Leveraging community orientation and visually appealing concepts to attract backers.
Active engagement and seeding psychological ownership among backers enhance participation and funding success.
Implementing scarcity tactics and designing reward tiers to optimize backer participation.
Backers are motivated by prosocial motives, reciprocal giving, and emotional engagement.
Psychological ownership and active engagement among backers enhances participation and funding success.
Transparency, detailed information, and frequent updates build trust and commitment.
Considerations for creators and backers.
The review highlights that many creators struggle with setting realistic funding goals, managing expectations, and maintaining constant engagement with their backers and fellow creator community. By focusing on these three potential barriers, creators can set themselves up for success.
Delays in reward delivery and idea replication are also significant challenges for creators, so clear communication and demonstrating project preparedness are crucial to overcoming these issues. This again creates trust between creators and potential backers and is crucial for establishing a sustainable foothold in the crowdfunding space beyond individual project launches.
The strategies listed here are high-level and will need to be implemented differently across different projects and campaigns, but hopefully there’s enough there to get creators thinking about the most critical campaign elements and behaviours they need to be aware of. As with all things, success is not guaranteed, but the above guidance could prove useful for those creators starting to explore reward-based crowdfunding.
Quick commercial break
While we’re on the subject of reward-based crowdfunding, I’d like to draw your attention to my own campaign launching on January 14th, for the collected version of Acasual, from myself, EV Cantada, and Lucas Gattoni.
Acausal is a mind-bending sci-fi thriller about two women trying to outrun their pasts, who come across a device that sends them messages from the future. They struggle to live for themselves, free from the haunting trauma of their respective pasts and the pre-determined future bearing down upon them.
It’s a story that explores who we are, and who we want to be.
It’s also a story about time-travel, crime, Canada, and blowing shit up!
The collected edition launches on January 14, 2025, and I hope you’ll check it out.
Final thoughts
What do you think of this overview? What resonates with you?
I spent a lot of the past year and a half diving deep into the crowdfunding research literature, and found some interesting work, particularly on information asymmetry, and on reward structures.
As I continue to use crowdfunding as part of my own business, I’ll continue to scan for new papers of interest in this area, but I’m curious if there are other things you would be interested to see me explore?
I threw some thoughts down in this poll, and I’m curious to see what resonates with you.
Maybe there’s something else entirely you’d like to see more of in 2025? If so, please let me know.
Until next week!
Cheers
John
Alshater, Muneer and El Khoury, Rim and Ferdous, Marah and Supriani, Indri, Reward-Based Crowdfunding: A Synthesis of Research Insights (January 01, 2024). Available at SSRN: https://ssrn.com/abstract=4901438 or http://dx.doi.org/10.2139/ssrn.4901438
Lots of great advice in here! Thanks!!