Meet the four horsemen of the Crowdfunding Apocalypse
This is the argument: Entrepreneurs, developers, and enthusiasts have to be committed to weeding out bad apples in crowdfunding, for the greater good of our industry.
But Wait, Crowdfunding Gave Us Great Tech Products!
Indeed, but we are not here to talk about the good stuff, and here is why: For every Oculus Rift, there are literally hundreds of utterly asinine ideas vying for crowd-cash.
Unfortunately, people tend to focus on positive examples and overlook everything else. The sad truth is that Oculus Rift is a bad example of crowdfunding, because it’s essentially an exception to the rule. The majority of crowdfunding drives don’t succeed.
How did a sound, altruistic concept of democratizing entrepreneurship become synonymous with failure? We could list a few factors:
- Unprofessional media coverage
- Social network hype
- Lack of responsibility and accountability
- Lack of regulation and oversight
The press should be doing a better job. Major news organizations consistently fail to recognize impossible ideas, indicating they are incapable of professional, critical news coverage. Many are megaphones for anyone who walks through the door with clickbait.
The press problem is made exponentially worse by social networks, which allow ideas to spread like wildfire. People think outlandish ideas are legitimate because they are covered by huge news outlets, so they share them, assuming the media fact-checked everything.
Once it becomes obvious that a certain crowdfunding initiative is not going to succeed, crowdfunding platforms are supposed to pull the plug. Sadly, they are often slow to react.
Crowdfunding platforms should properly screen campaigns. The industry needs a more effective regulatory framework and oversight.
Realistic Expectations: Are You As Good As Oculus Rift?
Are you familiar with the “Why aren’t we funding this?” meme? Sometimes the meme depicts awesome ideas, sometimes it shows ideas that are “out there” but entertaining nonetheless. The meme could be applied to many crowdfunding campaigns with a twist:
”Why are we funding this?”
This is what we love about crowdfunding. Say you enjoyed some classic games on your NES or Commodore in the eighties. Fast forward three decades and some of these games have a cult following, but the market is too small to get publishers interested. Why not use crowdfunding to connect fans around the globe and launch a campaign to port classic games to new platforms?
You can probably see where we’re going with this: Crowdfunding is a great way of tapping a broad community in all corners of the world, allowing niche products and services to get funded. It’s all about expanding niche markets, increasing the viability of projects with limited mainstream appeal.
When you see a crowdfunding campaign promising to disrupt a mainstream market, that should be a red flag.
Why? Because you don’t need crowdfunding if you have a truly awesome idea and business plan with a lot of mainstream market appeal. You simply need to reach out to a few potential investors and watch the money roll in.
We decided against using failed software-related projects to illustrate our point:
- Most people are not familiar with the inner workings of software development, and can’t be blamed for not understanding the process.
- My examples should illustrate hype, and they’re entertaining.
That’s why we’re focusing on two ridiculous campaigns: the Triton artificial gill and the Fontus self-filling water bottle.