Why Crowdfunding Fails: Fraud, Incompetence, Wishful Thinking?
There is no single reason that would explain all crowdfunding failures, and we hope my examples demonstrate this.
Some failures are obvious scams, and they confirm we need more regulation. Others are bad ideas backed by good marketing, while some are genuinely good ideas that may or may not succeed, just like any other product. Even sound ideas executed by good people can fail.
Does this mean we should forget about crowdfunding? No, but first we have to accept the fact that crowdfunding isn’t for everyone, that it’s not a good choice for every project, and that something is very wrong with crowdfunding today:
- The idea behind crowdfunding was to help people raise money for small projects.
- Crowdfunding platforms weren’t supposed to help entrepreneurs raise millions of dollars.
- Most Kickstarter campaigns never get fully funded, and successful ones usually don’t raise much money. One fifth of submitted campaigns are rejected by Kickstarter, while one in ten fully-funded campaigns never deliver on their promises.
- Even if all goes well, crowdfunded products still have to survive the ultimate test: The Market.
Unfortunately, some crowdfunding platforms don’t appear eager to scrutinize dodgy campaigns before they raise heaps of money. This is another problem with crowdfunding today: Everyone wants a sweet slice of the crowdfunded pie, but nobody wants a single crumb of responsibility.
That’s why we’re no optimists; we think we will keep seeing spectacular crowdfunding failures in the future.