This is why you will fail your crowdfunding campaign
And this is why i failed mine and the lessons learnt.
Crowdfunding can be a game changer for bringing innovative ideas to life, but here’s the truth: most campaigns fail. The good news is that failure is preventable if you know what to avoid. In this article, we’ll dive into the common mistakes that derail crowdfunding efforts and what separates successful campaigns from those that fizzle out. Whether you’re planning your first campaign or looking to improve after a setback, this guide will help you understand why many initiatives fall short—and how you can turn potential failure into success. By the end, you’ll have actionable insights to refine your approach and maximize your chances of meeting (or exceeding) your goals.
My Crowdfunding Story
I wanted to create a leather backpack specifically for designers, but with limited capital at my disposal, I faced a big question: how could I cover the costs of sourcing materials, developing samples, and meeting manufacturers’ production minimums? That’s when crowdfunding seemed like the perfect solution—at least to cover the initial production run, and if all went well, to launch the brand into the market.
After two years of working with manufacturers, perfecting designs, and navigating sourcing challenges, I finally brought The Designer Backpack to life. With the revenue I earned from freelancing, I was able to pay for the pre-production samples and prepare the campaign’s content for launch.
When I first launched the campaign, I got a few sales right away, but then—nothing. That’s when a well-known marketing agency reached out, offering to invest $24,000 in promoting my campaign through paid ads, promising it could generate $1 million in contributions. But the catch? They wanted a 45% share of the revenue. It was tempting, but I realized I’d barely make a profit. What struck me most, however, was how well they understood my target audience. They knew exactly how to unlock the campaign’s potential, and it hit me—crowdfunding isn’t just about having a great product or campaign. Marketing and pre-launch (assessing demand) is the game!
That realization shifted my perspective and set me on a new path.
The key questions became: Is there a way to assess demand before launching a campaign or committing to production? How can I produce or order the right amount of the right product for the right customer? How can I build a community around my product independently on my website before launching?
That’s when I decided to create Fundlify, a crowdfunding app for Shopify.
Reasons why “successful” campaigns fail!
1. Lack of Proper Market Research
Many campaigns fail because the creators haven’t done enough research to understand their target market, leading to products that don’t resonate with backers.
Zano, a miniature drone project, raised over $3.4 million on Kickstarter but failed to deliver. The product was marketed as a user-friendly, affordable drone, but there were technical issues and over-promises that couldn’t be met.
Lesson Learned: The creators overestimated the demand and underestimated the complexity of delivering a functional product. Before launching a campaign, it’s crucial to conduct thorough market research to ensure there is real demand for your product and that it’s technically feasible to deliver it.
2. Failure to Build a Strong Pre-Launch Audience
Many campaigns go live without a pre-existing audience, thinking the platform’s traffic alone will drive success. This is a major reason for failure.
Coolest Cooler became one of the most-funded Kickstarter projects, raising over $13 million. While initially successful, it failed to deliver all promised products on time, leading to severe backlash. One of the reasons was that the creators didn’t build a sustainable community or engage their backers adequately before launching, causing them to lose trust when delays occurred.
Lesson Learned: A successful campaign often starts well before launch. Building a loyal audience and community that believes in your project is critical to sustaining momentum during the campaign and managing expectations after it ends.
3. Overpromising and Under-delivering
Campaign creators often get overly ambitious and make promises they can’t keep, resulting in product delays, quality issues, or even cancellation.
Lily Camera, a flying camera drone, promised groundbreaking features like automatic flying and filming. It raised $34 million in pre-orders, but the creators were unable to deliver a working product, leading to bankruptcy and a class-action lawsuit.
Lesson Learned: It’s essential to set realistic goals and promises in your campaign. Overpromising can lead to legal and financial disasters if you can’t meet expectations. Always be honest with your backers about what you can deliver and when.
4. Poor Communication and Transparency with Backers
One of the top reasons campaigns fail post-launch is poor communication. Creators fail to keep their backers updated about progress, delays, or problems.
Kano, a DIY computer kit for kids, raised over $1.5 million on Kickstarter. While they eventually delivered, they faced multiple delays and quality issues. The lack of transparency about these issues frustrated backers, leading to a loss of trust and negative reviews.
Open, transparent communication with your backers is key to maintaining trust. Even when things go wrong, backers appreciate honesty and frequent updates, which can help mitigate negative reactions to delays or issues.
5. Poor Financial Management and Planning
One of the most common reasons campaigns fail is mismanagement of funds. Creators often underestimate production costs or face unexpected expenses.
Amabrush, a hands-free automatic toothbrush, raised over $5 million on Kickstarter and Indiegogo. However, due to poor financial planning, including underestimating production costs and delays with manufacturers, the company declared bankruptcy in 2019, leaving backers without their promised product.
Lesson Learned: Financial planning and a clear understanding of manufacturing and shipping costs are essential. Before launching, creators need to budget for every aspect, including potential delays, and ensure they have enough capital to complete the project.
6. Insufficient Understanding of Technical Challenges
Many campaigns fail because creators don’t fully understand the technical complexities of their product, leading to delays and poor-quality deliveries.
Pavlok 2, a wearable that claimed to help users break bad habits by delivering small electric shocks, raised over $275,000 on Indiegogo. However, the product was plagued by technical issues, from defective hardware to problems with software updates. Backers were frustrated by poor performance and long delays.
Lesson Learned: Creators must ensure their product is technically feasible and can be produced at scale. Testing and development should be done prior to launch, so creators are confident they can deliver a working product.
7. Lack of Post-Campaign Support and Customer Service
After the campaign ends, many creators struggle to maintain communication and provide customer support, leading to loss of trust and negative feedback.
OUYA, a highly anticipated Android-based gaming console, raised over $8.5 million on Kickstarter. While it delivered the product, backers complained of hardware issues, lack of games, and poor customer service. The company struggled to address these concerns, and OUYA ultimately failed to gain traction, selling its assets to Razer in 2015.
Lesson Learned: Post-campaign support is crucial. It’s not just about delivering the product; it’s about maintaining relationships with your backers. Providing timely updates and responsive customer service can help prevent frustration and preserve your reputation.
8. Over-Reliance on Hype and Failing to Meet Expectations
Some campaigns succeed in creating massive hype but fail to live up to the expectations they set during the campaign.
Skully, a high-tech motorcycle helmet with an augmented reality display, raised $2.4 million on Indiegogo. The campaign generated huge excitement, but the company couldn’t fulfill the orders. Internal mismanagement, including misuse of funds for personal expenses, led to the project’s collapse. Backers never received their helmets.
Lesson Learned: While it’s important to generate excitement for your product, it’s equally important to ensure that you can deliver on your promises. Don’t let hype overshadow the practical aspects of managing and delivering your campaign. Stay focused on fulfilling the core promises to your backers.
Final Thoughts
While crowdfunding can be a powerful tool for raising funds and bringing products to life, it requires careful planning and execution.
Before launching your campaign, ensure you have a solid strategy, a clear understanding of your market, financial goals and costs, commitment to transparency with your backers. Following these principles can drastically improve your chances of success and help you avoid common pitfalls.
If you want to assess market demand before launching your crowdfunding campaign, give Fundlify crowdfunding app for Shopify a go.