Go Fund Yourself

Not only in crowdfunding, but also in every other aspect of life, achieving success is important. Therefore it is essential to analyze success when it comes to crowdfunding. At first glance, it is easy to determine what success in terms of crowdfunding is. If the funds were raised, the campaign was a successful one. If the fund raising ended in failure, the campaign was unsuccessful. There are also great amount of tips and texts from 'online society' and crowdfunding platforms that are explaining how to reach the financial goal, since that is the main reason to engage in the campaign. However, a more profound examination of the subject shows that a crowdfunding success itself is much a more complex matter. That is why the accent in this research is more on defining the term success within boundaries of crowdfunding and explaining the complexity of the success, rather than finding out the answer the question of how to successfully raise funds.

Definitions of success

Business dictionary defines success as: Achievement of an action within a specified period of time or within a specified parameter. Success can also mean completing an objective or reaching a goal. Success can be expanded to encompass an entire project or be restricted to a single component of a project or task. It can be achieved within the workplace, or in an individual's personal life. For example, if an individual's personal goal is to be accepted in a new career, success would occur after the individual has been officially accepted into his or her new place of employment. ^[1]

When talking about success in crowdfunding, it is important to distinguish success of crowdfunding campaign and success of crowdfunding project. These two types of success must not necessarily depend on each other, but do overlap.

Crowdfunding campaign

Strictly speaking, the success of a crowdfounding campaign seems to be clearly defined. The aim of the campaign is to raise a specific amount of capital in order to realise the project. Successful campaigns are the ones that can acquire enough attention in a particular time and reach the funding goal. On the other hand the crowdfunding campaign maybe was not successful, but it could be implemented to inspire investors and to make project successful. As said before, a profound examination shows that it is much a more complex matter, therefore the complexity of the campaign success will be one of the topics of the research.

Crowdfunding project

The success of a crowdfunded project is slightly harder and a little more abstract. It is important to consider the goals that were set before the campaign. Goals of the project can still change during the campaign or even afterwards and are not clear and definite. On one hand a successful campaign doesn’t necessarily mean a successful project. Often after a successful campaign the initiative and motivation to realise the project is missing, or the campaign has served only to advertise the upcoming project.

In order to better understand the problem, success in crowdfunding was examined both trough analyzing the success rate in categories to which the project belongs to, and trough analyzing some of the famous campaigns and projects. The goal was to see what makes a crowdfunding campaign and a project successful, is there a 'formula' that leads to successful fund raising, and does the campaign influence the success of the project and if that is the case, how do they overlap.

Statistics per Category

A variety of factors influence the end result of a crowdfunding campaign, such as: the platform being used, seriousness in approach to the project, proper social networking, use of media in explanation of the project, realistic projection of funding goals, research of the best suitable rewards, and so on . However, success of the project can also have something to do with the category it belongs to. Some categories are more interesting for potential donors and more popular than others. 'Market' saturation is another element that influences potential success in a way that the large number of project in a category will result in a lower success rate. That is why it is important to analyze and compare categories based on the current number of projects and success rates, and to see if the link between success of the campaign and the category it belongs to can be made.

The overall success rate for projects hosted on the biggest and most successful platform -('Kickstarter')^[2]^[3]^[4] is approximately 44% (as of January 2014), which means that more than half of the crowdfunding campaigns do not reach their ultimate funding goals. Nevertheless, some categories have better rates than others do. While these statistics are based on Kickstarter projects, they can apply to all of the crowdfunding industry. Dance and Theatre with their 71% and 64% success rates are the most successful categories on this platform. The most unsuccessful categories are Publishing and Fashion with 32% and 30% success rates. Astonishingly, Games and Technology are one of the categories with the lowest rates of success (both have only 35%), being that games and technology projects were responsible for the blooming of the crowdfunding platforms. With its 40% and 48% rates, Film and Art stand in the middle of the Success Rate Graph.

Another important parameter in analyzing statistical data is the number of the projects, where it can be seen that the most popular categories are Film and Video (with a total number of 29624 projects) and Music (with a total number of 24707 projects). Games has 6841, Technology 2887, Art 10374, whilst Dance has only 1517 projects. The statistics also show that when it comes to average funding per Campaign, category Games is on the second place with 36,162.84 $. Technology, which is one of most unsuccessful categories, is on the first place with 40,095.29 $, while Dance has only 10,572.08$, whilst Art has only an average of a 4895,00 $ per campaign. Even though category Games is one of the least successful, it has also in total the highest gross of 160 Million Dollars. It is somewhat a paradox, and it has to do with the fact that a successful game a lot of times gets overfunded and exceeds its funding goal (Game Broken age had exceeded the $400,000 goal with more than $3.3 million from over 87,000 backers).

The data shows that a link between the rate of success and the average funding per campaign can be found. Two of the most successful categories, Dance and Theater, have also one of the lowest funding goals. Furthermore, Games and Technology, one of the least successful categories have also the highest funding goals. A grate success of the Dance has probably a lot to do with the low funding goals and the fact that there are 1,3 % of the dance crowdfunding campaigns. Another aspect that should be analyzed is sociological, where the dance and art 'offline' society is a rather stronger connected, as appose to 'games' society. With a small funding goals and with the first ring of the donations that are based on the friends and family pledges, it is simpler for an artist or a dances to come to it's goal. However, majority of the campaigns don't even surpass the first step of the funding, and near 80% of them never raised more than 20 % of their goal.

Projects' analysis

In a large number of projects that were presented in Kickstarter or Indiegogo or another crowdfunding platform, few project were highlighted because of their unique approach to the campaign, great ideas, amount of raised money, popularity and success or in the other hand failure after the crowdfunding campaign. These highlighted projects are presenting a different combination of success that can come out from one crowdfunding campaign. Some of them can be described like successful in terms of champagne and realized project while others became successful only in one of this field, or not successful at all.

Broken Age

Broken Age is an episodic point-and-click adventure video game, Tim Schafer’s first return to the genre since 1998’s Grim Fandango.

Broken Age began under the working title Double Fine Adventure as a Kickstarter crowdfunded project promoted by Double Fine and 2 Player Productions in February 2012. Originally a goal of $400,000 was set to cover the costs of development and documentary filming, it became the largest crowdfunded video game project at the time, raising over $3.45 million from more than 87,000 backers within the month. It remains one of the highest-backed crowdfunded projects of any type, and its success helped to establish Kickstarter and other crowdfunding mechanisms as a viable alternative to traditional venture capital and publisher funding for niche video game titles.

ILLO: Birth of the Cool

Raylight Games, attempted to fund its Illo: Birth of the Cool – via both Kickstarter and Indiegogo. The game is a surreal puzzle adventure, designed for platforms with tilt, touch and microphone inputs, including iOS, Android, PlayStation Move, Kinect, Wii U, PS Vita and 3DS. The campaing started on Nov 23, 2012. The number that they tried to reach was 270 000 $. Both campaigns ultimately failed to generate the funds needed to continue development Due to its lack of succes, the campaign was cancelled 10 days before its scheduled December 3 end date.They only managed to collect 2945 $ from 28 backers on Kickstarter.

Marina Abramovic Institute

Marina Abramović is as one of the most progressive and devoted long-duration performers. Marina is setting up an experience performance center inspired by her own latest project. Abramovic aims to put art, science, technology and spirituality together in the "Marina Abramović Institute", a dynamic museum which displays what she calls "long durational work." All visitors will become active participants in the art.

New York City Opera

The People’s Opera – New York City Opera – has focused on producing unique works, showcasing emerging young artists, and educating the next generation of performing arts lovers. Throughout its history as The People's Opera, NYC Opera has made opera accessible and affordable. People opera exists to give everyone an alternative artistic experience, unique and accessible to all.

Veronica Mars

Veronica Mars is a American neo-noir mystery comedy-drama film adaptation based on Thomas' UPN/CW television series of the same name (2004-2007). It is co-written, produced, and directed by Rob Thomas and co-written with Diane Ruggiero and Kristen Bell as the title character.

Darci’s walk of shame

The movie, Darci's Walk of Shame is a romantic comedy about a unemployed school teacher who travels alone to her sister's wedding in Thailand, has a affair with one of the waiters and then must endure “a very long, confusing walk of shame in a ridiculously bright coloured taffeta bridesmaid’s gown”. Melissa Joan Hart, the star of the 1990s tween sitcoms 'Sabrina the Teenage Witch' and 'Clarissa Explains it All', should have had a leading role in this movie.

The newest hottest Spike Lee Joint or "Da sweet blood of Jesus"

The newest hottest Spike Lee Joint is a new movie from Spike Lee Jones and in a description on Kickstarter page is written that is new kind of love story. Movie about Human beings who are addicted to Blood. Funny, Sexy and Bloody. After being stabbed with an ancient, cursed dagger, Dr. Hess Greene (Stephen Tyrone Williams) develops a lust for blood.

We can compare some projects from the same category for example the NYC Opera’s campaign with the most successful arts campaign to date, The Marina Abramovic Institute. It’s a useful comparison for a few reasons: both campaigns are by well-known arts brands located in New York City, fundraising within a few weeks of each other. Abramovic is a Serbian performance artist who has been active for three decades; The NYC Opera has been operating for 70 years. Of course, Abramovic was asking for $600,000 rather than $1 million. But with the NYC Opera seeming unlikely to raise even a fraction of Abramovic’s total, we need to look beyond the target amount.

The average pledge to the campaigns is similar - the mean pledge for the Abramovic campaign was $139 compared with a current mean of $125 for the NY Opera. But that’s where the similarity in pledging activity ends. Rewards for the pledgers of NYC Opera are moustly the tickets for the performances. But the problem with theater tickets is that they are in-person rewards. If a backer isn’t based in New York or willing to travel there, they’re essentially useless. If the backers are outside the NY, NYC Opera is offering only a choice of a tote bag, desktop wallpaper, an mp3 playlist curated by the Opera’s artistic director and a CD or DVD. Marina Abramovic offered: For $25, “Marina will teach the Abramovic Method SLOW MOTION WALK exercise via live stream. Receive exclusive access to this event. You, Marina, and the other backers at this level will then perform your exercise SIMULTANEOUSLY, creating a large public performance that occurs at the same time in different locations all over the world.” For $100, “You will receive a set of never-before-seen video materials.” For $1,000 “Marina will perform the Abramovic Method eye gazing exercise with you via webcam. You may document this experience in any way you’d like and opt to include it in MAI digital archives.”

Another useful comparison is from the film category. Two crowdfunding campaigns were launched via Kickstarter at the same time, with the same goal, but at the end with different success. Veronica Mars movie pledged $5,702,153 of 2,000,000 goal and Darci’s Walk of Shame collected only $51,605 from 315 fans. Few possible reasons for failed campaign could be the facts that Darci’s Walk of Shame campaign didn’t include trailer or poster. They believed that Melissa Joan Hart’s popularity is enough to raise 2,000,000 dollars without making too much effort in crowfunding campaign. Veronika Mars movie didn’t need trailer because the movie should be the extension of the Veronika Mars series. The fans already know what it is about. Team that worked on Darci’s Walk of Shame campaign didn’t let the fans know exactly what the project was. One of the reasons for failed campaign was also the gifts. Gift for the pledger who gave 10,000 dollars for Veronika Mars movie was one scene in the movie and for the same amount of money Darci’s Walk of Shame reward was that cast will appear at pledger’s wedding and Melissa and her co-stars will toast bride and groom.

Leading to conclusion, it is possible to notice that crowdfunding campaigns will take in the future much more important rolle in economonical sence. This might lead to completely new course in development of society. At the moment, it is impossible to say to which extend. It todays world much money would be spend on developing the product, getting reactions from consumers and eventually promoting it as starts to produce. With crowdfunding campaigns, it will develop quitte different. Through crowdfunding campaign be already most of those thing visible. Promotion of projects will be accomplished with reactions of possible backers which will show the nessesity of product its self. Prior to all knowledges collected during the capaign, products will have much lesser procent of risk.

Crowdfunding campaigns have not only opportunity factor, but they can provide much bigger picture of the thing to come in future for investors because they provide strong picture of the current situation on the market. Chances that the investor will get in risky situations are significentaly smaller after the have been filtered trough crowdfunding campaingns. On the other side crowdfunding platforms make inventros much more vissible on the market and they do it for free at the begining. Eventually they charge certain procent of collected money, but that happens only if the campaign had success.

Diversity of success

Crowdfunding may be an ideal way to get capital for a new creative project, but being successful is not easy as it seems. As analyzed projects show, even the successful campaign can produce an abortive project and vice versa, although the campaign fails, the project could turn to be a success, which is why it is important to distinguish these two terms - the success of the campaign and the success of the project. To become successful it requires a lot effort and dedication. A good concept, adequate preparation, and an existing community to support it are very important. Every crowdfunding platform, such as Kickstarter or Indiegogo, has tips in order to make it easier for the users to make the campaign efficient. Furthermore, there are variety of tips and texts from 'online society' that mainly come to the same conclusions. Engaging with the audience, capturing the media attention, using social networking as a way of promoting the project, having adequate rewards for the donors, having a professional approach to the project and to the campaign are only some of the advices given. However, even the completion of all of the above does not necessarily bring success and there is no formula that guaranties success. What makes it more interesting is that if the campaign fails, the project can turn out to be successful.

Benefits and Risks

Crowdfunding is an excellent way for creators to raise a capital, but also to receive exposure they need in order to verify, execute, and help their projects grow. That is why, when talking about the success of the project, failing to raise the funding does not necessarily mean unsuccessful campaign. Success is much more complicated in terms of the campaign, since it offers more than just desired funding. That being said, crowdfunding campaign is not only a fund raising campaign; it can also be a mean to introduce broader audience to the project, and to advertise it without spending resources on the advertisement, as the Illo: Birth of the Cool showed. It has the potential to go viral on social media, while attracting the interest of more traditional media outlets. It affords an unbelievable networking opportunity. Just putting project out and promoting the campaign on social media and getting press can get real investors who otherwise may not have heard about the project. A crowdfunding campaign can also answer to real investors, whether project has what it takes to give them a return on investment. It helps to show there are others who believe in the project. Even if the campaign doesn´t raise it´s goal, it still makes possible to show investors that a certain project has received sufficient market validation. On the other hand, it can be a medium to include public in the project and to create a certain community around it, as Marina Abramovic did with Marina Abramović Institute.

Of course, the main reason to start a campaign is fundraising and with that in mind, crowdfunding can be risky. As shown in the statistical analysis of the categories, only 44% of the campaigns turn out to be successful, in terms of fund raising. Since the crowdfunding community grows, number of the campaigns only becomes larger and some of the participants are famous individuals, as seen in the example The newest hottest Spike Lee Joint. Saturation of the community becomes a real problem, and standing out is harder than before. Since only small number of the campaigns is shown on the main page, advertising becomes a challenge, since not only the time but also finances should be invested in it. It can lead to a serious investment of recourses that in the end do not bring wanted result. Although, crowdfunding is not the answer for every organization, it does provide an alternative. When developed, executed and curated properly, crowdfunding campaign contributes to the success of the project on many different levels and should not be viewed solely though the criteria of capital.

Links

References

[1] ttp://www.businessdictionary.com/definition/success.html#ixzz3Lcvumsua businessdictionary

[2] ttp://www.crowdlifted.com/news/2014/1/kickstarter-success-rates-and-the-beautiful-dance-of-data

[3] ttp://www.crowdlifted.com/news/2014/1/crowdfunding-flops-kickstarter-campaign-failure-rates-by-category

[4] ttps://www.kickstarter.com/help/stats

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