It sounds impossible, doesn’t it? A crowdfunding campaign, too successful? Surely that’s a pipe dream! But in our experience partnering with exciting and innovative companies that seek fundraising through a crowdfund, it is a very real possibility.
Overfunding can lead to a huge number of different challenges that you were not probably expecting. Here are just three that we have seen in the crowdfunding world – and how you can prepare for them:
1. Too many rewards to deliver
If you have budgeted your time and resources to deliver, for example, 100 units of your idea because you’re expecting around 100 backers, but you find yourself with 400, that can pose an immediate challenge. You’ll need to figure out a method of manufacturing more quickly, or delaying delivery of some of your rewards – not a situation that you want to put your backers in.
Prevent it by: setting a limit on the number of rewards that you’ll deliver for each supporting tier, and that will make them feel more exclusive and drive demand. Make sure that some of your reward tiers don’t include physical rewards, giving your backers a variety of options to choose from.
2. Far more shareholders than you were expecting
If you’re not delivering physical items but instead shares, you may have been expecting 30 to 40 – but complete your crowdfund with 70 new shareholders. This can be initially exciting, but then you start to realise that with more shareholders comes more voices, more opinions, more demands. Keeping them all happy is going to be much more difficult than you thought.
Prevent it by: deciding actively before you launch your campaign just what rights and responsibilities your shareholders will have. Stating this openly at the very beginning of the campaign will carefully set expectations, and enable you to lead your shareholders, rather than the other way around.
3. Unrealistic board expectations
For companies that already have a board as they enter a crowdfunding campaign, you’ve already worked hard to encourage them to support your campaign plan, business strategy, and marketing spend. You’ve told them exactly what you’ll raise, and what you’ll do with it – but now that you’ve raised double your expected total, their expectations have doubled too.
Prevent it by: addressing this in your business plan, and creating stretch goals for the campaign that are clearly ring-fenced for certain things. For example, if you raise 10% extra, you’ll expand the R&D team. If you raise 20% extra, you’ll add to the sales team. If you raise 30% extra you’ll open a new office in a new city – you get the idea.
Crowdfunding campaigns can be exhilarating and exhausting: it’s all about getting the preparation done properly. Although it’s easy to focus on the terrors of failure, sometimes you need to make sure that you’re as well prepared for success.
Worried that you’re not going to get the word out about your crowdfunding campaign? Confused about all the press, social, and digital chatter? Get in touch here to start a conversation with the experts.