If you’ve been to crowdfunding website
CrowdIt.com recently, you may have noticed projects have slowed to a crawl.
At press time, there were five active projects on the online fundraising site, compared to 16 at the time of its launch in June 2013. Only eight out of hundreds posted are shown to have exceeded their goal since the site launched.
Co-owner Jason Graf says the website functions automatically, so there’s no reason to shut it off.
Still, the business has had to shift gears to stay relevant.
Graf says the company now is focusing on partnerships – enter institutions such as Missouri State University and CoxHealth – to offer custom crowdfunding pages at cost.
The MSU Foundation’s
MissouriStateCrowdfunding.org serves as an online fundraising portal for the university’s students, faculty and staff. The website is a near carbon copy of CrowdIt.com, but with MSU branding. Only one project was active July 15 – a campaign to raise money to improve energy efficiencies at Temple Hall – and 20 fundraisers have been launched since the site came online last year.
Graf readily acknowledges the difficulty of getting a crowdfunding portal off the ground, and can only guess as to why his site and others can’t make traction.
Best guess: It’s tough to compete with what he calls crowdfunding’s “the big three” websites: Kickstarter, Indiegogo and GoFundMe.
“It seems to be an industrywide trend,” he says. “I think most people who do crowfunding believe they’ll raise more money just based off traffic the site gets, so they go with the big three.”
For others looking to get in on the crowdfunding scene, Graf recommends a hard look at the industry and a plethora of research.
“I wouldn’t say stay out. I’d say do your homework,” he says.
“Someday, someone will find that secret formula that will have the backing to create a shift. For the last two years, that hasn’t been able to happen.”
Graf’s comments remind me of Cerberus, the three-headed guard dog of the underworld in Greek mythology. The creature allowed many to enter but none to leave, and those seeking to defy it surely were met with untimely ends.
Following that mythological metaphor, perhaps crowdfunding campaigns are sucked into the well-populated scene guarded by the big three, and for fear of demise, stick with them. You get the point.
If Hercules doesn’t come along to, as Graf says, “find that secret formula” to combat Cerberus, Kickstarter, Indiegogo and GoFundMe will stay dominant.
With dominance comes stature, and people want to be associated with that.
Still, people may look at successful crowfunding sites and think it’s a clear path to victory. But it’s a slippery slope.
It can be downright difficult to get people to pay for a project before it’s tangible, and there are varying schools of thought over when entrepreneurs should ask for money.
As a consumer, I have to be extremely wowed to pull out my wallet, even if it’s for a product I can touch or for which there are proven results and reviews.
If I don’t know what the project is going to look like, and it’s still in its conceptual phase, I’m likely not going to give the creator the benefit of the doubt. I owe them nothing, I may not even get anything back in return, and most of the time, I simply don’t trust them.
You hear about Kickstarter all the time in the media, but as it turns out, the site only has a 37.5 percent success rate. That’s 88,920 successfully funded projects out of 244,111 launched.
Recent local projects have struggled to capitalize, too.
Former Killian Construction Co. executive Ken Coleman’s fundraiser for his Tubular Signs LLC’s collapsible yard signs gained only $478 of its $50,000 goal on Kickstarter, and Ozark-based cellphone case and accessories company Bodacious Cases LLC raised $600 of a $30,000 goal on IndieGogo in June, its second failed crowdfunding campaign. Successes, such as local video game developer Pixelscopic LLC more than doubling its $75,000 goal in 2013, are the exception.
In a recent Springfield Business Journal article about The 1906 Gents, 1 Million Cups-Springfield organizer Chad Carleton indicated quite plainly that not all projects have what it takes. Contrary to public perception, crowdfunding is not an automatic line to customers and money.
“It’s so glamorized right now,” Carleton said. “Too many people are going for crowdfunding when they shouldn’t.”
As with The 1906 Gents’ Kickstarter campaign to buy new woodworking equipment that launches Aug. 1, it might be worth a try if you don’t have access to the money and can’t find investors on your own. But if we’re honest, it’s a long shot.
The crowdfunding scene, whether you’re a host, a creator or a buyer, seems to be more of a get-rich-quick pitch than a viable solution.
Springfield Business Journal Web Editor Geoff Pickle can be reached at gpickle@sbj.net.[[In-content Ad]]
