Crowdfunding Crisis #3: All or Nothing

crowdfunding time all or nothing

Most of the major crowdfunding sites have an “all or nothing” policy.

Either you raise the entire goal amount in the limited time period or the campaign receives nothing. Crowdfunding campaigns that allow you to keep the funds despite an unmet funding goal charge higher commission rates (some as high as 9%).

The only logic to this arbitrary rule is the sense of urgency and threat of loss. Yet, with well more than half of all crowdfunding campaigns failing, it’s clear that urgency and threats aren’t working.

Aside from the obvious arbitrariness of this rule, it ignores the reality faced by entrepreneurs, start-ups and non-profits.

Savvy fundraisers these days do not seek only one funding source. Lack of success on a crowdfunding platform does not mean failure in the long-term, as many start-ups will be concurrently pursuing angel, equity, debt and other revenue opportunities.

The idea that the failure of a crowdfunding campaign dooms the larger project to obscurity is plain dumb. Campaigns that fail at crowdfunding may succeed elsewhere – by getting equity, debt or angel funding, or by succeeding on a different crowdfunding platform. A campaign that meets, say, half its crowdfunding goal but succeeds through other funding routes is still a success. But not if the crowdfunding site withholds the money the campaign raised.

All or nothing is a major problem. It is art of a looming crisis in crowdfunding.

What’s the solution?

Keep reading.