{"id":6126,"date":"2015-12-11T09:30:06","date_gmt":"2015-12-11T08:30:06","guid":{"rendered":"http:\/\/cms.munich-startup.net\/?p=6126"},"modified":"2022-06-20T08:44:15","modified_gmt":"2022-06-20T06:44:15","slug":"mucrowd-blog-projects-fail","status":"publish","type":"post","link":"https:\/\/cms.munich-startup.net\/en\/6126\/mucrowd-blog-projects-fail\/","title":{"rendered":"MUCrowd Blog: What to do when crowdfunding projects fail?"},"content":{"rendered":"

An article by Linette Heimrich (Chamber of Commerce and Industry for Munich and Upper Bavaria<\/a>) from the MUCrowd Blog<\/p>\n

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From knitted beer coolers to potato salad to crazy high-tech gadgets, the crowd has funded a wide range of things. Nothing seems impossible, and that's precisely what makes it so appealing to many project starters. However, not all projects funded by the crowd ultimately deliver on their campaign promises. Crowdfunding isn't an online shop: But how many projects actually fail in implementation despite successful funding? The US platform Kickstarter asked itself precisely this question and commissioned an independent study.<\/b><\/p>\n

As part of the study, a team of researchers from the University of Pennsylvania surveyed 500,000 backers who had funded projects on Kickstarter about their receipt of promised returns. A project was considered a failure if backers did not receive any returns, regardless of whether the project was ultimately implemented.<\/p>\n

In one out of ten projects<\/b> the supporters go away empty-handed
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According to the study, one in ten project initiators fails to repay their backers. The frequency of failure is relatively similar across the various project categories. Backers of projects in the technology, film & video, and theater categories were slightly more likely to be dissatisfied with the repayment received and to describe the project as a failure. Interestingly, projects that raised smaller amounts were more likely to fail to repay their backers.<\/p>\n

Communication creates understanding<\/b><\/p>\n

Despite the disappointment of not receiving a thank you, the majority of backers would continue to support crowdfunding projects. It also showed that failed projects don't necessarily have to be a huge disappointment. Project founders who communicate transparently why a project couldn't be implemented as promised or who compensated their backers can often hope for understanding.<\/p>\n

However, in the event of a foreseeable failure, project initiators should react quickly and communicate honestly with their backers what went wrong. The use of the raised funds must also be transparent. Ideally, a (partial) refund of the funds to the backers can be made, or the project can be implemented in an alternative form.<\/p>\n

How project starters avoid the most common pitfalls<\/b><\/p>\n

It's best to avoid it in the first place. Of course, not every failure is self-inflicted, for example, when external circumstances like illness prevent implementation. But many "risk factors" can be safely avoided with good preparation.<\/p>\n