Is Crowdfunding a Good Idea for Your Business? Here’s What You Need to Know

by | Sep 24, 2020 | 0 comments

Although crowdfunding has its shortcomings, it is a viable alternative for kick-starting seed-stage businesses. Crowdfunding can also help when launching a new product. Properly managing a crowdfund campaign is essential to its success.

An Increase in Crowdfunding 

According to the Pew Research Group, in 2015 total funds generated through crowdfunding campaigns totaled $34 billion by 2030 that figure is projected to be $300 billion. With this growth however has come many more participants making it more difficult for a campaign to stand out among the 6.5 million that vied for funding last year. To ensure success, or at least improve your chances, following are action steps you’ll need to take:


The average pledge amount last year was $88 for all projects and $96 for fully funded projects. What this tells you is that people are willing to invest that amount if they find your ‘pitch’ has value. So, enter your pledge rewards in the $100-200 range. This will afford you a higher chance of exceeding your funding goal. The average campaign totaled $824 in 2019.

Pew Research also found that although large donations are not uncommon (21% contributing $51-100), the vast majority, roughly 49%, contributed a lower amount – $11-50.

The key is to show your value proposition while being creative with finding the dollar amount that hits the right price point.

The Right Demographic

Male funders dominate. Male funders far exceed female- about 85% to 15%. Therefore skewing your campaign to men greatly improves your odds of getting the funding you desire. This doesn’t mean that the product or service you are pitching must be for men only as a female oriented product will do well if it is viable and compelling.

30% of funders are in the 18-29 age group with another 27% in the 30-49 group. The average campaign lasts 9 weeks with 4 postings during that time. It should be noted that ‘updated campaigns’ raised 126% more than those without updates.

The Pitch

The average word count for successful campaign pitches was between 300 and 500 words.

  1. Campaigns with videos earned 105% more than those without videos
  2.  All-or-nothing campaigns fully funded at twice the rate of keep-it-all campaigns
  3.  Adding a personal narrative to your campaign gets 79% more backers.
  4. 53% of email shares converted to donations. In comparison 12% of Facebook shares converted and only 3% of Twitter’s converted.

Best Crowdfunding Platforms to Run Your Campaign

In conclusion, getting it right the first time is a requisite in crowdfunding. Make sure you are…

  • hitting the right demographic, 
  • pledging for the right amounts,
  • addressing a male audience,
  • adding a short personal story and a video.
  • and the most forgotten item in proposed funding budgets was shipping and logistics costs.

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By Jim Lavorato

Jim Lavorato is the founder of 4M Performance which is designed to assist businesses to survive and thrive in these uncertain times. Jim launched an entertainment-related company in 1988. He was at the forefront in cinema technology and helped spearhead the movie industry's transition to digital presentation and distribution. He also co-founded the Arboreal Group, an environmental consultancy. He has published articles on the motion picture and media industries and is a contributing editor for ScreenTrade magazine and writes a blog "Cinema Mucho Gusto". He is a certified SCORE Mentor in the SCORE Greater Phoenix Chapter and lives in Scottsdale, AZ. Learn more about Jim in his "About" page.

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