The crowdfunding can give a big boost to your entrepreneurial project, especially if you took care to follow our advice to increase your chances of success . However, according to one study , 9% of projects funded on Kickstarter fail to deliver their product to their contributors. Based on an example of failure, we offer tips to prevent or even tackle this problem.
The Zano case
In 2014, the Zano drone raised more than £ 2.3 million in its Kickstarter crowdfunding campaign. This amount represents twenty times that requested by Torquing Group, the company behind this project. Given so much enthusiasm from contributors, Torquing set up a website to take pre-orders, increasing the sales of an additional 3,000 drones.
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Unfortunately, due to numerous technical problems, the company declared bankruptcy and cut off communications with Kickstarter and its contributors. The crowdfunding site then called on journalist Mark Harris to investigate this case. After five weeks of investigation, Harris released his report . One of his findings is that Kickstarter, along with other crowdfunding platforms, should reconsider how they handle projects involving large sums of money.
Prevention and solutions
By observing the failure of Zano and other sociofinancing projects, it is possible to avoid some disastrous decisions. For example, with the coolest cooler case, its creators offered their product at a low price. As a result, they ask their contributors for an additional amount for a ” shipped delivery “. However, if, despite your caution, your product can not be delivered, Kickstarter suggests transparency as well as the following tips :
– Explain to the contributors what has been done as work;
– explain to them the elements that prevented the project from being completed;
– explain to them the use of the funds, which “have been spent appropriately”;
– If funds remain, offer a refund to those who have not received their award “or explain how these funds will be used to complete the project” otherwise.
In conclusion, by remaining transparent, you are more likely to maintain a good relationship with your contributors. If your next crowdfunding campaign becomes a huge success, do not forget to be well surrounded to avoid feeling overwhelmed by events. In this regard, feel free to read our mentorship post for more information.