For so many years, the Indy cars have had it right. Don’t sit on the grid waiting for the race to start and then madly accelerate – Start your engines early and get moving well before the race begins and get your momentum up, ready for when the green flag drops. There is an uncanny parallel to crowd funding, and after extensive worldwide studies, the evidence is glaringly obvious – the greater momentum you have in place prior to starting, the far greater your chances of achieving crowd funding success.
Savvy exponents of crowd funding have known for a while that it is best to have people pre-committed to pledging support to their campaign. But the level of support required for success and the impact of arranging this before the campaign goes live has now been largely quantified by Seedrs in their analysis of the different levels of pre-committed funds and the effects on the success of a campaign.
Their findings were simple yet startling. Campaigns that started with 0% funding at launch showed a 15% chance of success. However, with just a little work, those project creators that went about seeking support prior to launch, and achieved just 1% funding shortly after commencement of their campaign lifted their likelihood of success to 27% – almost doubling their chances of meeting their target.
A considerable jump in success rate came when project creators further engaged their crowd prior to their campaign going live. With just 5% of funding pre-committed, their chances of success were now 50%, relatively good odds in anyone’s books. Those that were absolutely diligent and took time to really rally support increased their chances of success to 70% if they raised 10% of their required funding prior to launching their campaign.
The magic number came at 35%, at which point campaigns starting with this percentage of their target pre-committed or pre-funded met or exceeded their funding target in nearly every instance. The crowd funding community has long known that campaigns that achieve 30% of their funding target go on to be fully funded in 90% of cases. Even those strong odds are bolstered by achieving this level of support prior to the campaign going live.
Understanding the dynamics of this is paramount in understanding the real essence of how to achieve crowd funding success. Why does this amount of pre-commitment achieve such great results? Why is a “rolling start” so important to a project creator achieving their funding target, and why is it so often repeated when people achieve these magic milestones?
The answer is twofold:-
Firstly, project creators feel inspired to keep going. Nothing inspires success like success. A few strong steps usually inspire you to run. A feeling of “I can do this” and wanting to take it all the way can be a powerful motivator. “Bigger, Faster, Stronger” – the Olympics credo is based on this. People inspired by initial success to take it all the way to achieving their goal.
Then there is the power of “The Second Tier” which is perhaps the greatest driver to crowd funding success. Remember back to when you were a kid, and you and your buddies stood on the edge of the pool, daring each other to be the first to jump in. No one wanted to be the first, until someone took a great leap, a leap of faith, and plunged in. This was then the catalyst for a few other brave souls to take the plunge. These were the ones who were keen, but didn’t want to be the first (however, they were happy to be the first to follow). They gave validation that it was OK to take the leap, and allowed others to “jump in”, to the point where anyone left standing on the edges, who had not jumped in, was no longer considered “with it” and part of the crowd.
It’s exactly the same with crowd funding. The pre-commitments, the first followers, and the validators signal to the rest of the crowd that it is alright to follow. It takes away the nervousness, and gives comfort to the second tier (the first tier being the friends, family and close associates of the project creator – those who were relatively easy to engage and get on board as supporters for when the campaign initially launched). The second tier or “friends of friends” then becomes a natural extension of the initial momentum. The second tier is also larger than the first tier, given that each of the first tier has as many contacts as the first tier itself – the spread then becomes exponential. By the time the campaign is exposed to the third tier (the greater internet audience), the audience is huge, the story is completely validated by the support it has received, with the inertia carrying the funding campaign at pace to the target and quite often well beyond it.
The argument for a rolling start cannot be denied. Project creators that are “in the know” understand that the efforts and activities required once a campaign is underway are largely mute if the initial momentum is not there. As many a successful racing car driver has been quoted over the years, it is not the work done once the starters gun goes off, but the work that got you to the starting line that will determine your (crowd funding) success.