Before you officially launch your project, get to learn some of the challenges you may encounter in the future to hedge your bets as much as possible.
Crowdfunding has become a popular way for entrepreneurs and startups to raise funds for their projects. Platforms like Kickstarter and Indiegogo allow creators to pitch their ideas to a global audience and receive financial support in exchange for rewards or equity. However, not all crowdfunding campaigns are successful, and many projects fail to deliver on their promises. In this article, we'll review a recent study that identifies some of the challenges in crowdfunded product development and provides insights into how to improve the chances of success.
The study, which was published in the journal Design Science, analyzed 144 technology campaigns on Kickstarter that aimed to develop physical consumer hardware products. The researchers used a failure mode model to categorize the reasons why campaigns failed to deliver their products on time or at all. The model identified four main categories of failure: technical, execution, market, and team. Technical failures included issues with design, engineering, and manufacturing, while execution failures involved problems with project management, communication, and logistics. Market failures refer to challenges in identifying and reaching the target audience, and team failures related to conflicts, turnover, and lack of expertise.
The study found that only 9% of the campaigns were able to deliver their crowdfunded products on time, while 33% failed to deliver at all. The remaining 58% were either delayed or delivered a different product than what was promised. The researchers also identified some factors that were associated with successful campaigns, such as having a clear value proposition, offering a unique or innovative product, having a realistic funding goal, and providing regular updates to backers.
So, what can we learn from this study? First, it's important to recognize that crowdfunding is not a guaranteed path to success and that there are many challenges that can arise during the product development process. Second, creators need to be aware of the potential failure modes and take steps to mitigate them. This may involve hiring experts in design, engineering, and manufacturing, setting realistic timelines and budgets, and communicating regularly with backers. Third, creators should focus on creating a compelling value proposition and differentiating their product from competitors. Finally, creators should be transparent and honest with their backers, even if that means admitting to setbacks or delays.
Crowdfunding can be a powerful tool for entrepreneurs and startups, but it's not without its challenges. By understanding the potential failure modes and taking steps to mitigate them, creators can improve their chances of success and deliver innovative products to their backers.
