Crowdfunding, as a way of raising money for a new venture, has become big business. From a small start in 1997, it was estimated to be an industry worth more than US$34 billion in 2015. But crowdfunding is still in its infancy and – as with any tool – it can be misused so that its potential for bringing innovations to the markets could be hampered.

1. Six things that successful crowdfunding projects have
in common
Crowdfunding, as a way of raising money for a new venture, has become big business. From a
small start in 1997 it was estimated to be an industry worth more than US$34 billion in 2015. But
crowdfunding is still in its infancy and – as with any tool – it can be misused so that its potential
for bringing innovations to the markets could be hampered.
Keys to success
Timing:
Early funding and backing is key to successful crowdfunding. The more backers and funding
received in the first few days of a campaign, the more likely it is to succeed. This suggests that
designing a campaign to reward the early backers will lead to it being more successful.
Successful projects on average raised 39% of their funding goals by the end of the first sixth of
the campaign – with many securing their funding before this early limit was reached. This
compares to failed projects which managed to raise on average less than 4% of their funding
goal in the same time period.
Networks:
It probably comes as little surprise that having large online social networks helps entrepreneurs
achieve success when it comes to crowdfunding their ideas. When project proposers add an
online social network link to their project’s pages, they indicate that they are intentionally using
their social network in order to boost their crowdfunding campaigns.

2. Temper your ambition:
Ambition is usually perceived as a key to success for innovators – after all it takes ambition to
launch a crowdfunding bid. But we identified many projects which were simply over ambitious –
as shown by the negative impact that a high funding goal has on the chances of a project’s
success. Projects which failed on average received less than 6% of their funding goal, with
some raising less than 0.0001% of their funding goals.
Impatience:
Being impatient to get off the ground increases the probability of a project‘s success. This may
seem counter-intuitive – as one would expect that giving a campaign more time would help it
succeed. But when it comes to crowdfunding, backers are impatient – they want to get the
projects they support off the ground as soon as possible. In fact, they are so impatient that the
shorter the declared duration of the campaign, the more likely the project is to succeed.
Reputation:
Number of projects from entrepreneurs who had already successfully launched campaigns. This
experience improved the chances of a project’s success, as it increased the reputation of this
creator generating trust. This is very important in an environment such as crowdfunding where
the entrepreneur knows much more about the characteristics of the new product or service to be
launched than the potential backers.
Reciprocity:
In a virtual community, such as that created by crowdfunding platforms, supporting other
people’s projects could be a good way to attract support for one’s own. The positive impact of
reciprocity indicates that crowdfunding platforms are virtual communities – where altruistic
behavior makes innovators more likely to succeed.

3. Crowdfunding: a global perspective.
Crowdfunding is a global enterprise with a single crowdfunding platform raising funds in more
than 100 countries. But it also demonstrates how crowdfunding is still limited in Africa and South
America – the areas which may most benefit from using crowdfunding to get a good idea off the
ground.
Many a massive enterprise has started small – and in a modern post-industrial landscape, using
crowdfunding to bring a brainwave to life will be increasingly important in providing jobs and
creating wealth.