The idea of crowd funding receives a great deal of press exposure and the constant media attention would lead some to believe that it’s the perfect solution for a company’s funding needs. As an added bonus, crowd funding campaigns, if executed successfully, can help a company create awareness for its product or service. While the potential benefits are strong, there are also some risks.
The truth is that crowd funding is not for everyone. There are definite risks associated with a crowd funding campaign. Before initiating a campaign, a company should work with its stakeholders and customers to talk to them about the pros and cons of crowd funding.
We recently completed a crowd funding campaign where we were not able to meet our fundraising goal. When we surveyed our audience, asking for feedback, the results were surprising. Many thought our effort was “sketchy”. They were turned off by the idea of crowd funding. Many asked why crowd funding would be necessary. The idea itself was viewed as a last ditch effort for desperate companies. In other words, it doesn’t convey a sense of strength.
The truth is that some companies aren’t a good fit for crowd funding. Make sure you’re aware of the potential risks and understand the long-term effect it can have on your brand.