The Risks of Extreme Crowdfunding Success

Introduction

A really strange thing happens when crowdfunding on websites like Kickstarter - after you’ve raised your target amount, raising more than that can actually be incredibly dangerous.

It’s human nature to want to raise as much as possible. It lets you go - look at my super successful campaign! But unfortunately, it can sink a project, often catastrophically.

Risk 1 - Stretch Goals

Stretch goals = more work. Can you handle it?

Risk 2 - Time Pressure

When a Kickstarter campaign launches, it gives a target ship date. Lets say 6 months in the future. If the project then gets massively over funded, are they still going to be able to do it in 6 months? Probably not - it’s just common sense. The deadline should be pushed back accordingly, but this isn’t the way Kickstarter currently works.

Risk 3 - Manufacturing Challenges

Manufacturing ten of something is very different to manufacturing a thousand.

The project creator might have had a certain manufacturer lined up, which they can no longer use. Or maybe they now have to invest in costly tooling which they hadn’t budgeted for.

Risk 4 - Customer Support

All of those extra backers can lead to a customer support nightmare. If you look at some of the comment pages on Kickstarter projects it makes you wince. The level of abuse can sometimes be Youtube levels, or higher. Project creators often aren’t prepared for the deluge of customer support.

Conclusions

Some of the risks outlined above are design faults with Kickstarter itself, and some are just the result of overly ambitious project creators. Either way, raising huge amounts of money can come with significant challenges. A business needs time to find its feet, and by trying to get too big too fast, there are inevitable flameouts - which was seen in the excellent report into the Zano project.