The Problem With Crowdfunding Campaigns
While looking into whether crowdfunding made sense for Toffee, one commonly recurring theme I saw time and again was the lack of transparency from founders. I've decided to address this by looking into how and why this happens, and what I'll personally be doing to prevent it from happening during and after Toffee's campaign.
Let's start with a hypothetical scenario: A founder posts a crowdfunding campaign and is communicative whilst it's in progress. Then, usually as soon as the campaign has finalized and the funds are wired, there's radio silence... The founder misses promised check-ins for months at a time, the sporadic updates that do get posted provide little to no actual information, and eventually you find out that the company has shuttered without the common courtesy of receiving the necessary paperwork to write off your investment.
The sad reality is that this is not uncommon, especially so for startups who've done a crowdfunding campaign. Most investors have unfortunately already had this happen to them, and they've become a lot more reluctant to invest in startups on crowdfunding platforms as a result.
So why does it happen?
Though it's true that being a startup founder is a difficult task which requires tons of time in and of itself, I find that it can't really be used to justify the lack of updates and/or transparency to investors. In reality, founders will oftentimes use this as an excuse because they might be embarrassed about the progress of their startup, or rather, lack thereof. Other times, founders will feel that there's no need to 'waste' time with updating crowdfunding investors and instead spend their time doing something productive, like gaining followers on Twitter.
What will you do differently?
As mentioned above, I found out about this issue before launching Toffee's crowdfunding campaign. From the start of the campaign, I have:
1. Taken the time to respond to existing investors outside of Wefunder. Whether you reach out via LinkedIn, Twitter, or email: you're guaranteed to get a reply.
2. Posted frequent and transparent updates surrounding the project, roadmap, and progress. Case in point: this is one of those posts.
3. Haven't shied away from difficult questions asked by potential investors. In fact, I prefer those!
I'd like for Toffee to become a reference on how to run and maintain a successful crowdfunding campaign. Following the successful close of this campaign, here's what I pledge to do:
1. I will remain as accessible as I now am. You won't go without a reply when you send me a message.
2. Rather than provide sporadic quarterly updates, I will make it the norm to post monthly updates.
3. If/when the going gets tough and I'm in need of help, I will ask instead of keep quiet.
I'll be answering more frequently asked questions as the campaign progresses. If you have any questions in the meantime, don't hesitate to shoot me a message.
- Haven't invested in Toffee yet? Don't miss out, our campaign is still open for investment! Also, share our campaign with friends who might be interested!
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