News

Chart of the week: Learning from failures

February 22, 2017 • By TAB team

Using Crowdsurfer Pro, we’ve pulled down a couple of charts that give us an insight into unsuccessful crowd finance campaigns in 2016.

Using Crowdsurfer Pro, we’ve pulled down a couple of charts that give us an insight into unsuccessful crowd finance campaigns in 2016.

Charity falling short

The chart above shows the number of unsuccessful crowd finance campaigns we tracked in 2016 (excluding debt), broken down by funding type.

As we can see in our sample, charity is the worst performing type by far with 182,000 campaigns failing to reach their funding targets.

In comparison, rewards-based crowdfunding failed on about 91,000 occasions and equity crowdfunding was the best performing, with only 64,000 campaigns coming up short.

Equity pledges remaining high

As we can see in this second chart, things get interesting when we look at the average pledge size for unsuccessful crowd finance campaigns in 2016.

In 2016, unsuccessful equity crowd finance campaigns in our sample had an average pledge amount of $139,000.

In contrast, the average pledge amount for rewards campaigns was a mere $1,800 and for charity campaigns, even less, with $1,300, which is under 1% of the amount pledged for equity.

The bottom line?

So, whilst there are far more unsuccessful charity and rewards campaigns, there is far more money, on average, being pledged to unsuccessful equity campaigns.

These two conclusions are inextricably linked, with the higher pledge amount for equity crowd finance campaigns a possible reason for the lower failure rate.

Equity campaigns are usually launched by a business hoping to raise a large sum of money, operating a sophisticated, carefully planned campaign. They have used research and product and business development in an attempt to target serious investors. Hence, the pledge amounts are high and, given the expertise of raisers and investors, the number of unsuccessful campaigns is likely to be lower.

In contrast, whilst more popular, reward and charity campaigns are undertaken without such an intricate business plan and they target unsophisticated investors (otherwise know as the general public). Hence, the amount of money pledged is typically low and the failure rate is high.

For more insights into unsuccessful crowd finance campaigns (and, in happier news, insights into successful campaign too!) check out Crowdsurfer Pro.