Crowdfunding projects are ever-increasingly becoming more prominent in today’s age, spearheaded by the success of some projects such as the Oculus Rift, the Ouya, and the Pebble. However, it is quite evident that these (and many other) projects have something in common, that they stem from an idea with an avid community waiting for the idea’s realization. Is this absolutely necessary in order to launch a success crowdfunding campaign? Furthermore, does this mean that crowdfunding mean more than just to create a business, but to create awareness of an idea as a whole? In a Harvard Business Review blog post by Ethan Mollick, these questions are explored, being backed up with with research.
A person using the concept Oculus Rift virtual reality headset.
Mollick explains that the recent boom in companies partaking in the development of virtual reality products wouldn’t have happened without crowdfunding. He puts forward the idea of the aforementioned Oculus Rift pioneering the way for other products such as the Samsung gear or HTC Vive, both products created by established and refined multi-billion dollar companies. It was Oculus founder and online VR community enthusiast Palmer Luckey, who took initiative and gathered initial support from this niche community to start up this crowdfunding project. Mollick explains that through this and his surveys, it is evident that crowdfunding “serves to validate demand and build communities of support”. I find this idea extremely interesting, as crowdfunding initiatives are usually seen as a way to garner finances to support what is an idea in demand. However, Mollick explains how sometimes crowdfunding projects can be a way to find out if a certain product, service, or idea is in demand, enough so that individuals or small firms are willing to financially support what may only be a possibility. He goes on to say that only 9% of funded projects fail to carry on with its goal, and that this is because the proof that there is demand for that project’s goal is already present. I see this as companies being able to do a primary type of market research that we haven’t seen in the past.
So are these communities necessary in order to launch a successful crowdfunding campaign? Based on Mollick’s post, the answer is almost certainly yes. However, this doesn’t necessarily mean that the community has to be preexisting. This community can be established through the launch of something like a Kickstarter or Indiegogo campaign. Once people realize that there is an idea that they want to support, and that many others feel the same, the community of people wanting an idea to be realized is established. Crowdfunding definitely is about more than just raising funds, it can also be about creating awareness, and therefore, a sort of community.
Word Count: 449