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May 11, 2015 5:35 PM ET

Archived: What if your crowdfunding project gets over-funded?

iCrowdNewswire - May 11, 2015

Whenever you start some crowdfunding project, make sure you plan all possible scenarios, so that you don’t run into problems if your project is successful.


If you don’t raise enough money to meet your crowd goals, besides sheer disappointment, you are probably not going to experience much of a hassle. The platform will just cancel the commitments of those interested backers that pledged funds during the campaign (giving their money back) and you’re free to pursuit other endeavors on your own. But what if your project fund raising process is a resounding success? What if you raise many times the amount planned and you have to deliver goods to thousands of backers? Good right?

Well, not necessarily (especially if your crowdfunding campaign is the “rewards” type). If you are to deliver your products to funders, you have to plan way ahead. Make sure you have all the costs considered and have the necessary partnerships to put your product in industrial scale production. Make sure you have the proper distribution channels as well. It’s generally easier and cheaper to produce and distribute when you have more units to deliver, but you should have as much of the logistics figured out as possible.

This week, ZPM Espresso is hitting the news, even in the New York Times, because of a highly successful campaign to raise funds for their new coffee maker. Unfortunately though, not for the best of reasons. While they pledged only $20,000 to make it work, they actually raised nearly $370,000. More than 18 times the planned budget! And then success turned into a biter nightmare.

The problem was they simply could not deliver the coffee maker. The company allegedly ran into several problems with their product development and ended up burning most of the raised money trying to make the larger scale production work (they had to deliver 2,000 units of the coffee maker) without success. Now they have to negotiate with funders, who have been trying to sue them to get a refund from whatever little money they have left.

Whether or not this flop is a result of a bad product design or the lack of a good plan to have the production scalable, the fact is: when you launch your campaign, make sure you can meet your post-fundraise goals! Have all possible scenarios properly planned out and a sound project to back it up.

Via iCrowdNewswire
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