By Hazel Butters

May 10th, 2016

Is the all or nothing crowdfunding approach a good thing, or seriously flawed?

Is the all or nothing crowdfunding approach a good thing, or seriously flawed?

In previous posts we’ve covered the concept of all or nothing crowdfunding and shared several Kickstarter stats.

For some people, the combination of these two things can lead to the question: Is the ‘all or nothing’ crowdfunding approach a good thing, or seriously flawed?

It’s no secret that I’m a fan of Kickstarter, and seeing that Kickstarter’s only funding mechanism is ‘all or nothing’, you’d be right in guessing that I have no beef with it. But I understand why some people may interpret it as ‘unfair’ – that all that work and effort and even if you’re short by 50 cents then you walk away with nothing. Zero. Zip.

It’s a tough call for many first-time crowdfunders. The promise, and safety-net, of ‘keep what you get’ funding can be tempting. While the ‘nothing’ of all or nothing can be a real driver – both for those running the campaign and for its backers.

The crowdfunding ‘flavor’ that you pick really depends on the project you are launching and the audiences you want to connect with. But for certain types of projects there is evidence that suggests that ‘all or nothing’ can lead to a higher success rate.

In 2014 York University in Toronto and Université Lille Nord de France collaborated and analyzed tens of thousands of Indiegogo crowdfunding campaigns seeking to raise between $5,000 and $20,000 to compare the success of all or nothing campaigns compared to keep what you get (both of which can be run on Indiegogo). The findings? That if you’re after funding, then ‘all or nothing’ is the way to go.

The researchers found that 34 percent of the ‘all or nothing’ campaigns reached their funding goals compared to 17 percent for the ‘keep what you get’ campaigns. A statistic which I thought was interesting was the number of backers attracted, with an average of 188 backers attracted to ‘all or nothing’ campaigns, while the ‘keep what you get’ campaigns attracted an average of 73 backers.

So the conclusion – from this (yes, single) study would be that ‘all or nothing’ campaigns are statistically more successful. In the following posts we’ll look at some of the potential reasons.

If you have a question about funding or crowdfunding that we may be able to help with, then sign up for a free advisory session to see if we can help you and share our experiences of crowdfunding campaigns.