Crowdfunding Assumptions

How we arrived at our projected crowdfunding revenue

We relied heavily on the following research papers:

• Purdue University’s 2015 paper entitled An Analysis of Incentive Structures in Collaborative Economy: An Application to Crowdfunding Platform;
• Salvador Briggman’s 2014 paper entitled Kickstarter Crowdfunding: How the Predictors of Success Vary by Project Category
• University of Pennsylvania’s 2013 paper entitled The Dynamics of Crowdfunding: Determinants of Success and Failure by By Ethan R. Mollick;
• Shopify’s Ultimate Guide to Crowdfunding.

Key Findings

• Projects that offer more reward level choices (5–14) are more likely to succeed;
• Projects that modify the reward structure during the funding period are more likely to succeed;
• Project creators that have larger social networks are able to attract backers to their projects that are less risk averse. One explanation for this could be that many of those backers may be friends of the creator who are less risk averse to donating in his or her project despite the uncertainty of the project quality.
• As reward levels that are further down the menu tend to be less popular, it is reasonable that the placement of a new incentive alternative should be above an already popular reward level rather than below.
• Rewards that include Product Samples such as, say, a game DVD, are most attractive for backers.
• Other reward types such as Decorative Items (e.g., posters and stickers) Unique or special reward types, and Backers’ Engagement in Product Creation (e.g., participating in designing the product), Contributor Acknowledgement (e.g., name shown on the contributor list) are also fairly valuable propositions for backers.
• Rewards that include tickets for a one-time event or simple expressions of gratitude, such as “Thank you” messages, are the least attractive among all reward types, presumably because they elicit very low engagement with the project.
• Adding a reward on top of a popular reward could make the popular one even more popular; however, the total number of backers actually decreases compared to the original reward structure.
• Adding a reward below the popular reward distracts attention from other rewards and make existing rewards less popular.
• Adding a reward above a reward in an early stage distracts attention from other reward options. Therefore, it actually slows down escalation of rewards becoming popular ones and not make the other reward options even more popular.
• Adding a reward above a reward in a later stage could help make the already popular reward even more popular.
• To date the most popular pledge amount is $25 and the average pledge is around $70. Small amounts are where it’s at: projects without a reward of $20 or less succeed 28% of the time, while projects with a reward of $20 or less succeed 45% of the time. $100 perks raise the most money and often make up nearly 30% of total funds raised. $1 rewards are an important way for people to show their general interest in and support for a project.
• Another informal study has found that the most popular perks range in value from $10 to $30. Nearly 60% of the total contributions to these campaigns came from backers selecting perks in the $10-$50 ranges. Projects without a reward of $20 or less succeeded 28% of the time. In contrast, those with rewards of $20 or less had a success rate of 45%.
• This article shows the percentage conversions of crowdfunding videos watched ranging from 16% to 7.2% to 2.9%. The percentages are obviously affected by the dollar amount as well as perceived value.

Summary

Based on the limited available research, we have chosen the following reward levels and predicted less than half the maximum and minimum conversion rates available (16% and 2.9%):

$1.00, 8%
$2.00, 4%
$5.00, 1.5%
$10.00, 0.35%
$25.00, 0.1%
$50.00, 0.04%
$100.00, 0.01%

Crowdfunding Projections

Project 2030 crowdfunding projections

Next

Find out what we’ll be aiming for in Phase 1: Global Educational Marketing Campaign, check out how you can help or see the Frequently Asked Questions.