Crowdfunding - timing is critical

Timing is crucial in crowdfundingTiming is one of the most important factors to consider in crowdfunding in order to attract the largest number of investors possible.

Crowdfunding is still a relatively young form of business financing, at least in Europe, in the US it is much more widespread. The basic idea is impressively simple: funds for a project or start-up are raised from numerous small investors, without a bank or other institutional investor intervening. Numerous sub-variants of crowdfunding have developed, differing largely in what investors receive in return. In some cases, investors become shareholders in the company; in others, they are promised a fixed return on their investment. Sometimes the consideration is in kind, and in some cases donations are solicited. Crowdfunding is an interesting alternative to traditional financing for businesses for many reasons. The financing costs are usually lower and often projects can be financed, where the banks wave off.

A recent study on the chances of success 

Largely not all crowdfunding campaigns are successful. Typically, about 40 to 50 percent of campaigns reach the targeted investment amount, while the remaining attempts fail. A recent Swiss study reveals that things are rarely close. Those who fail, usually fail thoroughly! Only two percent of unsuccessful projects reach even half of the targeted total amount, more than 60 percent do not even manage the five percent hurdle. So there are a lot of projects that almost no investor is convinced of. However, we are not dealing with professional investors who all evaluate projects according to similar criteria and for this reason alone arrive at similar judgments. The investors are small private investors, and the average amount of individual investments in this study was only 128 francs. This suggests that the herd instinct, which is also well known in the „big financial markets“, plays a role. If enough investors jump on board, more will follow. This makes it all the more important to get off to a good start. 

The importance of a good start

The study shows that almost everything is decided in the first few days of a project. On average, successful projects collect ten percent of the total amount on the first day. Within the first ten days, these projects are already financed to about one third. Conversely, it is also true that those who are significantly below this in the first few days will hardly be able to gain any more investors in the further course. Only a few investors more or less on the first day can therefore decide on success. Since the initial phase is therefore of great importance, it is worth taking a closer look at when a project should be started. It would be annoying to fail only because the potential investors are not looking! 

Good timing decides

Weekends are bad days, the study clearly shows! Not only is a project start on the weekend detrimental, but so is a start date too close to the weekend. Ideal days are Monday and Tuesday. Successful projects launched on these days achieve an above-average 40 percent of the total in the first ten days. Significant changes in investor behavior can also be observed during the course of the day. On weekdays, many investments are made relatively early, while on Sundays, most investments are made during lunchtime. So if you start your project too late, you largely give away the particularly important first day!

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About the Author , Founder and CEO of Langmeier Software GmbH
Urs Langmeier Urs Langmeier is founder and CEO of Langmeier Software GmbH and thus responsible for the strategic further development of Langmeier software solutions.
 

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