Dienstag, 19. März 2013

The Tipping Point To Success

Many projects that fall short of reaching their funding target do so because the project creator has just been too ambitious with their funding goal. But with a tipping point like that on iPledg, funding campaigns have a built in mechanism to allow a reality check to come into play, allowing the crowd to have even more say if a project should be successfully funded, albeit in a simpler format than the project creator had originally envisioned. And, since introducing the concept of the tipping point, more projects than ever before have transformed from dream to reality.

A tipping point is a simple concept. In traditional crowd funding, project creators are faced with an “all or nothing” scenario. Fall a dollar short of your funding target and (in theory) you get nothing. Then it’s back to the drawing board to see if you can either use the momentum of your first campaign and try again, or trim your project back a little to a lesser funding amount and have another go. A tipping point overcomes this problem by allowing the project creator to set up their campaign in the usual manner, but they can nominate at the outset what they could do if only a percentage of the target funding was raised.

Let’s take for example the case of an author who uses crowd funding to raise the money they need to publish their recently written masterpiece. The funding target may be $10,000 which will allow them to print their works in hardback. But at the outset the aspiring author nominates that it they achieve $3,000 (or 30% of their ultimate target), they can e-publish their book. OK, not their preferred option, but it still sees their book becoming a reality, and available to the world in soft-copy. Once the campaign hits the tipping point, it is considered “live”, and any funds that are raised will be paid to the project creator at the completion of the campaign. So if their target of $10,000 is not met, but they exceed their tipping point of $3,000, the money is collected, and the (lesser) project of publishing their e-book is now a reality.

A tipping point is not unlike the reserve price at an auction. Whilst the seller of a property wants to get as much as they can and dreams of the vast sums that their property can achieve, they set a reserve at a minimum level that allows them to move on and achieve their goals moving forward. Similarly, a tipping point is the position at which the project creator accepts the ability to move forward with their project at the base level. The ability is still there to achieve far greater amounts, and to achieve (and exceed) their ultimate funding goal, but a tipping point allows for them to be “in the game” and achieve at least their base level of funding.

Often the crowd recognises the worth of a campaign. They will determine through their collective voice if a campaign should be funded. They will determine that a widget made of gold may not be worth the funding target of $5,000, but one made of wood is a great idea, and well worth the $2,000 (or 40%) tipping point. A tipping point gives the crowd a greater voice, and a greater say as to whether a project is successful, and in what format the project will go ahead.

In addition, project creators have a higher chance of achieving their funding goal in one way or another. Not only will the crowd provide them the funding they need, they will provide the project creator invaluable feedback, purely based on which of the options are funded. Where else can a project creator receive the funding they require, plus the feedback of an engaged and supportive market? The project creator opens their project up to achieve funding for the more realistic or the stretch goal depending on the collective opinion of the crowd.

Not only will commercial projects benefit in a manner that cannot be offered elsewhere than on a site with tipping point functionality, charities have the special ability to set an exceptionally low tipping point, almost assuring them of all funds raised, given that they put in enough effort to get to their low “reserve” or tipping point.

iPledg’s tipping point allows for even greater democratisation of funding, giving the crowd the chance to say yes to lesser ambitious goals, or to see the whole funding target reached if the crowd see fit. And with the project creator now having two bites of the cherry in the one funding campaign, they have a far greater chance of having their campaign funded, along with being told by the crowd as to which option is going to be better perceived by the market.
First published on iPledg