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
