Crowdfunding Metrics: The 30% Rule.. crowdfunding planning

posted Oct 24, 2013, 12:09 PM by Unknown user

It’s been said that if you achieve 30% of your crowdfunding goal, then you are well-situated to reach 100% by the end of your campaign. This rule is a bit confusing since 30% is less than half-way. Yet, despite this fact, it has become a recognized marker for success. Ultimately, there’s one reason for this: 30% of your crowdfunding goal should represent your own personal network’s value—that is, the funds raised in advance to get the ball rolling.

Once crossing the 30% milestone, statistics suggest that crowdfunders have nearly a 90% rate of success. A recent study by Seedrs analysed the different levels of pre-committed funds and its effect on the success of a campaign.

  • Projects starting with 0% showed a 15% chance of success
  • Projects beginning with 1%  experienced a 27% likelihood of success
  • Projects with 5% of their funds pre-committed had 50-50 odds
  • Projects with 10% pre-committed discovered that their odds increased to 70%
  • Projects having 20% experienced a 80% chance of success
  • Projects starting with 35% or more completed their goals in every instance

Although these results reflect equity-based crowdfunding in the UK, Kickstarter and Indiegogo have recognized the 30% rule back in North America as well. It seems that after reaching this magic number, project creators feel inspired to persist. The trick to filling the gap between 30% and 100%, however, rests in the hands of the secondary network.

The secondary network refers to the colloquial “friend of a friend.” While you may not know these individuals intimately, the introduction, referral, or recommendation through a friend is crucial to your overall success. But you cannot rely on your primary network to do all of the work for you. You need to map it out – literally. Look at your own confirmed supporters and try to tie some influential individuals to each. You may not get them all, but securing only a few is all you need to put things in motion.

With 30% under the belt, your project is validated—it instantly becomes credible. No one wants to be the first to pledge money to an unknown, uncertain project. By exhausting your personal network at the beginning, you ensure that those in the secondary network are already familiar with your cause, thus feeling less hesitant to throw a few bucks your way. The 30% rule is an interesting and merited strategy, so it’s worth considering. Before launching, try and pre-commit at least 30% (if not more), either through guaranteed pledges or your own personal money.

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