Crowdfunding is a not a business plan

Being successful at rattling your cups does not mean you have a viable company or product

Just saw someone get upset over the idea that bigger, profitable, successful companies in a certain industry having a “successful” crowdfunding campaign are somehow unfair if they don’t pay back into the “ecosystem” of said crowdfunding, by promoing other, less successful or visible campaigns. A notion that they should “support the community”.

First of all, the "ecosystem" is a for-profit company that enables popular IP entities to leverage their fanbases to cover production costs for goods they then turn around and sell to those fanbases. The for-profit company hosts a website and in return gets a cut of these transactions. There is no “community”. There is a very successful pick-and-shovel business that rakes in cash for very little effort. But make no mistake, this is a business, not a commune or even a co-op. In fact, the people who use it get very mad when the workers for said company even attempt that; stay down peons, don’t get in the way of our Great Ideas (profit).

The reality of it is crowdfunding is just preordering, something everyone involved in video games is very suspicious of, and dislikes for many very good reasons. With video games, it’s a method of getting people to pay for a game that might stink, but the company already has their money and can ignore all the complaints, and go on to make another crap game. In contrast, with crowdfunding you enable production of the good you wish to have. It’s a risk, much like preordering a video game that may turn out to be mediocre, fall short of what was promised, or have a production best described as a money fire attended by screeching goblins intent on achieving a Nobel Prize in the Field of Accomplishing Nothing.

There is, however, no business plan. There is no business. There can be a well-run crowdfunding campaign by competent people, that delivers what it promises, but once it is over, and the production has finished, and the goods are sold/delivered…

Another one is started.

This is not a method of actual business. This is a continual and ongoing dance to stay ahead of future expenses. If a company actually uses the crowdfunding revenue to build resources and cover expenses to result in ongoing production, fine, but the vast majority of crowdfunding campaigns are nothing more than raising revenue to cover extant costs. Legit companies do not make these kinds of risk. They raise capital, reach equilibrium between expenses and revenue, pay back the capital debt, and function, hopefully for long term. They do not keep going back to the crowdfunding well to cover their costs, even if it is successful each time.

Because eventually it won’t be.

Something will happen. It may be completely out of the control of the organization running the campaign, or they may spectacularly fuck up, via over promise, confuse online popularity with real world popularity, or just piss enough people off that the previous levels of revenue won’t exist in the future. And suddenly you’re a goblin shoveling dollar bills into a furnace.

The popularity of using crowdfunding to support individuals is a long successful notion, switching from hawking t-shirts to simply being compensated for your work was a much better method of revenue for creatives. Even some who mocked it early on make use of it now.

But what works at the individual scale is not a good business model unless you like running your business the same way EA sells video games to the screaming gammon/pogface thumbnail clickbait Youtube review watching crowd, except with more risk. That’s not even counting the fact of how the vast, VAST majority of crowdfunding campaigns go nowhere, or that recurring crowdfunding systems like Patreon provide median revenues around the level of 25% of US minimum wage.

Crowdfunding companies rely on big successes for publicity. It’s in their interests to make it look like you’re just one great idea and web page away from an easy life. It’s also to their benefit to make it look like they’re just part of the team, and the other crowdfunding campaigns like yours are part of one big happy family.

But it’s bullshit.