BizBahrain Magazine Nov-Dec 2017

Expert Viewpoint | Investor Behaviour
Myth #3: Crowdfunding is for the young-
With crowdfunding being a relatively
new form of funding, many people
believe that only students and young
entrepreneurs embrace it. This is not
true; it actually appeals to people across
generations.
Seasoned businessmen and real
estate developers also have tasted
success on crowdfunding platforms.
For these veterans, it’s a great way to
validate a new product and test their
project or idea to see if it resonates with
investors or customers.
6 Biggest Myths of
Crowdfunding
by Jose Paul Martin
Over the last couple of editions, we
talked about crowdfunding. We
went in depth, and now it's time
to bust a few myths about crowdfunding
to conclude.
Often, people who create
crowdfunding campaigns have no
idea of how crowdfunding works;
such campaigns are likely to fail. For
entrepreneurs who continue to live in
the fantasy world that crowdfunding
is an easy way to raise a few thousand
dollars, this is magical thinking!
You need to be clear in your thoughts
that crowdfunding is just a more simple
and efficient to reach out to your potential
backers. Here’s an attempt to debunk
some of the common crowdfunding
myths that still exist today:
Myth #1: Your project will go viral
without much effort - Let’s get straight
to the point - going viral is a tough task.
The simplified version of crowdfunding
seems to suggest that you sign up on a
platform, launch your product and funds
start pouring in.
Yes, this was true to an extent when
crowdfunding was new, but with the
crowdfunding landscape becoming
dense, a lot of hard work goes into a
successful campaign.
The two most important factors for
success today are creating a credible
pitch (check out http://pitchprocess.
com if you want to get good at this) and
building momentum before launching
on the platform, so roll up your sleeves
and be ready to work hard.
Myth #2: Popular platforms are the best
launch pads - Popular platforms like
Kickstarter are flooded with thousands
of projects at any given point of time.
The odds of making it to the homepage
are really close to zero. It is easy to
get lost in some of these popular
platforms, so finding the right platform
to launch on is an important aspect of
crowdfunding.
Myth #4: Crowdfunding is the last
resort - On the contrary; for many
project owners, crowdfunding is the first
choice, especially when they have no
track record of having run a business.
In crowdfunding, success will depend
on your ability to market the product,
convince your audience of its value, and
motivate them to back your idea.
Myth # 5: Crowdfunding success is
based on the quality of your ideas -
Crowdfunding success is first based
on how well you market your product.
The quality of your product is only the
second most important thing. This is
why many campaigns like the Coolest
Cooler succeeded the second time,
though the product remained the same.
Myth # 6: Too many investors is trouble-
It’s common to think that too many
investors complicate the scenario, and
potential angel investors or venture
capitals may not approach you.
However, there are several ways to work
around this - investors can actually be
used as brand ambassadors.
What are your fears when it comes
to crowdfunding? Sometimes the best
way to tackle them is to head them on.
You’re an entrepreneur right, I’m sure
you have it in you!
Jose Paul Martin is a private
equity investor & advisor
currently focused on IT &
Healthcare sectors in the
Middle East, US & Asia. He
is also MD of Eqoris Group &
Author of The Pitch Process
Framework
http://pitchprocess.com
70 November-December 2017