Creative Commons image by: Andrew Magill

The Secret Language of Crowdfunding Success

on Wednesday, Jan. 15th

When it comes to crowdfunding campaigns what you say–and how you say it–can make all the difference.

Researchers at the Georgia Tech University have studied online fundraising campaigns and found that the language used in a campaign can “hold surprisingly predictive power about the success” or failure of an effort.

“Our research revealed that the phrases used in successful Kickstarter campaigns exhibited general persuasion principles,” said ((Professor Eric)) Gilbert, who runs the Comp. Social Lab at Georgia Tech. “For example, those campaigns that follow the concept of reciprocity – that is, offer a gift in return for a pledge – and the perceptions of social participation and authority, generated the greatest amount of funding.”

While offering donors a gift may improve a campaign’s success, the study found the language project creators used to express the reward made the difference. For example, the phrases “also receive two,” “has pledged” and “project will be” strongly foretell that a project will reach funding status, while phrases such as “dressed up,” “not been able” and “trusting” are attached to unfunded projects.

Let’s circle back around to the “perceptions of social participation and authority” part, shall we?

The heart of what the Georgia Tech team has found really comes down to this: everybody loves a winner. Or at least the appearance of a winner. While there’s not much grand insight in the idea that a “positive” vocabulary leads to greater success, a nice little blunt reminder that humans will shy away from defeatist language as a self-fulfilling prophecy is always useful to have around.

The research team has complied “a dictionary of more than 100 phrases with predictive powers of success or failure”.

But just what are the stakes, on a societal scale, for successful crowdfunding campaigns?

Sherwood Neiss & Jason Best of Crowdfund Capital Advisors conducted a survey of companies that used crowdfunding techniques–rewards, debt, and equity models–to see if they did better at marketing their products, making decisions, and attracting investors.

Here’s a sample of what they found, as presented in a piece the pair wrote for Venturebeat:

Experts regularly assert that crowdfunding increases exposure about a company and their product or service and, in doing so, leads to net new product sales.

To test this, we asked company executives about their quarter-to-quarter sales (net of crowdfunding proceeds) and this is what we found:

▪ Among all companies that concluded successful rewards, equity, or debt campaigns, quarterly revenues increased by an average of 24 percent post crowdfunding (not including amounts raised by crowdfunding).

Neiss and Best admit that their survey was small–just 87 companies–but they state that they are continuing to study the field in conjunction with the UC Berkeley Program on Innovation in Entrepreneurial and Social Finance they co-founded in 2012.

For the record: Crowdfund Capital Advisors has a vested interest in the success of crowdfunding–look at the name–and were part of the lobbying efforts to legalize debt and equity crowdfunding.

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