the last two months, countries gradually went into lockdown in attempt to contain COVID-19 with China taking the lead, followed by other affected countries including the United States. This meant that businesses had to turn to telecommuting, essential work places having their employees staggered — and the latter includes production lines.
As most crowdfunding projects are entirely dependent on manufacturing output, major crowdfunding platforms saw at least a 30% decline in new project launches. Consequently, Kickstarter, the biggest crowdfunding platform to date, laid off 39% of their employees. We never saw this day coming.
But before we scurry into shutting off new project ideas, let’s discuss the effects.
The Global Coronavirus Recession
Aside from the social impacts of COVID-19, the Coronavirus recession is a severe global economic recession affecting almost everyone. Almost everyone but specific industries such as healthcare (especially MedTech) and technology.
At the beginning, most companies decided to take a step back and discuss business continuity plans with some choosing to delay event and product launches. But it did not take long before the same companies decided to find their way out to still stay relevant amidst the virus situation — from alternative marketing messagings to a switch in product launches; or simply taking their businesses online.
We have seen events and night markets turn to livestream and online delivery options. So if you have been debating to launch a project, the question is why should you stop?
The Crowdfunding Space
One of the most important things in crowdfunding is to know your target consumers or supporters and their purchase behaviour. Despite the reduction in new project launches, we’re seeing more project launches which are dedicated to keeping one safe from the virus. Basically, there is always an opportunity in every market — it is how you make use of it.
With the unemployment rate soaring and an impending recession, consumers have been proven to save up for rainy days and spend on essentials. Having said that, Amazon’s revenue reportedly increased by a whopping 29% compared to a year ago, proving that consumer spending is still prevalent amidst the virus. While people are still spending, they have a lowered risk appetite when it comes to non-essential items or investments — and this includes supporting crowdfunding projects.
Targeting Supporters with Lowered Risk Appetite
Taking a look at most crowdfunding platforms, there is a chance you could fund a project and never get the items due to production or shipping complications. With more customer service officers being laid off, this also meant that contested cases will not be attended to anytime soon. The market today cannot afford to proceed under such circumstances.
All it takes is governance and transparency to rebuild consumers’ and supporters’ faith in crowdfunding again. Concordia Ventures crowdfunders are required to provide a projected timeline and supporters’ funds will only be disbursed upon the completion of items in the pipeline. As much as this may sound harder for crowdfunders to get their hands on the full amount of funds at a go, in a world today filled with security breaches and misuse of funds and data, the demand for transparency has proven to be an ever-growing market.
Effective Crowdfunding: Transparency through Governance
Kickstarter has paved the way for then-undervalued crowdfunding market and we have seen how their success and the adoption led to more services being created, such as complementary referral programs. The blue print of crowdfunding has been set in stone and instead of changing the way things work, Concordia prefers to leverage on existing success factors of major crowdfunding platforms and push our own features based on our expertise.
Creating Trust between Crowdfunders and Supporters
Being in the blockchain industry has helped us gain insights on how the technology could be put to good use for crowdfunding. The idea of governance is to create trust in an almost trustless society today. We have seen how crowdfunders go missing after funds have been raised — both in traditional crowdfunding and the ICO space. Let’s not forget that the crowdfunding space today is gravely affected by both the bearish market and coronavirus recession. Morale is at its lowest and crowdfunders are putting their ideas on hold, despite supporters’ interest.
You lose some, you gain some.
Our governance system assures supporters (or investors) that your milestone has been completed before releasing their funds they’ve put in to support your project. This eliminates any form of doubt and uncertainty for projects’ development.
While it could be more difficult for crowdfunders to claim their funds, the trust empowered by our governance structure is more effective than trying your luck in an open market with no form of governance. The demand is simply not there anymore. It is time for governance. The same is with the growth of other technology applications, from social media platforms to marketing platforms — we are all now demanding for more transparency with the request of data-centric platforms, as well as more privacy options.
We are currently accepting project submissions at the point of writing. If you are one of these crowdfunders sitting on the fence; or have already launched or ended your campaigns but your goals have not been met, please drop us an email to indicate your interest. We will be happy to take it from there. If you are a supporter looking for more innovative projects to fund, register your interest on our website and be prepared for our launch in July. We already have projects onboard, so you can expect to explore our features on web as well as both iOS and Android, very soon.