Let’s be honest. After jumping through hoops to get your crowdfunding campaign live, your video is many times an afterthought. We recently analyzed over 200 campaigns to gauge how important videos are in crowdfunding.
A quick bit of background: Crowdfunding campaigns are open on average 93 days.
Issuers must meet their funding target to receive invested capital; otherwise, it goes back to the investors, and the campaign is considered closed and failed.We analyzed 243 closed campaigns. Of those, 51 percent (123) got funded. These campaigns are raising more capital than their failed counterparts — a lot more. On average, they raise 16.5 times more per campaign than a failed one, capture an impressive $277,000, and monumentally overshadow the average $16,000 a failed campaign raises. Given the SEC does not allow failed campaigns to keep their funds, it is imperative for issuers to ensure all their campaign efforts are fine tuned.
Our analysis focused on the campaign video as a highly visible, yet commonly misunderstood fundraising driver. We dissecting each video’s essential components through a weighted quality-rating system based on a 10-point scale. A perfect 10 video exceptionally demonstrated the following elements:
- Ability to engage the audience’s attention
- An idea that compels an investor to invest
- Strong emotional pull
- Solid product or service testimonials
- Meaningful and professional speaker engagement
- Video production quality, including the music
- Solution effectiveness to a market problem
- Investment opportunity and market potential
- Team introductions and confidence in their execution ability
- Funding needs and plans
Campaign videos scoring in the range of 0 to 3 points are considered poor, 4 to 6 points average, 7 to 8 points good, and 9 to 10 points excellent.
Videos rated poor typically do not engage the audience or compel an investor to invest because of missing key information about the product or because the product or service present more questions than answers. These videos also lack professional production quality.
Average videos have most the essential components listed in our weighted rating system but are somewhat lacking in professional production quality, audience engagement, business opportunity details, and funding needs.
Good videos are professionally done and provide solid audience engagement with a compelling business opportunity. They address most components in our weighted-rating system but leave out one or two key details — most commonly an explanation of a business’s funding needs and plans.
Excellent videos are professionally done, emotionally engaging, and provide a compelling business opportunity. They tick all the boxes in our weighted-rating system, leaving the investor informed, confident, and excited about the investment opportunity.
In addition to categorizing videos by quality, we also tagged campaigns by the type of audience they target: 1) “Explainers” are essentially commercials tailored for the consumer audience, leaving out key investor information (i.e. the investment opportunity, market potential, team introductions, experience, and funding needs), and 2) “Pitches” are videos with a message tailored for the investor, including everything an explainer does plus what they typically leave out.
For a video categorized as an explainer to score well, it needed to strongly engage the audience through its production quality, emotional pull, testimonials, and creative business solution, since it lacks more concrete business information.
Our findings led us to four recommendations:
1. Investing in quality reaps maximum returns.
The majority of campaigns funded (82 percent) have a video of average quality or better. Having at least an average quality video is becoming more of a prerequisite for an increased chance of meeting the funding target, but this doesn’t ensure above average funding. In fact, successful campaigns raised an average of $277,000. If you look at the chart below, you will see that those with an average quality video only raised $222,000 — 20 percent below average, while those with good quality…
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