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What can we learn from successfully Crowdfunded startups that failed

Ossic, a startup company, which made 3D audio headphones for virtual reality applications, was recently shut down. The company had gotten off to a fabulous start having reportedly crowdfunded $3.2 million, but ultimately closed its operations. Ossic’s experience is one of many highly successful crowdfunding campaigns that were flooded with money from eager backers, but eventually crashed after their campaigns were done.

On one hand, I do admire them for at least being half successful. My own experience with crowdfunding on Kickstarter ended with my project — an app that connected dog owners to dog-related businesses in their respective areas — not getting funded. In researching some of these high profile crowdfunded flame-outs, I’ve come to learn the following three things about why even if campaigns are successful, they still might fail:

1. Not having outside funding and business experience may hamper the project

Crowdfunding can sometimes raise a lot of money for a startup. It’s also a gauge for angel or corporate investors to determine which projects are worth backing. Even if your project raises a lot of money initially from the public, it still may not get off the ground if it doesn’t also attract corporate investors.

2. Promising technology that doesn’t exist yet is likely to fail

It’s fun to speculate about the technology of the future and people who are adept with it can even build themselves a prototype that will do some amazing things. However, promising to bring that technology to the masses within a set timeframe is a whole other ordeal.

3. Not planning for the full cost of a project will jeopardize

As anyone who has scaled up a business can tell you, it’s not as simple as getting more orders and then making more stuff and then repeating that cycle. It’s a delicate balancing act that can stymie cash flow if it’s not done correctly. Even in the realm of crowdfunding, where companies are essentially handed millions of dollars if they can find enough willing backers, you may not be fully prepared for how much your project will ultimately cost.

When crowdfunding for a project, it’s crucial for you to realize you’re not in the “concept marketing” business, but in an actual business. Marketing is important, but you still must have substance and actual delivery of your product or service to succeed.