Crowdfunding originated in Europe and the United States, and it gained its popularity among financiers and investors because it promises transparency and convenience. In the four categories of crowdfunding, the pre-sale type has the largest scale. Pre-sale or reward-based crowdfunding has helped entrepreneurs to get seed money, and serves as a marketing channel. However, not all projects are fully funded and not all funded projects are successful.
Most crowdfunding platforms use an "All-or-Nothing" model, in which funding goals must be reached within a specified time, otherwise funds will be returned to backers. According to data from CrowdfundInsider, Kickstarter, which is the world's largest crowdfunding site by funding volume, has had a failure rate as high as 60% of listed crowdfunding projects. China-based crowdfunding sites have also had high project failure rates. In contrast, project success on crowdfunding sites which adopt the "Keep-It-All" model, in which even funding below the targeted amount can be kept by fundraisers, can only be measured by future development. Yet, survey results also show that many projects' post-funding development under the "Keep-It-All" model is not very satisfactory overall. This paper examines the main reasons leading to the failure of crowdfunding projects, such as the incorrect positioning of project value propositions, poor marketing, lack of the core competencies, ignorance of the interaction in financing and follow-up processes, and poor supervision of capital and project operations. Finally, this paper puts forward some measures and methods to limit the failures of crowdfunding projects.
