The concept of crowd funding has been there for about a couple of years and it is gaining popularity. In this process, funds are raised for different projects, purposes or developments and it involves billions of dollars. So there is an importance of predictions for these types of campaigns. Big data and analytics play an important role in this area. With social media promotions, market dynamics and other activities, lots of data is generated, which are known to have an extremely important role in analytics. Data scientists are able to predict the success of any campaign by past analytics results.
In this article, we will talk about the influence of big data in crowd funding predictions.
What is crowd funding?
Actually, crowd funding helps individuals, groups or organisations to raise money for different needs. Crowd funding also helps in the development of a project or execution of an idea. Friends, relatives and interested people can donate money for the project or idea through a variety of means. Often, crowd funding is done through some internet-based services, but other methods are available too, for example benefit events and money orders.
Crowd funding involves three main people. The initiator, who proposes their thoughts to the people, the supporters of the idea or project, who actually helps the initiator in raising money by funding him, and the mediator, who brings the two people together and acts as their communication channel.
This intermediary can be an organisation or a platform. Often, these intermediaries operate through social media or other such online platforms. Using an online platform is very useful because they reach out to a wider variety of people and also have a greater reach.
What is the rule of success?
For successful crowd funding, one must learn something from every initiator, whether they are successful in their work or not. Often, failed projects teach a hard lesson to initiators. So, to learn the rules the easy way, this article will discuss the golden rules for success in crowd funding.
The project must be awesome: The project is the first thing that your future investors will see, so the project or idea must be reasonable enough for the people to get interested and involved in. Also, the project page must be created beautifully to attract the most number of visitors.
The project must be up-and-running: After the initiator’s project is online, he/she must always fill the page with the latest updates so that the investors know about the progress of the project. If the initiators do not regularly update their pages, then people will consider it abandoned and will stop funding it.
Talking about the idea: Often, initiators prefer not to talk freely about their project with their friends or family members, as they fear that their talks will be considered like useless ads and spam. However, this isn’t true at all. If their relatives and friends like them enough, they will definitely understand the sentiments and hard work behind the project and will consider them seriously.
Continue the project until no flaws remain: Crowd funding is actually a countdown to a deadline. Often, people aren’t very much interested in the project until it is developed enough. So, initiators must try to continue the project until it is finished. When it is about 50% complete, they will notice a sudden gush in the number of investors in their project. So they must try not to abandon their project until the very end.
What are the challenges?
One of the biggest challenges in the field of crowd funding is the success rate of the project. Initiators work very hard for their projects and ideas. They concentrate fully on their project so that it may gain momentum. However, hard work doesn’t always pay off.
If the investors do not like the project enough or are unable to understand the idea, they do not show much interest in the project. Thus, the project does not get a proper start and the realization of the initiator halts completely due to less funding. This can be a very heart-breaking situation, especially for a novice initiator, someone who is extremely new to this field.
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How big data can help?
Big data can be very useful in the field of crowd funding. Above all, it can help the initiators get answer to particular questions which are important for their projects. Big data can be used to get important insights on topics like what is the most popular type of project nowadays? What is the status of similar projects and have they been successful? If they were successful, then what method of crowd funding did they use? What was the size of their supporter base?
These questions are very important and have to be answered properly before launching any crowd funding campaign. Powerful predictive analytics can be used to eliminate the need of mere estimation and get the best insights. Thus, big data can revolutionize the world of crowd funding by providing insights on different fields, making every crowd funding campaign successful and useful to the public.
What is the future of crowd funding?
Big data is a perfect match for places where a large amount of transactions involving money is occurring, and crowd funding is such a place. Big data is currently influencing crowd funding and will continue to do so even more extensively in the future. In the future, big data will influence crowd funding in the following fields.
Better prediction of success
Big data can help in better success prediction of a campaign due to its accurate insights. Many platforms have been created which use these insights to quickly find out about the success rate of the given campaign. For example, some data scientists have managed to create a powerful model which can tell how successful the campaign will be within 4 hours. This model has an accuracy rate of about 76%. Thus, in the future, these types of model will be used to determine the success of the project and will help the initiator to make necessary changes in it to make it more successful.
Social media is playing a huge role in the crowd funding projects. The data from social media will be used for effective prediction of the preferences of the target audience.
The University of Illinois has revealed that social media is having a powerful impact on crowd funding. They found that the interactions on social networking sites strengthen the communication between the target audience and the initiator. The two most popular social media sites used for this purpose are Twitter and Facebook.
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Some success stories
Crowd funding has created many success stories, and many people have managed to chase their dreams through crowd funding. For example, the Ouya gaming console was a huge hit, collecting $8.5 million in just 29 days via Kickstarter, which uses big data for accurate predictions.
Another one is that of Pono Music, which gained $6 million in about 30 days. And, there are many more success stories which are totally big data and analytics driven.
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Crowd funding is breathing life into thousands of projects and ideas every year. However, by realizing the potential of big data in the field of crowd funding, many more benefits can be added. Big data will help the initiators to choose the right field and design a project which will solve problems in that field, while more and more investors can invest in their project. Thus, big data is becoming really important in the field of crowd funding.