What are the challenges associated with crowdfunding?

Here are some key challenges associated with crowdfunding:

• Getting the required funding target within a short campaign duration is rather difficult without a robust pre-launch strategy. Important factors like building community momentum and day-one contribution levels play a big role.
• Creating an engaging multimedia campaign page and video that convinces potential contributors requires significant creative effort, production skills and often external support.
• For early-stage ventures with no proven product or traction, validating the business idea and capabilities of the founding team to strangers is a big hurdle before investors commit funds. An unknown brand needs to put in more work.
• Having a shareholder base of hundreds of retail investors instead of a few institutional investors greatly increases the investor relations efforts needed for communications, resolving concerns and addressing individual queries.
• For rewards-based models, the practical difficulties of procuring, packaging and distributing hundreds of customised rewards to supporters across geographies are often underestimated, leading to unforeseen costs.
• Understanding diverse securities regulations related to investing across multiple jurisdictions is challenging. There are also costs of implementing control frameworks to ensure compliance.