Crowdfunding your startup? Don’t get political!
Whether you’re inclined to defend ‘MAGA Country’ or exclaim ‘Black Lives Matter,’ new research suggests your crowdfunding campaign should exclude your politics.
A group of academics recently researched nearly 20,00 Kickstarter campaigns. They found those who were overtly political raised less money than apolitical campaigns—although the distribution wasn’t even. Companies using conservative speech garnered 9% less money and those with liberal speech 17%. Relying on “expectancy violation theory,” the researchers found the political messages turned off potential backers because it created a negative expectancy and harmed credibility. According to the researchers, this theory, “assumes that behaviors are a rules-based system grounded in society’s psychological or cultural standards and that individuals develop normative expectations about the appropriate behaviors people should use during communication.” In settings where political speech violates expectations, the speakers come across as unprofessional.
Millennials mix crowdfunding and politics
The research runs counter to certain demographic and social realities. Post-COVID, more companies have engaged with crowdfunding for less conventional reasons as shutdowns upended people’s lives and the economy. Further, Millennials have become heavily involved in crowdfunding campaigns as they’ve entered middle-age and are more likely to let their political flags fly than previous generations. One study showed three of four Millennials had donated to a crowdfunding campaign during the pandemic. And many of these were political in nature ranging from held ‘Build the Wall’ to #metoo.
Of course, crowdfunded startups aren’t the only companies dealing with political landmines. Millennial Alissa Heinerscheid famously drove Bud Light off a revenue cliff with her promotion of transgender influencer Dylan Mulvaney. Other public companies receiving pressure from Wall Street’s ESG/DEI fetish have become targets including Harley Davidson, Tractor Supply, Coca-Cola, and Netflix.
Those companies have the ballast and built-in good will to survive political scandals. Startups in an already challenging funding environment do not. Thus, the message is clear for founders. Talking politics to your apolitical funding crowd comes with risks you may not be able to afford.
By Jossey PLLC
Schedule a free 30-minute consultation with my firm here: https://www.thecrowdfundinglawyers.com/cfl-scheduler/
