AI and crowdfunding: opportunities and challenges

Artificial intelligence (AI) is revolutionizing the way we work in an increasing number of areas, thanks to its ability to analyze large amounts of data, identify patterns, and make decisions quickly and accurately. The combination of AI and crowdfunding is an opportunity to also revolutionize the way we raise capital, opening up a new way for businesses to do crowdfunding campaigns more efficiently and with a higher chance of success.

In this article, we want to imagine the future of crowdfunding with artificial intelligence and analyze the opportunities and challenges that AI and crowdfunding can generate together.

AI and crowdfunding: opportunities

We begin with an overview of the areas of AI use in crowdfunding.

Data analysis: AI can analyze large amounts of data about projects and businesses seeking funding, identifying patterns and trends that can help predict the success of a campaign. But it also speeds up and facilitates data analysis for monitoring and optimizing the marketing and communication activities for a campaign.

Customization: AI can help tailor marketing strategies for crowdfunding campaigns to the needs and interests of potential investors, increasing the likelihood of success.

Automation: AI can automate many crowdfunding-related processes, such as reward management and communication with investors.

Risk assessment: AI can help assess the risk associated with projects and companies seeking financing, providing investors with more accurate and reliable information.

Through these and other opportunities, artificial intelligence can also help reduce the cost and time of running crowdfunding campaigns, making them more accessible and sustainable for businesses seeking to fund themselves. However, it is important to emphasize that AI cannot completely replace human operations in crowdfunding, and that it requires the acquisition of new skills to learn how to use it to really make a difference.

Crowdfunding platforms can also use AI tools to facilitate successful campaigns, for example by segmenting their users based on past investment preferences to target newsletters promoting certain campaigns that meet their preferences to each. Remember, however, that platforms cannot do targeted marketing activities for individual campaigns.

AI for data analysis

One of the most powerful functions of artificial intelligences is data analysis: these machines are able to analyze huge amounts of data in a very short time and provide summaries, categorizations, and maps that are very useful for making decisions and planning strategies.

In crowdfunding, for example, data analysis using AI comes in handy for:

• Know your audience, from demographics to behaviors to sentiment toward the brand
• Identify industry trends
• Analyze the market and competition
• Identify the content most valued by users and social media algorithms
• Monitor KPIs of marketing and engagement activities (advertising, social posts, emails, webinars, website traffic, etc.).

Not only that, even before that, an AI can be asked to use predictive analytics to analyze historical data from all crowdfunding campaigns at hand and predict the outcome of a campaign with certain characteristics, to have more elements with which to make informed decisions and set realistic goals. For example, you can identify the optimal time of year to launch a crowdfunding campaign by analyzing the performance of investments and other funding activities over different periods. Or analyze the performance of crowdfunding campaigns of a certain business model and identify its weaknesses and strengths. And so on.

Through data analysis, a crowdfunding campaign can be started off on the right foot and with the tools to correct course along the way by realizing early on if something is not going as it should.

Here are some examples of platforms and software that use artificial intelligence for data analysis:

• MonkeyLearn extracts data from textual content
• Zoho Analytics and Tableau analyze data and transform it to present it in personalized and dynamic visualizations, highlighting connections and trends
• BigML creates predictive models based on historical data
• Google Analytics has integrated advanced performance analysis of websites and advertising campaigns into its functions.
• Sprinklr monitors engagement and selected KPIs across multiple platforms simultaneously, unifying data to provide overall reports.

AI for process automation

Process automation in crowdfunding through artificial intelligence can optimize campaign management time and costs by streamlining repetitive tasks. Here are some examples of how AI can automate processes such as rewards management, campaign planning, and investor relations management:

Audience segmentation: Through data analysis, AI can automatically segment target audiences into subgroups of potential investors who share common characteristics, interests, and behaviors.

Rewards management: AI can help manage rewards offered to investors, for example, automatically generating customized reward options, managing deadlines and deliveries, and sending customized notifications to investors. This can help reduce the cost and time of reward management and improve investor satisfaction.

Communication campaign planning: AI can help plan marketing and communication activities, for example, by identifying the best marketing channels and the most effective publishing times for a certain target audience, organizing contact databases, generating a customized editorial plan for social media, scheduling personalized emails based on user actions, and analyzing data from similar crowdfunding projects.

Investor relations management: there is artificial intelligence software specifically designed to manage investor relations, for example by sending personalized notifications and updates on projects, responding to questions and comments via chatbots, and generating project reports.

Examples of tools that use AI to automate these processes include:

• Perkfection: a tool that manages rewards for Kickstarter and Indiegogo campaigns, optimizing conversions and reducing management costs. Perkfection uses AI to generate custom reward options, manage deadlines and deliverables, and send notifications to investors.
• InvestorHub: a tool that uses AI to manage investor relations during and after the crowdfunding campaign, for example by sending personalized notifications and updates on projects, generating reports, collecting feedback from investors, and providing the company with aggregated data on various aspects of the investor set and individuals.
• HubSpot: software for audience segmentation, personalized and automated email marketing, and campaign tracking.
• Blueshift: multichannel predictive marketing software with which to automatically organize user data and have it analyzed by an AI to build dynamic, personalized customer journeys developed across multiple communication channels.

Generating content for crowdfunding with AI

The use of generative AI in crowdfunding can come in handy when creating content with which to promote a crowdfunding campaign. Here are some examples of how generative artificial intelligence can be used to create narratives, graphic content, videos and social media posts in a personalized and efficient way:

Storytelling: generative artificial intelligence tools can help turn business plans, anecdotes, and personal stories into engaging narratives, for example by generating project presentation texts, descriptions of products or services offered, and compelling stories behind projects from raw material. This optimizes the work of creating an emotional connection with investors and increasing their confidence in the project.

Graphic content: There are now thousands of artificial intelligence software that can create graphical content such as images, infographics and videos. They can be useful for preparing content for social media and other communication channels, generating mock-ups or promotional images of products or services, creating infographics to illustrate data and statistics about a project or market, and producing crowdfunding campaign presentation videos, investor testimonial videos, and other high-quality, customized video content.

Social media posts: artificial intelligence can be used to speed up the preparation of templates for social media posts, as well as the persuasive or informative copywriting text that should accompany them. Once the software has been taught the tone and style to use, it can be provided with the information to be reworked for consistently consistent and recognizable posts.

Email texts: artificial intelligence can greatly speed up the writing of texts for email marketing, either by providing a basic template or by adapting the template to different audiences and communication goals.

AI can do all this by preliminarily analyzing demographic and behavioral data to create content that speaks directly to investors' wants and needs. Message personalization is a key factor in winning the trust of potential backers of a crowdfunding campaign.

Some examples of artificial intelligence software for content generation and optimization:

• ChatGPT, the best-known generative AI software
• Jasper AI, optimized to write persuasive text for marketing campaigns and social posts
• Copy.ai, specializing in writing captions, product descriptions, social posts
• Writesonic, copy generator for advertisements, social posts and SEO optimized descriptions
• Lumen5, text to video content converter
• Pictory, script to video converter
• Adobe Firefly, for creating and editing images and illustrations, including from text.

AI and crowdfunding: risks and challenges

AI and crowdfunding can form a winning combination together, as we have seen, but the use of artificial intelligence always brings challenges and risks alongside the opportunities. Challenges and risks that require careful consideration to ensure that the use of AI is effective and responsible.

Loss of human touch

The loss of the human touch in interactions with investors is a significant risk when using AI in crowdfunding. AI can automate many functions, such as handling inquiries, answering frequently asked questions, and personalizing marketing messages. However, if a balance is not struck between the use of AI and human intervention, interactions can become too automated and lose humanity.

Investors prefer to interact with human representatives when it comes to discussing project details and voicing concerns. This means that although AI can be used to automate some functions, it is important to maintain a human channel of communication open to ensure that investors feel heard and understood. When it comes to giving their money to someone else, in fact, people prefer to look at that someone's face, even virtually, and have a hard time trusting them if they feel they are only talking to robots. The key is to learn how to use artificial intelligence perfectly, so that it communicates exactly as we want it to, and to always do a "human" check on the content produced.

Complexity and Accessibility

Implementing AI in crowdfunding can be complex, especially for those unfamiliar with more or less advanced technologies. Most artificial intelligence tools provide basic use that is accessible to almost anyone, but their advanced functions-the most effective-require some technical knowledge to master. Without specialized support, training, or study, it can be difficult for a company that wants to optimize its crowdfunding campaign to use these tools.

This potential discrepancy in resources is in addition to the discrepancy in economic resources which already proves relevant in determining the chances of success in a crowdfunding campaign. Making a successful crowdfunding campaign, in fact, requires time, money and skills, but this does not mean that it is precluded for smaller or less technological companies: such entities must invest more time in optimizing resources and acquiring skills.

Transparency and accuracy

Artificial intelligence can make mistakes, provide false information, misrepresent reality: when working with this crowdfunding tool, it is crucial to always verify the products of AI before circulating them, to avoid misleading communications to investors and equivocal messages that may compromise the company's reputation or even cause legal problems. Finally, it is important to check the respect for privacy and in the use of data when entrusting them to artificial intelligence tools.