The Optimal Crowdfunding Target: Why $118,000 Is The ‘Sweet Spot’ For Startup Success

Ask for too little money on a crowdfunding platform and investors might assume your venture lacks ambition. Ask for too much? The campaign could seem unrealistic or poorly planned.

So what’s the right number?

A study analyzing 1,189 successful equity crowdfunding campaigns has pinpointed the optimal fundraising target: approximately £94,000, or about $118,000 USD. This figure maximizes the likelihood that a campaign will substantially exceed its goal. The finding challenges common fundraising strategies, since the average campaign in the dataset sought around £580,000, more than six times the optimal amount.

Researchers from the University of East Anglia and University of Manchester examined campaigns from Seedrs, one of the United Kingdom’s largest equity crowdfunding platforms. Because Seedrs only displays successful campaigns publicly, the team employed truncated regression analysis—a specialized statistical technique designed for datasets where unsuccessful cases remain invisible. This approach revealed patterns that conventional analysis methods miss entirely.

Why Team Size Matters: The 19-Person Sweet Spot

Beyond the dollar amount, the research identified an optimal team size that catches most founders off guard: approximately 19 members. Campaigns with teams near this number consistently outperformed both smaller and larger groups.

The relationship follows a curve. As team size grows from one person, funding success climbs steadily, peaking at 19 members before declining again. The researchers point to prior work suggesting that small teams may struggle with limited competencies and capacity constraints. Larger teams, meanwhile, risk internal disputes among members that can signal instability to potential investors.

Solo entrepreneurs receive a surprising advantage, though. Single-founder campaigns performed better than expected. One possible explanation is that investors find the narrative of the lone visionary compelling, even when collaboration might seem more logical.

How Statistical Methods Reveal Hidden Patterns

Published in the Bulletin of Economic Research, what makes this study different from earlier crowdfunding research comes down to methodology. Most platforms, including Seedrs, removed unsuccessful campaigns from public view in recent years. Previous researchers using standard statistical methods on such datasets were essentially analyzing only successful outcomes while trying to understand the full picture.

The research team applied truncated regression, a technique specifically designed for datasets truncated at a particular value. When they compared results from this corrected method to traditional approaches, the differences were substantial. Standard methods consistently underestimated how much various factors actually matter.

Consider the fundraising target. Using conventional analysis suggested the ideal amount was approximately £20,600 (about $26,000 USD). The corrected method showed the sweet spot was more than four times higher. This isn’t a minor adjustment. It’s the difference between aiming for a modest seed round and pursuing genuine growth capital.

The statistical test confirmed strong evidence of bias in models that failed to account for truncation (p = 0.001), meaning there’s less than a 0.1% probability these differences occurred by chance.

Words That Boost Crowdfunding Success

The study also examined which words in campaign descriptions correlated with higher funding levels. Two terms stood out: words related to health (including “healthy”) and “organic.” Campaigns mentioning these terms raised considerably more money than their targets, likely reflecting investor interest in wellness trends and environmental sustainability.

Conversely, campaigns featuring “entertainment” or “information” in their pitches tended to raise less. The researchers note these words might serve as proxies for certain business sectors that investors find less appealing, even after controlling for industry categories.

The Equity Offering Paradox: Why More Is Better

One finding flips conventional entrepreneurship thinking on its head. Campaigns offering investors a larger percentage of equity actually raised more money, not less.

One school of thought suggests that entrepreneurs who retain more ownership signal confidence in their venture, potentially attracting investors. If this held true, we’d expect campaigns offering less equity to perform better. The data showed the opposite pattern.

The researchers offer two possible explanations for this unexpected result. Investors might interpret low equity offers as a signal that they’re not valued as important partners in the venture’s success. Alternatively, small equity percentages might suggest inflated pre-money valuations, raising concerns about whether investors are getting a fair deal. These are potential explanations that warrant further investigation rather than proven mechanisms.

Industry Differences in Crowdfunding Performance

The study tracked campaigns across 17 business sectors, from automotive and transport to food and beverage. Four sectors showed notably stronger fundraising performance. The automotive and transport sector exceeded expectations, as did energy, and finance and payments ventures.

Surprisingly, the data and analytics sector underperformed relative to others. This finding seems counterintuitive given the current enthusiasm for data-driven businesses, but may reflect market saturation or investor fatigue with similar pitches in this space.

What the Numbers Mean for Entrepreneurs

Getting the numbers right from the start could determine whether a campaign barely meets its goal or substantially exceeds it. The research suggests several actionable insights:

Set your target around £94,000 ($118,000 USD) if circumstances permit. Campaigns at this level consistently raised more relative to their goals compared to substantially higher or lower targets.

Build a team of approximately 19 members when possible. This size appears to signal both adequate capacity and manageable coordination to potential investors.

Consider your equity offer carefully. While conventional wisdom suggests being stingy with equity signals confidence, the data indicate investors respond better to more generous equity allocations.

Choose your pitch language strategically. Words related to health and organic products resonate with current investor priorities, while generic terms like “information” or “entertainment” may dilute your message.

These findings apply specifically to equity crowdfunding in the United Kingdom and may not translate directly to other countries or crowdfunding models such as rewards-based platforms. The optimal target amount will also vary based on the venture’s actual capital needs, industry requirements, and growth stage.

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Disclaimer: This article summarizes research findings for general informational purposes only. It does not constitute financial, legal, or professional advice. Entrepreneurs should consult qualified advisors before making fundraising decisions. Individual circumstances vary, and what worked for campaigns in this dataset may not apply to every situation.

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