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Crowdfunding has helped many startups turn creative ideas into innovative products. But the failure rate of crowdfunding campaigns is high. Kickstarter, for instance, says about 61% of completed campaigns on its platform have failed.

So, what can businesses do to improve their chances of success?

They can start by ignoring the conventional wisdom that says entrepreneurs shouldn’t launch crowdfunding campaigns until their products are well developed, and almost ready for production.

Instead, entrepreneurs should start a funding campaign with a product still in development—and involve backers in improving the original design. That’s the upshot of research conducted by me and Sidika Candogan, Bilal Gokpinar and Ersin Korpeoglu of University College London and Philipp Cornelius of Erasmus University Rotterdam.

The trick is getting the right balance between a product that starts out too complete and one that is too half-baked.

If the project is insufficiently developed at the start, the campaign is likely to fail. Only the most altruistic backers are going to be willing to pledge support without a reasonable understanding of the product and what it can do. On the other hand, a fully developed product can fail to attract funding if its features have limited appeal, because potential backers weren’t given an opportunity to weigh in on them.

My colleagues and I studied more than 21,000 rewards-based crowdfunding campaigns launched on Kickstarter between July 2013 and February 2016, capturing more than 6,000 successful campaigns and nearly 15,000 failed ones.

To understand why funders’ involvement is so crucial, it’s important to understand how these campaigns work. Kickstarter campaigns are primarily rewards-based, which means that if the campaign succeeds, backers receive the product as a reward for their investment, rather than an equity stake in the company. The creator sets a target amount to be raised by a certain date, and backers’ rewards depend on their pledge level. For example, a hypothetical campaign for a natural-fiber T-shirt might give backers one T-shirt for pledging $80 and two T-shirts for pledging $144. The project is funded only if the total pledge amount exceeds the target by the deadline; the creator then collects the funds, makes the product and delivers rewards to the backers. If the funding goal isn’t reached by the deadline, the creator gets nothing.

With that in mind, here’s what our research revealed about the optimal level of funder involvement.

• Make your case, but leave room for feedback.

To engage potential backers’ interest at the start of the campaign, it is best for the creator to describe what is unique about the product but not present it as a final design. For example, the creator of Nura headphones launched a successful campaign with a prototype—meaning there was still room for improvement—and highlighted the product’s ability to adapt to users’ unique hearing capabilities.

• Solicit feedback and offer early-bird incentives to encourage pledges.

Creators should make it clear that backers’ feedback is welcome and will be seriously considered. To encourage funding and the feedback that comes with it, businesses should offer incentives to those who pledge early. For example, the first 200 backers could receive a reward for contributing at a lower pledge level than those who pledge later.

• Use feedback to improve the product, and publicize the changes.

Throughout the campaign, the creator should respond to feedback from backers not only by modifying the product design but also by announcing the additional features. Again, using Nura as an example, the company’s headphones initially were designed with a wired USB connection. Some backers suggested that a wireless Bluetooth connection and a traditional analog connection also were important. The creator added these features and acknowledged the backers’ feedback on its campaign page. Nura’s campaign, which had a goal of $100,000, raised $1.8 million from 7,730 backers.

Mr. Tang is a distinguished professor and the Edward W. Carter Chair in Business Administration at the University of California, Los Angeles.

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