Ah, Kickstarter: crowdfunding foundation for many a creative project or rad tech idea. And it’s been around so long, you’d think no one would question whether it actually worked or not. But Kickstarter itself has commissioned a study on the success of its own Kickstarted ventures – “The Kickstarter Fulfilment Report” – and has done a very low-key presentation of the results.
“In March 2015, we invited a scholar from the Wharton School of the University of Pennsylvania,” Kickstarter explains. “Professor Ethan Mollick is an expert in entrepreneurship and innovation who developed an independent study surveying nearly 500,000 backers about project outcomes and backer sentiment. This is the largest study to ever examine the Kickstarter community.”
According to Kickstarter, “the core question behind the professor’s research was whether a creator delivered rewards as promised — not whether the creative work was actually made.” And as they explain, “9% of Kickstarter projects failed to deliver rewards.” However, “65% of backers agreed or strongly agreed with the statement that ‘the reward was delivered on time’,” in the study, but that 9 percent is still the figure that Kickstarter chose to highlight.
Bear in mind that Kickstarter’s study specifically focuses on whether the funded projects get made. It doesn’t highlight whether they then go on to be a success in the marketplace, but that’s rather too much to expect from crowdfunding. And for authors or indie publishers planning to Kickstart new works, or readers looking to support them, it’s worth noting that “projects that raise less than $1,000 fail the most often.”
Why is Kickstarter underselling its own success. Hard to know. But I would emphasize from my days covering venture capital, that the VC world operates on the three-to-ten rule. That is, out of every ten startups or great new ideas, seven will fail, three will actually return the money invested in them, and only one will finally break big – enough to pay for all the other nine. Even the Silicon Valley greats can’t improve much on this failure rate. Meanwhile, Professor Mollick pretty much turns this on its head, stating that “project backers should expect a failure rate of around 1-in-10 projects, and to receive a refund 13% of the time.” Sounds like Kickstarter may know something that the VCs don’t after all.