Kickstarter recently announced the release of The Kickstarter Fulfillment Report, an independent analysis done by the University of Pennsylvania to see just how many creators fail to deliver their rewards and what backers think about projects that don’t come through.
Almost 500,000 backers were surveyed and the study ended with a sample of over 65,000 campaigns (all successfully funded projects from April 2009 through May 2015). Professor Ethan Mollick’s research led him to the conclusion that 9% of Kickstarter campaigns don’t deliver the rewards they promised.
9% is a pretty low number considering how many stories we see in the media about large crowdfunding projects that fail. If you look deeper, you see that 9% of the more than 98,000 projects that have launched on the platform would mean that about 8,800 projects have failed to deliver. This number makes more sense, but what do these findings mean for backers and creators?
“Project backers should expect a failure rate of around 1-in-10 projects, and to receive a refund 13% of the time,” wrote Professor Mollick, “Since failure can happen to anyone, creators need to consider, and plan for, the ways in which they will work with backers in the event a project fails, keeping lines of communication open and explaining how the money was spent. Ultimately, there does not seem to be a systematic problem associated with failure (or fraud) on Kickstarter, and the vast majority of projects do seem to deliver.”
The study also found that failure rates are consistent across categories, and that many of the projects that didn’t deliver were smaller projects (that raised less than $1,000). The next two amounts that were most likely to fail were $500K+ and $1K – $10K.
Since projects between $0 and $10K are much smaller in scale, it makes sense that we mainly hear about higher earning projects that have failed. The media tends to thrive on negative stories sometimes – but there are a lot of positive stories around crowdfunding and Kickstarter too!
One of the most important things to keep in mind is that, in the end, backers should be satisfied with the way the project went down. Backers should keep in mind that when they contribute to crowdfunding projects they are putting their money into something that likely doesn’t exist yet. As many have said before me, Kickstarter is not a store.
It isn’t uncommon to see angry comments from backers who feel scammed or ripped off after a campaign doesn’t come through, yet 73% of backers who supported failed projects said they would back another Kickstarter campaign.
Most backers said they wouldn’t support another campaign by the same creator, but felt that failures were handled well by creators about 15-20% of the time. Overall, it seems like the majority of Kickstarter backers understand the risk involved and are willing to take that risk if it means discovering great things along the way.
It’s very important to set expectations going into a project and to make sure that backers understand the risks involved in the creative process. Once you’ve cleared this up and have your campaign together, then you’re ready to start with PR outreach.
