The Kickstarter Fulfillment Report
Kickstarter is a new model for bringing creative projects to life. Compared with other funding models — film studios, grant-makers, publishers, venture capitalists — there are fewer barriers to entry, and a greater opportunity to take risks on new ideas. Creators from diverse backgrounds, at every level of experience from across the creative universe, can find backing for their ideas.
It’s a powerful model — billions of dollars pledged, tens of thousands of successfully produced projects, Oscar and Grammy wins, trips to outer space, and beyond. But how many projects fall short of delivering what was promised? It’s a question many have speculated on, but we want to know for sure.
In March 2015, we invited a scholar from the Wharton School of the University of Pennsylvania to help answer this question. 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. We had no influence over its findings. Before research began, Wharton and Kickstarter agreed that we would co-publish the results, whatever was found.
Here’s what was found.
9% of Kickstarter projects fail to deliver rewards
The core question behind the professor’s research was whether a creator delivered rewards as promised — not whether the creative work was actually made. For example, if a creator successfully finished a film funded through Kickstarter but backers didn’t get a copy of their DVD, the project was counted as “failed.”
Here’s what Professor Mollick wrote in his analysis:
“Project backers should expect a failure rate of around 1-in-10 projects, and to receive a refund 13% of the time. 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.”
As Professor Mollick notes, the results of this study apply to Kickstarter — not crowdfunding more generally: “[I]t is important to realize that these results apply only to Kickstarter, and other crowdfunding methods (such as equity crowdfunding) and platforms that have different policies or approaches may have higher failure rates.”
Failure rates are consistent across categories
Failure rates for projects across all 15 creative categories hover within a narrow range around 9%. Projects from some categories tend to fail less often than others, but there are no major outliers.
Professor Mollick classified project failure into three definitions: Broad, Middle, and Narrow.
Broad means at least one backer considered the project a failure. Middle means at least half of backers agreed the project was a failure. Narrow means all backers agreed.
This graph shows the failure rates by category for all three definitions.
Projects that raise less than $1,000 fail the most often
When looking at projects by funding amount, the Wharton analysis found that smaller projects have the highest failure rate. Here are failure rates by the amount raised:
There are good failures and bad failures
Approximately 73% of backers who backed a failed project agreed or strongly agreed that they would back another Kickstarter project. However, just 19% of backers of failed projects would back another project by the same creator whose project failed.
Professor Mollick examined whether backers received refunds or detailed explanations from creators about why their projects failed. He found that in 15-20% of cases, backers reported that failure was handled well by creators. About 13% of backers of failed projects reported receiving a refund or other compensation from the creator. And 17% agreed or strongly agreed that they understood why the project failed.
Overall, backers of failed projects were obviously less satisfied than backers of projects that delivered rewards, but some projects failed and still satisfied their backers.
Kickstarter’s mission is to help bring creative projects to life. It’s a platform for ideas. Creative ideas. Big ideas. Weird ideas. But all just ideas that are looking to come to life.
Is a 9% failure rate reasonable for a community of people trying to bring creative projects to life? We think so, but we also understand that the risk of failure may deter some people from participating. We respect that. We want everyone to understand exactly how Kickstarter works — that it’s not a store, and that amid creativity and innovation there is risk and failure.
Thank you to the University of Pennsylvania, and the tens of thousands of creators and backers who took the time to answer these questions. And thanks to all the backers and creators who make Kickstarter what it is. We promise to always be a place where creative people of all stripes can aim high — and, yes, sometimes fail.