The Kickstarter
Fulfillment Report

An independent analysis by the
University of Pennsylvania

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.

A note on the methodology
Expand

Here’s how the study was conducted:

  • Professor Mollick surveyed 456,751 randomly selected backers about whether they received the rewards they were promised by creators.

  • An average of 7.2 backers were surveyed per project, and a total of 47,188 backers (10.3%) responded.

  • Altogether, 65,326 successfully funded projects from April 2009 through May 2015 were sampled.

  • The set included all projects that raised more than $1,000, half of those that raised between $250 - $1,000, and a quarter that raised less than $250.

  • At least one response exists for 30,323 projects — 46.42% of all projects in the sample.

  • Projects were deemed failures if backers answered that they never expect to get the promised reward, or that they did receive a reward but it wasn’t what they were promised.

  • Response rates were acceptable across all categories and unlikely to bias the findings.

  • The data collection effort for this study was reviewed by the University of Pennsylvania Institutional Review Board (IRB) protocol number 822617.

You can read Professor Mollick’s study in full here. Below are his disclosures:

“Kickstarter collaborated on data gathering, but these results are independent and solely my own work. I was not paid by Kickstarter, and all analyses were conducted independently of Kickstarter. Kickstarter was offered the chance to comment on, but not change, this paper before it was made public. For the backer data, Kickstarter conducted the survey using questions jointly developed with me, but shared all relevant non- private data. For the survey of project creators, the survey was conducted by me alone, and responses were not shared with Kickstarter. All errors and omissions are mine.”

Finding #1

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.”

Professor Mollick found that:

  • 9% of Kickstarter projects failed to deliver rewards

  • 8% of dollars pledged went to failed projects

  • 7% of backers failed to receive their chosen reward

  • 65% of backers agreed or strongly agreed with the statement that “the reward was delivered on time”

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.”

Finding #2

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.

Fulfillment graph

This graph shows the failure rates by category for all three definitions.

Finding #3

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:

Fulfillment graph
Finding #4

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.

Fulfillment graph

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.

What is a creator supposed to do if their project can’t be completed?

If a creator realizes they’re unable to bring their project to life as promised, they have to be open about it with their backers. Here’s what they need to do:

  • Explain to backers what work’s been done, how funds were used, and what stopped them from finishing;

  • Demonstrate that they’ve used funds appropriately, and have made every reasonable effort to complete the project as promised;

  • If there’s money left over, offer to return any remaining funds to backers who have not received their reward, or explain how those funds will be used to complete the project in some alternate form.

There’s much more on this topic on our Trust & Safety page and in our Terms of Use.

Our view

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.

Kickstarter, PBC