1 out of every 11 funded Kickstarter projects end in failure

About 1 out of every 11 funded Kickstarter projects end in failure, according to a new study from a researcher at the Wharton School of the University of Pennsylvania.

In March, the crowdfunding website invited Professor Ethan Mollick to assess how many of the projects on its site failed to follow through on their promises. While Kickstarter collaborated with Mollick to gather data, all of the professor’s analysis was conducted independently, and he was not compensated for his work.

When asked about rewards, 5.2 percent of respondents said they never received them, while another 2 percent received a reward, but felt it was not what they had been promised. Mollick limited his definition of failure to those outcomes, although another 18.8 percent of survey takers said they had not received a reward yet but were still expecting to get it eventually.

Even though 7.2 percent of respondents said their projects failed, different backers could disagree on whether or not a specific project fulfilled its reward as promised. To adjust for this, Mollick reported different failure rates depending on how strict one wanted to interpret the idea of a failed campaign. If the threshold of failure was having a single unsatisfied backer among the respondents, then Mollick found 9.95 percent of campaigns would be considered failures. If all responding backers had to consider a project a failure, then the number dropped to 5.6 percent. And if at least half of backers had to consider a project a failure, then the rate is about 8.6 percent, still low enough for him to deem it a “relatively rare” occurrence.

He added that there are few commonalities behind projects that end in failure. Those raising under $1,000 tend to fail at a slightly higher rate, as do campaigns for food, technology, or film projects. Music was one genre where failure happened much less frequently.

“The fact that failures seem to be distributed in non-predictable ways should offer some comfort about the underlying ability of backers to weed out projects that might offer obvious signs of trouble),” Mollick said, adding, “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.”

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