Study Finds Most Kickstarters Aren't Scams

By Chris Mills on at

Ever since Kickstarter began funding light-up bathroom accessories, people have warned of the dangers of crowdfunding, and how it’s all basically an online arena for vapourware. According to an independent study of tens of thousands of Kickstarter projects, the numbers aren’t in fact all that bad.

The study was conducted by Ethan Mollick, a professor at the University of Pennsylvania’s Wharton School. With logistical help from Kickstarter, he surveyed nearly half a million Kickstarter customers, getting a response from 47,188 backers. The projects surveyed ran the full gamut of size and type: every project that raised more than $1,000 was included in the study, and a significant number of smaller projects as well.

The main finding was on the failure rate. Mollick (generously) defined a failure as one where backers never received the reward, or did not expect to ever receive a reward. Of the projects surveyed, nine per cent were deemed a failure, so by those stats you’ve got just under a one-in-ten chance of backing a dud.

Overall, 65 per cent of projects were delivered more or less on time, meaning that around 25 per cent do deliver, except later than planned (this tallies well with my anecdotal experience with projects). There’s little difference in failure rate between categories: tech projects are just as likely to fail as crafts or film.

Study Finds Most Kickstarters Aren't Scams

The only variable that has a significant effect on failure rate is the amount pledged: if a project collects under $1,000, it’s a few percentage points more likely to fail.

Although the survey is robust in terms of methodology (especially the large sample size) it does leave a few questions unanswered. There’s plenty of examples where a reward has technically been delivered, but it’s so far changed from the peppy pitch video as to be a different product altogether.

Overall, though, the numbers seem pretty promising for Kickstarter and its ilk: one in ten isn’t a bad failure rate, and overall its better if you avoid laser-powered razors altogether. [Kickstarter]

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