When we think of Kickstarter we think of successful campaigns. We think about entrepreneurs, startups, and non-profits that have gone the route of crowdfunding over traditional forms of raising funds and overcame the odds. We think about the stories of tremendous success in the media, all the blogs generating hype and the notion that anyone can crowdfund anything.
This is all true. But what do we really know about these successful campaigns? A successful campaign means you reached your goal. Which is great. But how much money are we really talking? So far this year Kickstarter has successfully funded 49,000 projects. Of those projects 31,627 raised between $1,000 – $9,999. That’s roughly 63% of projects raising under $10,000. What’s difficult is knowing what the average raise in that range is? As the range increases the numbers of successful campaigns decreases.
Here are the ranges:
On average 54% of Kickstarter campaigns fail and when they fail they fail big. 9 out of 10 projects don’t even reach their funding goal and 97% of failed projects don’t even get halfway there. When projects do succeed it’s only by a small margin, roughly 3% or less over their goal. For more information check out this great infographic from AppsBlogger on the Untold Story Behind Kickstarter Stats.
To be clear, I have nothing against Kickstarter. I love the idea that anyone can attempt to raise funds for their project. I love being able to discover new projects I may not have ever had the opportunity to learn about. Most importantly, as an entrepreneur, I love the idea of not having to raise funds through a VC, giving up equity in my business, and creating more debt. That being said, I think it is extremely important to look at the numbers and do your research before making the the decision to put your project on Kickstarter or any crowdfunding service.
If you’re going to use a crowdfunding service like Kickstarter, it’s important to figure out what’s worked for others in the past, but also to figure out what hasn’t worked for others in the past. If you hide failure, it’s hard to learn from others’ mistakes.
What I learned from Dan’s post is how Kickstarter has made some very strategic design decisions to keep failure from rearing it’s ugly head. It’s near impossible to find any mention of failed campaigns on the Kickstarter site. It’s also very difficult to find any stats. In writing this post I had to dig through hundreds of post to find the numbers I was looking – the other 54% of Kickstarter campaigns. Kickstarter has gone so far as to actually use meta data on failed campaign pages so they don’t show up in regular searches.
I’ll let you decide if this is devious or not but as a business model it makes perfect sense considering Kickstarter takes 5% of all successful campaigns. With over 40% of projects succeeding Kickstarter’s annual revenue for 2013 will more than likely add up to a very healthy $20 million or more. That’s a lot of small success 🙂
With Kickstarter officially opening its doors to Canada the race is on for every entrepreneur and startup to start raising funds for their project. At Brendan & Brendan, the increase in current and prospective clients seeking advice on Kickstarter campaigns over the past few months has doubled.
The most important advice we can give anyone thinking of throwing their hat in the crowdfunding ring is to remember that while high-profile campaigns are hitting incredible goals and raising millions of dollars, it’s easy to forget that Kickstarter is not a guaranteed path to fame and fortune. Ask yourself why you want to run this campaign? What you’re looking to get out of it? And how it will affect you and your business if you are not successful?