If You Want to Get Funded on Kickstarter, Research Says to Avoid These Tactics
On the surface, the growth of crowdfunding has been phenomenal. Since its inception in 2009, projects listed on Kickstarter have raised $3.3 billion. Over 133,000 projects have become successfully funded. This has led many to claim that crowdfunding can democratize product innovation and access to capital by allowing small entrepreneurs, who lack access to resources, to find funding and markets.The World Bank is upbeat. It estimates the crowdfunding market will reach $90 billion annually by 2025. That’s roughly 1.8 times the size of the global venture capital industry today. But, similar to the age-old adage that most startups fail, most Kickstarter projects also fail to get fully funded. Because Kickstarter is “all or nothing,” projects need to meet their funding goal before pledges are unlocked to the project founder. But, only about
36 percent of projects make it. In many cases, those that don’t make it across the line do raise some interest, but not enough to become projects. This is not too different from what happens in the venture capital world. According to
research by CB Insights, just over 70 percent of startups stall at some point in the VC process and fail to exit or raise follow-on funding.
Kickstarter is often seen as a haven for innovators as it allows them to circumvent hard-nosed bankers, VCs and risk-averse traditional lenders. But, it looks like the crowd could be as skeptical as the average venture capital firm.
How the get the best outcome when pitching new ventures to crowdfunding backers
Using Kickstarter as a yardstick for the growth of online crowdfunding platforms gives us a sense of the dramatic growth experienced by such platforms. Since its inception in 2009, projects listed on Kickstarter have raised US$3.3 billion. Over 133,000 projects have become successfully funded.
Based on such data many have claimed that crowdfunding can democratise product innovation and access to capital by allowing small entrepreneurs, who lack access to resources, find funding and markets. Indeed, the World Bank is upbeat. It estimates that the crowdfunding market will reach US$90 billion annually by 2025. That is roughly 1.8 times the size of the global venture capital industry today.
But, similar to the age old finding that most start-ups fail, most Kickstarter projects also fail to get funded; only some 36 per cent of projects make it. This success rate is not very different from what happens in the venture capital world. Research from CB Insights shows that just under 30 per cent of start-ups make it through the entire VC process and raise adequate funds.
One reason Kickstarter projects could be falling short of their funding goals may be how the ventures are pitching their projects.
