Since the crowdfunding platform launched in 2009, more than one million backers have pledged $274 million to over 28,000 project ideas on Kickstarter.
But according to a study published by professor Ethan Mollick of the University of Pennsylvania’s Wharton School, 75% of technology projects on Kickstarter don’t finish on time.
What’s amazing about crowdfunding is that it’s booming despite heavily relying on the honour system (the pledgers) and on strangers to be competent at business (the project creators).
Kickstarter openly admits that it does not vet or track whether projects fulfill their promises. And if creator’s can’t follow through with their vision, it’s up to them to turn down the funding or offer refunds. Most competing crowdfunding platforms, including those in Canada, employ similar philosophies.
According to the Kickstarter statistics, technology and design-related projects make up 4.2% of successfully funded projects on the site. But they account for 21% of all money raised. That suggets tech campaigns are big ones, and when they succeed, they really succeed—but that success falls short when three-quarters of products aren’t delivered on time.
Most of the time, the reason for a project stall is the creators underestimated how difficult, expensive, and time consuming completing their project would actually be. They encounter a variety of roadblocks and, while their intentions are good, they leave hundreds or even thousands of financial backers disappointed and frustrated.
As a backer, be prepared for delivery delays. And as a creator, don’t over-promise.