For the most part, crowdfunding is a fantastic way for creatives to get their idea off the ground, be it a band wanting to crowdfund an album, a developer wanting a video game funded, or a tech startup wanting their product to become a reality, among other things. But sometimes, despite a project hitting their funding goals, they don’t always deliver.
We’ve all heard of crowdfunding campaigns failing, we’ve also heard about projects being funded but not necessarily delivering on their promise. But how common is this exactly? According to an independent study by popular crowdfunding site, Kickstarter, around 9 per cent of projects on Kickstarter don’t deliver their rewards.
Though that seems like a pretty small number compared to the 91 per cent of campaigns which do deliver, considering the crowdfunding market is becoming almost as big, if not bigger than venture capital funding, it’s pretty significant.
The study delved deep into the numbers and revealed that 8 per cent of money also goes towards these failed projects, and that the rates are pretty consistent among categories.
Apparently, according to the study, only 13 per cent of those failed projects end up offering a refund, with backers saying that only 15-20 per cent of creators have handled those failures gracefully.
According to Engadget, the study, despite being conducted by Kickstarter themselves, is pretty legit, having spoken to the professor behind the research.
Although backing projects on crowfunding sites always has some element of risk, for both the creator and the backer, crowdfunding sites are making effort to ensure backers’ monies are safe, though sites could do more to ensure creator accountability if things do go wrong.