Traditionally most new businesses fail within the first year of operation—around 4 in 10. Another 3 in 10 will get beyond the first year and then not make it past the 3rd year of operations. The lesson in short is that only a few make it to become successful businesses.
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In this context therefore one can better put in perspective the failure rate of projects that are launched under the crowd-funding platform called Kickstarter. According to new data, around 41% of all projects fail. The data which was compiled by AppsBlogger looked at 45,815 Kickjstarter projects. The overall funding pumped into these projects was estimated at $215 million, but the tale of success (or failure) seemed to rest squarely on the amount of money put into the project and the scale of expectations.
Projects that had a short time horizon were more successful and surprisingly projects with smaller amounts of funding did better than projects more heavily funded. AppsBlogger found that projects that asked for an average of $5,487 did better than projects which asked for sums upwards of $16,000.
Certain categories also did better than others and dance and theatre proved exceptionally successful coming in with 75 and 71% success rates respectively. Overall though, the 41% failure rate is somewhat better than the overall failure rate of traditional businesses. It is important to note however that the AppsBlogger data was not compiled with a long term time horizon. It is therefore not practical to compare the performance of Kickstarter projects with their ‘real-world’ counterparts.
With that said, do you think Kickstarter projects have tangible benefits to them? Share your thoughts with us below.
