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Almost one in 10 of fully funded projects on crowdfunding site Kickstarter fail to deliver rewards to their backers, according to new research.
Supporting a crowdfunding campaign on websites such as Indiegogo or Kickstarter has always come with risks; the project might not reach its fundraising target and even successfully funded projects might fail for some other reason. But the research may serve as a reassurance to future backers.
The report, titled Delivery Rates on Kickstarter by Ethan Mollick from the University of Pennsylvania, surveyed 47,188 people who had supported 30,323 Kickstarter campaigns between 2009 and 2015 to find out how often projects failed to deliver rewards they had promised to backers, and also to find out what types of project were most likely to fail.
Projects were considered to be a failure if the backer never received an award or received something that was different from what had been promised. The report found the rate of failure, where at least half of backers considered the project to have failed was 8.6 percent. The rate dropped to 5.6 percent of projects where all of the backers were dissatisfied.
The report also found mid-sized projects (those which raised $10,000 to $50,000) were the least likely to fail. As projects get bigger, they became more likely to fail, but small projects which raised less than $1,000 were the most likely to fail.
Film, food and technology projects were the most likely to fail, according to the report, whereas music projects were the least likely. But the researchers failed to find any other common factors in project failure.
"Since failure can happen to anyone, creators need to consider, and plan for, the ways in which they will work with backers in the event a project fails, keeping lines of communication open and explaining how the money was spent," Mollick wrote in the report's conclusion.
Kickstarter, which helped gather data for the report, published the findings on its website.
"Is a 9 percent failure rate reasonable for a community of people trying to bring creative projects to life? We think so, but we also understand that the risk of failure may deter some people from participating," Kickstarter wrote in a statement.
"We respect that. We want everyone to understand exactly how Kickstarter works — that it's not a store, and that amid creativity and innovation there is risk and failure."
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