When Kickstarters Fail - A Feature Analysis

The Evolution of Crowdfunding

Crowdfunding has undergone a significant shift, evolving from a relatively obscure concept to a widely accepted method of financing. This rise in prominence is largely attributable to platforms like Kickstarter and similar services.

Several projects have garnered substantial funding – reaching millions of dollars in a matter of weeks – effectively accelerating the realization of innovative concepts.

Understanding Project Failure Rates

The widely publicized successes of crowdfunding campaigns can overshadow the reality that not all projects achieve their goals. A considerable number experience significant setbacks or outright failure.

However, determining the precise failure rate is challenging. Kickstarter intentionally minimizes the visibility of unsuccessful campaigns, requiring specific searches to locate them and employing measures to discourage search engine indexing of these projects.

Despite these obstacles, independent analyses consistently estimate that over 50% of crowdfunding projects ultimately fail to reach their funding targets.

Analyzing Outcomes and Responsibilities

What becomes of projects that don't secure the necessary funds? Who bears the responsibility for the failures experienced by at least half of all campaigns?

Furthermore, what lessons could be learned by those who attempted and failed, should they choose to launch another campaign? Conversely, what challenges do successful Kickstarter projects encounter after funding is secured?

To gain deeper insights, interviews were conducted with individuals representing a spectrum of experiences: one successful campaigner, and two whose projects did not achieve their funding goals. This approach aimed to uncover the personal narratives behind the statistics.

Exploring the Human Element

These conversations sought to illuminate the human stories underpinning the data, providing a more nuanced understanding of the crowdfunding landscape.

The goal was to understand not just what happens with crowdfunding, but why, and the experiences of those directly involved.

The Most Unfavorable Outcome

Ethan Mollick’s preliminary study, “The Dynamics Of Crowdfunding: Determinants of Success and Failure,” represents the initial comprehensive statistical investigation of a crowdfunding platform. This research provided numerous insights that informed the creation of this article. A particularly striking discovery concerned the funding levels of projects that ultimately did not succeed.

Funding Levels of Unsuccessful Campaigns

The average funding received by projects that failed to reach their goal was only 10.3%, and a mere one in ten managed to secure more than 30% of the required funds. Essentially, the majority of projects that don't succeed experience substantial shortfalls.

“The mean funding among unsuccessful projects is 10.3% and only one in ten of these projects raise more than 30% of their goal. In other words, most failed projects fail big.”

Credit: Tyler Carbone, President of SRRN Games

Tyler Carbone, the president of SRRN Games, hadn't anticipated being part of these statistics when his studio launched its new tower defense project, Always Outnumbered, on Kickstarter. However, the campaign struggled to even achieve 1% of its funding target.

There was a reasonable expectation of success. “We had previously released several well-received games, and we had experience developing a tower defense title. Furthermore, we collaborated with GO Gaming, specialists in the competitive gaming sector.” Capitalizing on this opportunity, SRRN dedicated significant effort to creating detailed design documentation and concept art – a decision that, in retrospect, may have been ill-advised.

The Always Outnumbered Kickstarter campaign was launched with extensive detail, but lacked a compelling gameplay video. According to Tyler, “The order of development should have been reversed, but a video would have resulted in a more impactful Kickstarter presentation.”

Initially, many of Tyler’s colleagues shared his optimistic outlook. The preparation of the materials demanded weeks of dedicated work, but the team completed it with a sense of hope. However, it quickly became apparent that the project was not progressing as planned.

A small number of pledges were received, but this meager influx was far from sufficient. The developers began to “seriously contemplate, if not fully expect,” that they would not reach their funding goal.

“The developers began to seriously consider, if not outright assume, that they’d never reach their goal.”

Despite this, SRRN Games actively pursued every available avenue for promotion. They contacted press outlets, engaged in forum discussions, utilized Facebook, and more. The team even developed a small promotional game, Always Outnumbered: Survival, which took just over a weekend to complete. This effort boosted morale and garnered positive feedback from fans, but funds remained elusive.

The project’s significant failure ultimately provided the development team with time to process the setback. “The campaign appeared likely to fail for an extended period before its ultimate conclusion,” Tyler explained. “This allowed us to gather our thoughts. By the time the Kickstarter officially ended, we were prepared to move forward, which helped mitigate the impact on team morale.”

The campaign concluded on June 7^th, 2012, marking the end of the game’s development. SRRN had hoped to produce a game using a rapid development cycle, facilitated by the unrestricted funding that crowdfunding offers. “Without crowdfunding, any potential iteration of a tower defense game would require a longer development timeline and incorporate substantial publisher input. It simply wouldn’t be the same project, and therefore, Always Outnumbered, as originally conceived, will likely never be realized.”

“Without crowd funding, any incarnation of tower defense that we might try will be developed on a longer timeline and take into account considerable publisher feedback. It just won’t be the same project.”

Looking back, Tyler believes the project may have been destined to fail. While the tower defense genre enjoys widespread popularity, this particular game offered a more experimental and challenging experience. It lacked the broad appeal of mainstream hits like Plants vs. Zombies and Desktop Tower Defense. He also emphasized that creating a successful campaign requires considerably more effort than many realize.

“It demands a substantial investment – approximately two to three months of dedicated preparation – so it’s crucial to carefully evaluate whether crowdfunding is the appropriate strategic approach.”

Despite this difficult experience, SRRN Games may revisit Kickstarter in the future, but only if they believe they have a game capable of capturing the public’s interest.

Navigating Challenges When Best Practices Fall Short

Cadenza Interactive approached their latest project, Retrovirus, with confidence, believing they were well-positioned for a successful funding campaign. Their previous significant release, Sol Survivor, had achieved considerable popularity within the indie game scene in 2009. This prior success appeared to be amplified by the game’s concept: a “six degrees of freedom” 3D shooter, drawing inspiration from the classic Descent series.

A Genre Ripe for Revival

The chosen genre had remained largely untouched for years, suggesting a potential demand for a fresh installment. This perceived gap in the market fueled the studio’s optimism as they launched their Kickstarter campaign.

The team recognized the importance of presentation and invested heavily in creating compelling promotional materials.

Unlike some campaigns that falter due to inadequate visuals, Retrovirus launched with a comprehensive, high-quality gameplay trailer. This trailer showcased diverse levels and game modes.

According to Dylan Barker, a developer on the game, significant effort was dedicated to fundraising support. “We dedicated approximately two weeks of development time directly to supporting the fundraising effort,” Barker stated. “There’s a substantial opportunity cost associated with mounting a robust Kickstarter campaign.”

We dedicated around two weeks of development time to fundraising. A well-executed Kickstarter carries a significant opportunity cost.

Initially, the campaign showed promise, attracting a consistent stream of contributions towards its $75,000 target. Cadenza Interactive proactively engaged with the press, securing positive media coverage.

Notably, Total Halibut, a prominent gaming personality with over 750,000 YouTube subscribers, dedicated nearly half an hour to featuring Retrovirus on his channel.

Furthermore, numerous gaming websites highlighted the project in Kickstarter roundups or dedicated news articles. To further incentivize potential backers, Cadenza even released a demo of the game’s alpha version, offering a tangible preview of the experience.

Despite these efforts, the campaign ultimately fell short of its goal.

While gamers expressed enthusiasm in online comments, financial support dwindled and ultimately proved insufficient. The project concluded with $29,720 raised, less than half of the required $75,000.

Analyzing the Setback

The reasons behind Retrovirus’s failure remain somewhat unclear. Dylan Barker acknowledged the possibility that the studio “perhaps wasn’t persuasive enough with the footage,” but conceded that other projects have achieved success with less polished presentations.

The impact on team morale was undeniable. Unlike Always Outnumbered, which faced different challenges, Retrovirus had initially shown signs of potential success, making the failure particularly disheartening.

The failure to secure funding felt like a judgment on the game itself.

Fortunately, the project’s advanced development stage meant that cancellation wasn’t inevitable. However, the shortfall necessitated adjustments.

The developers, relying on revenue from previous titles, were forced to reduce the single-player campaign by 45 minutes. While this content may be revisited post-release, the final version of the game will be a slightly scaled-back version of the original vision.

A positive development emerged from an unexpected source.

A backer who had contributed to the Kickstarter and discovered the game through the Descent community stepped forward to provide additional funding, enabling further refinement.

“This connection with someone who believed in us and appreciated the genre was incredibly encouraging,” Dylan explained. “His support, along with the broader community, gives us the confidence to continue.”

Ultimately, Retrovirus will be released, albeit with some content adjustments, and Cadenza Interactive will remain operational. The game is currently available for pre-order at $17.99, with Alpha access granted to those who pre-purchase, ahead of the full release later this year.

It could be argued that Retrovirus represents a crowdfunding success story, as the investor who aided the game’s completion might not have discovered it without the Kickstarter campaign. Nevertheless, Dylan Barker indicated a reluctance to return to crowdfunding in the near future.

“Kickstarter essentially functions as pre-sales, allowing dedicated fans to contribute beyond typical purchases and subsidize development,” he explained. “While it can be transformative for the top 0.1% of projects, traditional funding methods are generally less stressful and avoid the opportunity cost of prioritizing fundraising over development.”

Funding Represents Just the Initial Step

Kickstarter has redefined the criteria for achieving success. Currently, it isn't essential to manufacture and market a product to generate substantial revenue, potentially reaching millions of dollars. A thoughtfully designed project can transform an idea into a fully financed reality within a single month.

This constitutes the primary advantage of crowd-funding; however, it also presents a challenge, especially when financing a product rather than a service or artistic creation. Statistical research conducted by Ethan Mollick on Kickstarter revealed that only 24.9% of successfully funded projects promising a product were delivered on schedule.

The average delay experienced by projects that faced delays amounted to two and a half months.

Mollick’s Findings on Project Delays

Professor Mollick’s research also indicated that projects securing significantly more funding than requested – often termed “over-achievers” – were approximately 50% less likely to meet their original deadlines compared to projects funded close to their target. This outcome appears paradoxical; wouldn’t increased funding typically lead to greater success?

Credit: Georgia Hoyer, President of TrekPak

To investigate this phenomenon, I consulted with Georgia Hoyer. Alongside co-founder Greg Schroll, she initiated a Kickstarter campaign for TrekPak, an innovative and straightforward padded divider intended to assist travelers and backpackers in organizing and safeguarding their belongings. The project achieved funding at nearly 300% of its goal, but shipments only commenced recently, resulting in a delay of several months from the initial timeline.

The TrekPak initiative began when the web designer they engaged suggested utilizing Kickstarter as a promotional tool. They thoroughly researched the platform and determined it would be an effective method for gauging market interest.

“Kickstarter provides a relatively simple profile with a standard template. We were keen to determine the most effective way to present our concept,” Georgia explained. The team dedicated approximately one month to studying other projects, compiling materials, and developing a high-quality video demonstrating existing prototypes. Upon achieving satisfaction with the presentation, they launched the project and retired for the night.

An Overnight Success Story

They were surprised to discover their overnight success. “We initiated our Kickstarter campaign on a Sunday evening, and upon waking the following morning, our project was featured on the front page of Popular Photography Magazine’s website,” Georgia recounted. “I had two emails in my inbox, and upon checking nine hours later, I had received 65.”

The article in Popular Photography Magazine was quickly followed by coverage on Gizmodo, triggering a surge of attention from smaller websites and a substantial influx of funds. “We reached our $15,000 goal within three days, and once a project is launched, it cannot be capped. You can either maintain it or cancel it. The situation became somewhat overwhelming.”

Like numerous other projects on Kickstarter, TrekPak originated as a concept. When the team launched the funding campaign, they envisioned it as “a worthwhile project, something enjoyable.” The unexpected surge in support translated to increased financial resources, but also a greater volume of orders – necessitating expanded workspace, more rigorous product testing, and additional materials. “We initially anticipated producing 50 units. When we had to quadruple that number, it fundamentally altered our approach. Consequently, we informed our backers of the increased production volume and adjusted the delivery schedule.”

The Transition from Project to Business

This significant increase in demand led the team to recognize the need to evolve from a project-based endeavor to a fully-fledged business. However, this transition presented new challenges. “We have been focused on streamlining our operations, seeking guidance from advisors, and securing additional funding,” Georgia stated. “The initial project budget was based on the cost of manufacturing the product, not the expenses associated with establishing a business.”

Georgia’s observations shed light on the frequent delays experienced by projects promising a finished product. Attributing these delays solely to incompetence would be premature. Achieving substantial success on Kickstarter can profoundly impact the lives of project creators. It can also dramatically expand the scope of an idea beyond its original intentions. The absence of a funding cap compels creators to launch their projects and hope for success – but not excessive success.

This pattern is continuously repeating, and in some instances, unforeseen circumstances further impede delivery. Elevation Dock, a premium iPhone dock with a $75,000 funding goal, exemplifies this, ultimately receiving nearly $1.5 million in pledges, serves as an example. The creators, already facing difficulties in crafting the product and shipping it to over 12,500 backers, encountered a further setback when Apple announced a connector change for the new iPhone 5. Other prominent projects experiencing delays include Pebble, PrintrBot [Broken URL Removed] and Pen-Type A, all of which were significantly over-funded.

The prevalence of delays has prompted Kickstarter to revise its terms of service. On September 20, 2012, the platform announced that all creators must include a section addressing potential risks and challenges within their project pages. Furthermore, projects in the Hardware and Product Design categories are now prohibited from displaying product simulations and renderings. Creators are also restricted from offering reward tiers that promise more than a single product or “a reasonable assortment.”

Success Can Be a Burden

These changes appear logical; however, the title of the accompanying blog post (“Kickstarter is not a store”) overlooks the core issue. The primary concern isn’t contributor expectations, but rather the weight of success. Project creators are increasingly realizing that bringing a dream to fruition can be more daunting than facing failure, which may explain the observed trend towards requesting higher funding amounts. Kickstarter could address this by implementing a funding cap to maintain project manageability, but doing so would reduce the company’s revenue.

Conclusion

Conversations with Tyler, Dylan, and Georgia revealed that Kickstarter, despite its potential, isn't a guaranteed path to success. A well-prepared project demands significant effort, and many initiatives lack a realistic chance of funding without considerable work from their originators.

Interacting with these individuals also highlighted Kickstarter’s dual nature – a catalyst for both innovation and disappointment. While a highly successful campaign can dramatically alter a creator’s life, failure can be interpreted as a rejection of the project’s value.

This inherent dynamism fosters remarkable creativity and achievement, but it can also be emotionally taxing for those involved. The unpredictable nature of the platform requires resilience.

With the continued influx of capital into crowdfunding, both those who contribute and those who seek funding must remember the human element. The individuals we support, the platforms we utilize, and the incentives we expect will ultimately define the future of crowdfunding, and potentially, the broader economic landscape.

It is crucial to prioritize people over products in this evolving system.