The Trend of Success on Kickstarter

Jan 19, 2018 | Product Marketing

Kickstarter is arguably the largest crowdfunding platform, and has been since its launch. Despite the rise in competitors, both direct and niche, Kickstarter has managed to be the dominant player in the industry. Because of this, Kickstarter is uniquely suited to be the signifier for the crowdfunding industry as a whole.

We analyzed Kickstarter campaign data from launch to the end of 2017 in order to analyze the trend of success on Kickstarter. We are going to primarily focus on the numbers from 2015 to the end of 2017, but the graph of the whole dataset will come into play. These numbers will help us measure the health of the crowdfunding platform and make a few educated guesses as to future trends.

First, a little background into our thinking: In 1962, Everett Rogers originated the theory of diffusion of innovations, which essentially distills down how new ideas and products propagate. Then, in the 1990s, Moore built upon this, adding “the chasm”, with Gladwell perfecting it with the “tipping point” in 2000. Together, they form what most people would consider the current baseline for entrepreneurial marketing. The graph below may look familiar.  

Diffusion of Innovation

This is Rogers’ bell curve that explains his theory of adoption. It can be applied to different fields ranging from education, to sociology, to even anthropology. Let’s add in Moore and Gladwell’s contributions and apply it to crowdfunding:

Diffusion of Innovation for Crowdfunding

In addition to setting the whole theory in the crowdfunding ecosystem (i.e. crowdfunding as a noun), I also applied my own theory that crowdfunding (as a verb) almost exclusively lives in the “pre-chasm” phases of the bell curve. Crowdfunding is extremely interesting because it essentially has its own diffusion curve within the larger, platform-specific curve. It might look a bit like the graph below, with the tail end being a bit more suspect to change or volatility, depending on what is done post-campaign.

Post-Campaign_Diffusion

However, we’re a bit more interested in crowdfunding as a platform. Let’s use some data to surmise its health, or more correctly, where it sits on Rogers’ curve. Below is a graph with data for the number of total campaigns run, as well as the number of successful campaigns.

Trend in Crowdfunding Volume

It’s pretty striking how well that lines up. Let’s see how the total amount of money raised on Kickstarter as a whole relates. It’s reasonable to expect that it will follow-up pretty closely…

Trend in Crowdfunding Success

…which it does. However, this gets more intriguing if we look at campaigns that raised over one million.

Trend in Crowdfunding Millions

The drop in 2017 is very concerning, though by using a moving average to track trends, we can see there is no cause for concern yet. Without having more data in this particular set, we cannot use it to draw any definitive conclusions. The numbers from this year have a high probability of good insight on where crowdfunding might be headed in the next few years.  

Qualitatively, even while looking at hard numbers and Rogers’ graph, it is quite clear that the exponential rise of campaigns launched went hand-in-hand with popularity and hype. It is logical that as crowdfunding grew in popularity, so to would those looking to capitalize. However, now that crowdfunding is a practice that most internet savvy people have heard of, people are more likely to see beyond the hype and only fund reasonable campaigns. Basically, as hype dies, reason eventually trumps it. The numbers do support thisbelow you can easily see that the success ratio has changed from 1-in-3 in 2015, to just under 1-in-2 in 2017. Lower total amounts raised, fewer total campaigns, but more success overall.

Total Campaigns Successful Campaigns Success Ratio Total

Raised

Amount Raised per

Successful Campaign

2015 53,334 18,040 1:3 $572,691,707 $31,746
2017 26,328 12,509 ~1:2 $334,944,243 $26,776

 

The real question, though, becomes whether crowdfunding does indeed fall along the standard Rogers’ curve or if it will steady out and be mostly sustained by smart backers who support fewer campaigns of higher quality.

Given the data available, we can reasonably approach two conclusions:

  1. Crowdfunding on Kickstarter is dying. This can be demonstrated by the graphs and industry theories. Kickstarter is running along the standard innovation curve and has now entered the phase where it will only be supported by the tail end of the late majority and/or late adopters. It will grow stagnant or die without something new to replace it. The large number of unsuccessful campaigns and/or the successful campaigns that failed to deliver haven’t done Kickstarter, or the whole of crowdfunding, any favors.
  2. Crowdfunding on Kickstarter might not necessarily be dying. The next couple of years are likely going to be extremely important in bucking the trend and revitalizing the platform. People might simply be getting more cautious about which campaigns to fund. This would explain the rapid decline in the number of campaigns with a slower decline in the number of campaigns funded. Kickstarter would do well to help creators elevate the level of their campaign, products, or both.

No matter the conclusion, Kickstarter or its competitors may hold the key to their own destinies. New features, new types of products, or new channels may change the future for crowdfunding. It is clear that changes do need to be made. Unfortunately, only time will tell how the platform, and its backers, respond.