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Kickstarter projects have 'reasonable' 9 percent failure rate, study finds

If you've ever wondered how many Kickstarter projects fail to make good on their promises, the company finally has a number: 9 percent. Through an independent survey developed by "a scholar from the Wharton School of the University of Pennsylvania," Kickstarter says it's learned a lot about where campaigns go bad. Over 500,000 backers participated, and Kickstarter insists it "had no influence over its findings."

The main takeaways could be seen as positive or pretty bad, depending on what you expect from Kickstarter's model. "Project backers should expect a failure rate of around 1-in-10 projects, and to receive a refund 13 percent of the time," Professor Ethan Mollick wrote in his analysis. The survey found that 9 percent of Kickstarter projects failed to deliver rewards; 8 percent of overall dollars pledged were directed at failed projects; and 7 percent of backers never got their chosen reward.

Projects that raise under $1,000 fail most frequently

But on the whole, the numbers show that most campaigns actually do work out, with 65 percent of backers agreeing that their reward was delivered as promised on time. "Ultimately, there does not seem to be a systematic problem associated with failure (or fraud) on Kickstarter, and the vast majority of projects do seem to deliver," Mollick wrote. Recent high profile fumbles like the Coolest Cooler aren't a good look, and even board games have proved a challenge. But it's actually projects that raise under $1,000 which fail most often, hovering between 10 and 15 percent. And once a Kickstarter creator fails to follow through, there's really no regaining trust for future projects; just 19 percent of backers say they'd give creators a second chance.

For its part, Kickstarter finds these numbers tolerable. "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," the company said. "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." Kickstarter's successes have included Pebble, Tile, feature films, and the revival of Reading Rainbow, but make no mistake: pledging your money is a gamble, and when a project doesn't pan out, there's no guarantee you'll get it back. Failed projects provided a refund only 13 percent of the time, per the survey's results. At least the FTC's on your side.