Planing for success in Crowdfunding. What succeeds, by how much and how often ?

posted Jul 1, 2012, 8:14 AM by David Khorram   [ updated Sep 7, 2012, 1:14 PM by Unknown user ]

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Analyzing Kickstarter: What succeeds, by how much and how often

When it comes to crowdfunding platforms, the biggest (or at least most well known) kid on the block is Kickstarter. So when the company announced last week it would release stats on the projects within its platform, the analyst in me got all excited. Like many, I’ve wanted more granular data on the breakdown of projects as well as which ones do better than others.

Using the baseline data Kickstarter provided, I did some analysis to better understand what projects succeed, the distribution of successful project categories by size, and at what point in the funding a project’s likelihood of success starts to go up significantly. Below are some of those results.

What categories rule today?

Below is a visual representation of how big each category is both in terms of successful projects and the funding raised. The size of the circle indicates relative size of aggregate funding for successful projects per category, while the vertical placement indicates how many successful projects each category has. While total project counts are even bigger than what’s shown here (there have been a total of 57,292 completed projects as of June 26), the chart does a good job of illustrating how each category is performing for projects that ultimately reach their funding target.

Total Successful Projects and Funding (US $ Millions) by Category

When you take a look at which projects rule, there is no doubt that music and film/video are the big dogs. This is not a surprise, given Kickstarter’s history and how the music and movie communities have been some of the earliest artist segments to embrace crowdfunding.

The interesting thing about looking at chart above, you start to understand, visually, how some categories tend to get bigger overall average funding. Design, for example, has only had 674 successful projects completed as of June 26, but the total funding raised for the category was $40 million, a much bigger aggregate revenue number (as indicated by the size of the circle) for other categories with a similar number of completed successful projects.

Distribution of projects by funding reached

Now, it should be noted that certain big projects – like the Pebble Watch project (which reached over $10 million) – tend to blow up the average project size, but even without the Pebble watch project, successful projects within design are more likely to be in a higher funding band than the average.

Percentage Distribution of Successful Projects by Funding Size 

Looking at the chart above, one can see that design, games and technology projects tend to have a higher share of their successful projects fall into the $20,000 and above, whereas some categories – like theater and art – see 90 percent of their projects fall under $10,000. Not surprising, when you think about it, as some types of creative work requires, quite simply, less capital.

The 30% rule, visualized

Yancey Strickler has written before about the 30% rule of Kickstarter, which in my conversation with other crowdfunding platforms seems to hold true, and often is the threshold when strangers outside of a fundraiser’s immediate network start to contribute to a campaign. With this in mind, I though it was very interesting that when I mapped out the the distribution of unsuccessful projects, the rule of 30% became very clear in the data.

Distribution of Unsuccessful Projects by Funding Threshold 

What happens, as can be seen by the above visualization, is that once projects hit that 20 percent funded threshold, they tend to hit a wall. And, by applying the rule of 30 percent, it becomes clear that once projects get over the hurdle of 20 percent funding and reach 30 percent or more of their funding target, the chance of reaching the funding goal grows exponentially. This is proven by the simple fact that there are a total of approximately 5 thousand projects that got past 20 percent of the funding target but didn’t succeed, but there are a total of over 25 thousand successful projects.

What this illustrates is that once you get around 30 percent funded, chances are much much higher (at Strickler points out) that you are going “jump the moat” to the promised land of successful projects.

If you’d like to see more analysis of Kickstarter’s data, the slides can be found here in SlideShare.