In this article we look at Kick Starter’s most successful projects and analyze some (not all) of the guidelines proposed by Kickstarter. Hopefully, Entrepreneurs can apply the lessons learnt from Kickstarter and apply these within the Crowdfunding environment or beyond it.
To begin with, we should discuss the success rate of Kick Starter projects, and for that, we’ll just quote an article from Mashable that states that “About 41% of the Kickstarter projects fail”. Therefore, we’ve got a 59% of success rate, which is pretty amazing when compared to the success rate that Entrepreneurs have when investing time and applying to an Accelerator, for example, which usually has an acceptance rate of 0.5% to 1% approximately – you can read about this here – Furthermore, it’s amazing to see the amount of capital some of these projects have raised through Kickstarter, if we compare these amounts to those obtained through some Early Stage / Seed Capital investments, the difference is huge. Therefore, hopefully, we can detect and extend some of the methods being used in Kickstarter, so that Entrepreneurs can increase their success rate when looking to raise capital for their projects.
So, what do the successful 59% projects have in common? And what should you try to do to get similar results? In order to try to answer these questions, we’ll start by looking at information provided by Kickstarter: the Kickstarter Guidelines, Kick Starter School, and Style Guide.
Kick Starter Guidelines
We believe that some of the key reasons why Kickstarter works for Entrepreneurs are summarized within these guidelines, mainly because they mention them as good practices, and this is probably because they have analyzed and inferred these based on analytics on their successful projects:
Funding for projects only
For Kickstarter, a project follows the following checklist:
- It has a clear goal, like making an album, a book, or a work of art.
- A project will eventually be completed, and something will be produced by it.
- A project is not open-ended. Starting a business, for example, does not qualify as a project.”
This is important for those people “investing” or “backing” these projects, because they can expect to see and have a tangible “Return On Investment” in the Short-Term. Why is this important? Well, because people tend to pay a lot of money for stuff that they can impulsively have today. When there is a particular risk involved and uncertainty kicks in, people tend to be reluctant to spending their money on something.
Therefore, the three bullet points previously discussed just make sure that there’s a clear start date and end date and that there will be a clear product for the people that are putting money into this.
We could extend these three ideas and apply them for those wanting to start any company as a matter of fact, we could make an analogy for them as follows:
- Be very clear about what you are offering, leave no room for doubt.
- Provide visibility for investors, they want to know when you’ll start working on what you are promising, and they want to know that there will be a clear result that will either way work for them (they might get their money back because there weren’t enough “backers”, or they might actually get their desired and promised result eventually).
- Stick to what you’ve promised. You said you would deliver something, then that’s exactly what you should do.
Projects must fit Kickstarter’s categories
Kickstarter has two major types of project categories, those that belong to Design and Technology (D&T) and those that don’t.
Non-Design and Non-Technology projects include the following categories: Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, and Theater.
Those that do belong to D&T must follow additional guidelines. So, why is this so? Well, perhaps because Kickstarter seems to know something about how to seduce Design & Tech Potential Backers, and this is interesting because it provides some insights on these type of “investors”:
- They are the type of people that probably won’t invest, unless they are well informed.
- They want to know about the creator’s background and experience, probably because they want to make sure that what is being offered can actually be produced with their skills.
- They want a manufacturing plan in the case of hardware projects, probably because they want to see that there’s real know-how and hands on experience behind what’s being done and want to see that the people doing this are seriously designing what they are promising.
- Of course, they also want to see a prototype. Probably and most certainly because they want proof that this is actually possible.
We could summarize and keep these points in mind as follows: If you want to sell D&T projects to someone, get the information together, show how you are going to do it, show who’s going to do it and show that it’s actually possible. Then, and only then, it might be possible for you to get them to believe in your project, at least with higher chances than if you didn’t prepare this way.
Last but not least, they add additional tips so that projects being posted remain creative and interesting to the users:
- Don’t post open ended projects (those that would require maintenance). They might do this in order to provide a WYSIWYG (what you see is what you get) for those paying for the project and also, probably, in order to minimize potential claims from people getting something that eventually falls apart.
- D.I.Y. They welcome experiments and crazy ideas.
- Aesthetics. They ask for projects to be visually appealing to potential backers.
This section is divided into 8 sub-categories and we’ll just cover them briefly:
- Defining your project
- Creating Rewards
- Setting Your Goal
- Making Your Video
- Building Your Project
- Promoting Your Project
- Project Updates
- Reward Fulfillment
Kick Starter Style Guide
Here you get some information about how to use the Kickstarter logo designs in ways that they think it’s appropriate. It’s important to follow this, because Kickstarter is a way of showing others that your project is doing well, somewhere at least.
Let’s look at some KPI’s that are interesting about successful projects.
In order to do this, we’ll focus on 1 project that has been successful: Scanbox. The data found here is taken from the data shown on June 17th, 2012, bare in mind that if updated, the values could change however.
First and foremost, this is the data that we can get from the Kickstarter project:
- Backers: # of people that have paid a particular amount of money for one of the Reward options.
- Goal: The amount of money the project owners are asking for
- Pledged: The amount of money that the project has currently gathered (this amount can exceed the Goal amount).
- End Date: the date when the “Pledging” ends.
- Days to go: The number of days that the project still has available for people to pledge on it.
- Minimum Pledge: The minimum amount of money a backer can introduce into the project.
From the Rewards columns, we can get the following information:
- Range: Money required to pledge for a particular reward.
- Backers: The amount of backers in favor of a particular reward.
- Limited Reward: A reward may have a limit to the number of backing it gets.
- Amount: The total amount per Reward.
If we calculate the percentage distribution per range relative to the total amount of money, we can graph this distribution:
It’s clear that 88% of the money comes from the first three ranges, and 63% from the second one. Keep this in mind: Lot’s of people spending little is more than few people spending a lot (at least in Kickstarter).
One last important fact is that this project not only reached, but exceeded it’s Goal ($12500 vs. $128654) by 929%. This is really impressive, mainly because it got to sell much more than it had actually predicted it would. This is a great KPI if you are looking to understand which projects are the best at exceeding expectations. It’s important to look at these projects, because they obviously are above standard, there’s definitely something about what and how they are doing it that is really attractive and efficient at drawing customer attention. In this project in particular, it could be that their product is excellent, or it may well be that their video was really cool and made people interested in seeing if this was actually possible at all. Comments from backers are a good way of getting a sense of what made them tick.
It’s clear that in order to draw more general conclusions about what’s going on, it would be nice to have this information over time to see the variations. More over, it would also be nice to have this analyses done to all the Kickstarter projects so that we can detect trends and also get a more reliable and representative sample to infer more things about successful projects. But don’t worry… we are already doing this, and you’ll get this information soon enough🙂
Hope this information has served useful. This is the first of many articles around Kickstarter. If you want more information, please subscribe, and we’ll keep you posted.
Below you’ll find some surveys, feel free to answer some of these questions!
Co-Founder & CEO – Tieasy
Check out our previous article on an Accelerator: BBVA Open Talent 2012 & Red Innova