Kickstarter has passed $1 billion in crowdfunded pledges, according to the company (which produced an entertaining series of visualizations to mark the event).
While it took Kickstarter five years (and 5.7 million people donating) to reach that milestone, more than half of the pledges reportedly came within the past 12 months. The United States contributed the most overall, with 3.7 million backers pledging a grand total of $663 million; the rest came (in descending order) from the United Kingdom, Canada, Australia, Germany, France, Japan, and Sweden.
Kickstarter has come a long way from its humble beginnings: on the Website’s first day of operation in April 2009, some 40 people pledged $1,084 to seven projects. Compare that to its record day, March 13, 2013, when 54,187 backers pledged $4,029,585.45 to 1,985 projects. This whole crowdfunding thing clearly has some momentum to it—take a look at CircleUp, Indiegogo, and other Websites following in Kickstarter’s footsteps.
But is Kickstarter in danger of peaking? Yes, a number of projects on the Website have achieved “superstar” status, racking up millions of dollars in donations. The noise and heat generated around those blockbusters, however, helps obscure the fact that many Kickstarter projects go underfunded. That’s in addition to the hundreds (perhaps thousands) of projects where the backers never received their promised rewards or an actual product.
Take the high-profile case of CLANG, which received $526,125 from 9,023 Kickstarter backers. The project’s creators (which included bestselling author Neal Stephenson) wanted to create a video game that portrays medieval dueling in its most realistic light, complete with a hardware controller that would have allowed players to swing a virtual sword in real time.
Despite making its financial goal, CLANG’s creators put the project on hold in late 2013. The reason? Uncertainty in the gaming industry made it hard for them to find additional investors: while crowd-sourcing came through with hundreds of thousands of dollars to help develop the hardware and software, much more funding was needed to create a mass-market product capable of meeting the creators’ exacting specifications.
“The overall climate in the industry has become risk-averse to a degree that is difficult to appreciate until you’ve seen it,” the team wrote in a posting on their Kickstarter page. “It is especially bemusing to CLANG team members who, by cheerfully foregoing other opportunities so that they could associate themselves with a startup in the swordfighting space, have already shown an attitude to career, financial, and reputational risk normally associated with the cast members of Jackass.”
CLANG is just a particularly high-profile example of how crowdfunding can fizzle out, despite best intentions and the involvement of some very smart people. Other projects will prosper, and the Crowd in the Cloud will continue as a funding method for quite some time to come; but as with “traditional” investing, there will continue to be winners and losers.