Oh, So Here’s Why Kickstarter Lets Projects Get Overfunded

It brings in so many freakin' new users.

We mourned the loss of a few good jellyfish earlier this month when an overfunded Kickstarter-backed jellyfish tank proved fatal. At the time, we noted that with many Kickstarter projects that go wrong, the effect is amplified if the project has been overfunded. It’s like when a startup has too many investors in a round. Falling behind on sandal shipments? It’s going to cause you way more heartache if  you have thousands of anxious backers in the wings wondering what you’ve done with their money.

Why does Kickstarter let projects get overfunded, we wonder? Why not just get to the goal and then stop?

Of course, Kickstarter makes a five percent cut on every funding total–so there’s an incentive there. But we suspect it’s really about advertising.

Successful projects are the best tool for Kickstarter evangelism–and the more successful, the better. The startup published some statistics yesterday around its two recent million-dollar projects, which closed on February 21 and March 13. Between Order of the Stick, a webcomic, and Double Fine Adventure, a videogame, Kickstarter got 71,343 new users–people who had never backed a project before. And of those new backers, 22 percent have already backed another project. An overfunder in one campaign may be another project’s first backer.

Don’t take us wrong, Kickstarter is obviously killing it. Despite the attention around blockbusters, the fundamentals of the Kickstarter economy are strong, the startup says. Right now, there are 4,500 projects raising funding. “Each project is not only promoting itself, but the Kickstarter ecosystem as a whole,” the company points out.

Kickstarter wrote the blog post, “Blockbuster Effects,” to drive home the message that big, overfunded projects don’t hurt the little guys. “Projects aren’t fighting over a finite pool of Kickstarter dollars or backers. One project’s backer isn’t another project’s loss,” Kickstarter says.

But when a Kickstarter project goes bad–a condition that we’ve observed is exacerbated when a campaign is wildly overfunded–you could argue that’s bad for the ecosystem. And as the site scales, the prospects of getting a project overfunded also could potentially prove attractive for scammers. Hey, who wants to make a fake indie documentary? We can raise $2 million and skip town with no consequences. Tips at betabeat.

Oh, So Here’s Why Kickstarter Lets Projects Get Overfunded