Great point. In addition to exploiting the law of averages, Kickstarter diffuses risk. It's easy to see that 100,000 people risking $20 (a $2M round!) is a lot easier pill to swallow, and thus easier to forget, on an individual basis. Contrast this with a small group of VCs risking $250k - $500k each.

It may have an interesting side-effect though. The salient hypothesis would be that the level of scrutiny applied to a $20-$30 risk is far lower than what would be applied when investing hundreds of thousands of dollars. By consequence, I would expect that Kickstarter would naturally fund more flops than a traditional VC model.