The pitfalls of crowdfunding – And why it’s a bad idea…
I have personally backed several crowd funded projects and it most cases they have been terrible experiences and it’s now safe to say that I am a seasoned backer.
Delays, delays and well more delays….
Not a single project I have backed has been able to deliver on time, don’t underestimate how quickly time can get sucked straight into a blackhole! I have had projects deliver months, almost a year, never and just plain still in progress.. If that’s bad enough there’s a never ending list of excuses, each one delaying the ship date by several months the best being;
- New Year
- Chinese New Year
- We haven’t got FCC certification
- The whole USA ran out of money and we can’t get FCC documents
- We shoved everything on boat to the other side of the world to save costs…
- We just finished manufacturing and we found out it catches fire really really easily!
- We have started to send out pre-orders from our new website first.
- We ran out of money and we need some more!
Ask the backers about how they plan to manage delays to the project and if they already have the correct certifications in place.
This is the largest problem out of the whole system, no matter how outrageous the claims of the creators are, there is no way anyone can comment and say any different, backers are forced to soely rely on nothing more than potentially flawed studies, broken promises and a hell a lot of good will, all from the creator. You see, only the people who are backers can make any comments about the project, meaning that no industry expert is able to comment on the technology to provide peer or critical review, leaving all of the poor backers to find out the hard way..
The tech might look impressive now
Chances are you’re thinking of backing a project that has some new swanky super cool new thing it can do well before anything else in the market, now the more outrageous it sounds, do a double or triple take on the delivery date… What might be hot tech right now… won’t be in 6 – 12 months when you get your hands on the thing.. (if and when) by which time the market has caught up with loads of choices from well known brands that you don’t have to worry about support or how well made it will be. Think about how feasible the project is using today’s tech, if it seems way too advanced, I can guarantee it will never happen.
Can they demonstrate a working prototype?
If they can’t show off their tech in any form, then it probably doesn’t exist, a lot of projects will be advertised using heavily edited images and stock photos with their products super imposed, don’t believe for a moment that they have them working somewhere. This is actually the #1 reason why so many projects end up on Indiegogo instead of Kickstarter, they must have a working prototype and only need funding to bring to market, don’t believe anyone that says Indiegogo better aligns their strategies, i.e they couldn’t get onto KS because they need the funding to even get the project off the ground and guess who’s money they’re taking for a spin to see if it’s even possible? YOURS!
Don’t take a project as being well run just because the creators are quickly responding to backers while the funding period is running, of course they are, they want you to readily part with your cash.. Of course warning sirens play loud if they can’t even be bothered to answer anyone during the funding period, if they aren’t going get back to you just to take your money, think about how much support you’re going to get after, likely the updates will be a once out of the blue update.
But I can get my money back right?
No*, consider any money you place on a project to be a total gamble, only back what you can afford to loose, if you get the item in the end consider that to be a bonus…. Once the money has left the funding website, they have no mechanism to reverse the payment, they have no influence they just collect and pass it on, once this has happened you’re on your own. They will tell you to speak to the creator and tell you how they must legally deliver on all the promises, but it’s up to you to convince the creator or try taking them to court from the other side of the world…
This is where things get interesting, with Kickstarter your pledge isn’t final until the deadline and no money is taken, up until then you can cancel and not loose a thing. Indiegogo however is a whole different world of problems, your money is taken immediately and they have a strict no refund policy, if you think you’ve been duped, tough you’re not getting it back. Be extremely wary of any campaign that is marked “Flexible Funding” this means your money goes into a blackhole regardless of if the project meets its funding goal or even if the project even gets finished. Once you’ve pledged, your money is gone and you’re not getting it back.
*Your credit card (do not use a debit card!) company may be able to recover the money, I currently have four ongoing disputes with my card company and this is a very slow process lasting months with no guarantee for success. The worst part is, that you will be asked to provide an independent report to prove the faults with the item, now good luck with finding someone to critique that hyper perpetual motion machine you just bought..