CrowdFunding – “Buyer” Beware
I'm a huge fan of Crowdfunding and see it as one of the most exciting and interesting innovations that is taken place over the past five years or so. It has tremendous potential, and can bring products and services to reality in a way that was never possible before.
It's definitely a boon to small entrepreneurial creators without a proven track record that wouldn't stand a chance of attracting investment in other ways, and certainly wouldn't be able to get banks or traditional financial institutions to loan them money.
And, more important, Crowdfunding directly connects creators with customers that share their interests and passions. The people that are willing to back crowd funding projects on popular sites like Kickstarter and Indiegogo, are already pre sold on the product or service to the point that they are willing to back it knowing that the product doesn't exist yet and won't for some period of time.
The problem is that too many "customers" tend to confuse backing a crowd funding project with purchasing an item at a retail store. They are two totally different animals.
Here's a breakdown of the Crowdfunding projects that I backed over the past couple of years:
In total, I have backed 21 projects – 17 on Kickstarter and 4 on Indiegogo. Out of that total, 12 successfully reached their funding goal, eight failed to fund, and one is still in the planning process.
Looking at the 12 funded projects, four of them have promised delivery dates in the future, but eight of them have already passed the delivery dates that were originally promised.
How many actually delivered anything? Sadly, the answer is only three. Two of them delivered within two months of the promised delivery date, but in only one case did the product match what was originally promised. In the other case the product was delivered but had significant problems.
One project delivered 15 months after the original promise date, and I have to admit that the products performance was exactly as outlined in the original project. Unfortunately it is Apple iPhone based and the interface was made obsolete when Apple changed to the Lightning connector. The only reason that I'm able to use the product at all at this point is that I hung on to my old iPhone.
There were also three projects that funded but it never delivered. The project sponsors got their money, did their projects, but failed to deliver anything on their promises and were non responsive to follow-up requests.
All that being said, I'm still very positive about Crowdfunding and will continue to back projects that interest me. I understand the odds quite well and I'm not naïve. The operative word is "caveat emptor"....