Some time ago I discovered a website called Kickstarter. I browsed about then moved on. Well recently I went back and had a serious look at the projects that were looking for funding. Here is a rundown of my experience.What Is Crowdfunding
Crowdfunding is a method that has become popular for projects to receive funding. There are many site that now do this for example Indiegogo and Kickstarter both of which I have personally used. By creating projects on such sites the creator can potentially achieve funding on better terms than they would have done if they had used a bank or other methods of investment. For example the projects I personally backed are securing sales in return of the investment. By doing this they are receiving the revenue for sales prior to a projects completion thus freeing up the money to help complete the project.
With crowdfunding once the project has been completed and you have received the benefit you signed up for your association with the creator then ceases (unless of course you choose to follow other projects they run).
Another similar idea out there is crowd investment. Sites such as Seedrs allow you to pledge a sum to back a product/company itself and to essentially receive shares for your backing. With this model you essentially own a part of the company so you keep the association with the company. Apart from shares however you do not tend to get a product at the end of it however you may have a say in the development process and direction (although do not rely on it). The shares that you do obtain may not be easily sellable and may not receive dividends.
So far I have backed 3 projects on Kickstarter and 1 on Indiegogo. 3 of these have been fully funded and 1 of them is still going through the process of receiving funding.
- Metal Evolution: Extreme Metal ‘The Lost Episode’ (Still Funding)
- Teensy 3.0 – 32 bit ARM Cortex-M4, usable in Arduino and C (Funded)
- ZERO DAY A film about cybercrime and threats to the Internet (Funded)
- Scope Creep Hack-venture – Learn Linux and Hacking (Funded)
So far I have received 1 of the products that have been fully funded. This being the Teensy 3.0 board (looks absolutely amazing, a further post to come about this board). The other 2 projects that have been funded have not arrived yet but this is due to Zero Day still being filmed and Scope Creep still being developed. Both of these have target dates in the future as to when they will be complete. These appear to be on target so far.
The Teensy project was created on Kickstarter on September the 4th 2012. I personally became aware of this around the 10th or so and the project ended fully funded on the 16th. 1 of the advantages of Kickstarter is that if you use a credit card with the Amazon payment they use they do not actually take payment until the end date for the project in this case was the 16th.
After a couple of weeks of waiting for the boards to be completed we were asked to make payment for the boards and again a short wait for the boards to be shipped. I personally received my board today about a week after shipping which I was quite impressed by.
Throughout the whole time the developer has kept the backers completely up to date with the progress of the project from when updated software had been released to when boards arrived and shipped.
So far it has been a completely positive experience. The projects I have backed I have had a very strong interest in the subject matter. I look forward to playing with my Teensy and of course receiving my other backed products,
What Are The Risks Involved
Prior to committing your money to such projects there are a couple of things that you should consider first.
First things first never commit to more money than you can afford. It can be quite easy to go over the top and to commit too much money. If the money is not spare then you should keep it.
Ensure that you are fully aware on what the level of funding that you are committing too actually gets you. For example some projects do not give you the final product instead electing to offer a discount or in some cases purely a thank you email.
Ensure that you know what type of funding you are committing too. For example on Kickstarter projects tend to need to attain 100% or more of the funding for the money to be taken. On Indiegogo there are projects that receive the funding regardless of whether the target was met. In this situation will the project be able to continue if they do not receive the correct level of funding. If not why are they receiving the funds?
Back projects in the full knowledge that the project may fail and you may not receive your money back. Although rare some projects that get backed do not complete. If this happens it can become quite nasty. For example The Hanfree iPad Accessory resulted in the creator allegedly squandering the $35,000 that project managed to attract through backing. The creator has filed for bankruptcy and it is unlikely that anyone will receive their money back. Thankfully such cases are rare but they do occur. Provided you have only backed money you are prepared to lose this should have little impact on you except some slight annoyance.
Since writing this there has been news reports of another project that is failling after the funding was secured. The BBC (Kickstarter Page) has reported that the game Haunts: The Manse Macabre has run out of funds and the developers have walked away from the project. This project only completed funding on July 6th raising in excess of £28,000.
As long as you do your homework you should be quite safe.
Happy Crowd Funding.