Whilst relatively new to the whole crowdfunding scene, having only supported a limited number of projects in the last twelve months, i think this is a fantastic alternative to more traditional methods of raising capital. Instead of jumping through hoops for banks or venture capitalists, whose only "interest" is to make money of your idea, crowdfunding allows you to source that capital from anyone and everyone via the Internet, gaining free market research in the process. Got an idea for a project or product? create a crowdfunding campaign on a site like kickstarter or indiegogo, set a goal and a time limit and you could potentially have all the capital you need, provided enough people support your venture. simple, right?
yes and no. personally, i have only ever pledged on kickstarter, so i cannot speak for any of the other sites out there - however - the problems inherent with such a method are universal regardless of which crowdfunding site you think is the best. As far as i know, the two biggest sites, Kickstarter and Indiegogo are "hands off" when it comes to successful campaigns that fail to deliver the promised rewards. That's right, a project may reach its funding goal, you hand over your cash and never see your reward. Kickstarters ToS specifically states that it does not offer refunds and while it mentions that project creators are required to offer refunds if they are unable to fulfill rewards, they can in no way enforce this ruling. I imagine Indiegogo and others user agreements reflect similarly held views in this matter.
Don't get me wrong, i have been fortunate in that all my projects that have reached their funding goal have so far delivered on-time or have had project leaders who have been in constant communication with backers over any delays or problems. Whilst some projects encounter delays and some creators may be slow with updates, others - like the Mythic video game (which was canceled after being exposed as a scam) - seem to slip through the net. Whilst certain risks are involved in any new product or project, crowdfunder's must be aware that in no way is it an investment or pre-order of any kind. Also, any backers who consider themselves scammed after not receiving stated rewards within an allocated time frame, may be shocked to find that any chance on a charge back has expired.
So, what can a n00b crowdfunder do? do your research, be prepared to write off any pledges as a loss, make sure you are aware that just because a website says a creator is bound by a ToS - doesn't always mean that a creator will honor said agreement. The project video showing a "in game screenshots/game play" or "product prototype" can easily be faked, forged or stolen from other sources and it only takes a moment or two to google-fu a potential project to expose any potential dubious actions. Overall, be a cautious backer, scammers are going to scam, just as haters are going to hate. The "next big thing" may indeed be something you are keen to fund, just be aware that it is still effectively donations-with-rewards, not an investment, not a pre-order.
An interesting side note to the already potentially dangerous waters of crowdfunding is one specific to IndieGogo - Flexible funding. This is an option anyone can select, so that despite setting a goal and a timeline, if a project falls short of its funding goal - the creators still get your money. This may be OK for low-cost or help-me-out campaigns, but i shudder to think how dangerous this can be when dealing with start up based projects. With any campaign that delivers a physical reward, the goal set is often the minimum funds required for production runs to bring the rewards into existence. By allowing creators the option to set their project as flexible, this opens up a whole new ballpark of potential problems. Personally, i think this, along with the fact that indiegogo allows you to post almost anything as a campaign - is why i will be avoiding this particular crowdfunding site. That's just my opinion mind you but if i could advise anyone two simple words of advice, it would be this - Caveat emptor (let the buyer beware - or in this case - backer beware)
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