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5 min readKickstarter is one of the biggest crowdfunding sites on the internet.
Creators from backgrounds in the arts, design, fashion, film, and games can find supporters who are willing to finance their ideas in small amounts and generate exposure for their creative works. For most, the end goal is creating a tangible item, like an album, book, game, or work of art.
250,000 projects have been funded and over $7.5 billion pledged on Kickstarter since 2009, creating over 750,000 part-time jobs and 80,000 full-time jobs. However, not every project on Kickstarter can be successful.
According to Kickstarter themselves, around 9% of all projects fail to deliver on their promises. Most often, these are the projects that fail to raise over $1000. But even if the project raises enough funds, backers sometimes won't receive what was promised or the product will be vastly different from what they were led to believe.
Crowdfunding is inherently risky – it’s not like you’re shopping at a storefront and are guaranteed to receive the items you're paying for. When you back a project on Kickstarter, you’re taking the creator or organiser’s word that they’ll promptly develop, manufacture, and ship your product by a certain date (which will probably be pushed back more than once).
But just because there’s risk in the crowdfunding process, doesn't necessarily mean it's a scam.
It's a great way for smaller developers and creatives to get some cash flow and promote their products, but it can be dangerous when put in the wrong hands. The scams you come across on Kickstarter are not your typical Nigerian prince scams – they can sometimes be hard to spot.
The worst part is, that there’s no concrete way to tell if a project is a scam or that the company isn’t going to deliver. So it's up to you, the backer, to do your research and assess whether or not you’re comfortable taking the risk.
Keep a look out for these red flags when you're considering backing a Kickstarter project.
Look at the creative or organisation’s track record. Have they made a game, album, or book before? Do they have an online portfolio where you can see their previous works or products? Have they used Kickstarter before and failed to deliver? If you can’t trust they’ll deliver on their promises, it’s best not to invest.
Coming up with an idea is one thing, but making and shipping a tangible product is another ballgame. Manufacturing a product for as many as 10,000 customers is hard, but even more so if you can’t estimate how long the process might take. If you’re investing in a company that's new to the industry or the manufacturing process, expect delays at the very least.
Even for the most established of creatives, delays are a normal part of the process. Even if the company has been in the industry for several years and they’ve shipped products out before, it doesn't always guarantee the process will be smooth sailing. That being said, you’re more likely to trust a company with a few happy customers than none at all.
Yogsventures began development in 2012. Two Minecraft YouTubers set on the ambitious journey of creating an open-world adventure game with no prior experience in video game development. So what did they do? They partnered with WinterKewl, a company that also didn’t have any experience in game development. 13,000 backers and almost $560,000 later, the game was cancelled as WinterKewl games went bankrupt.
You know what they say – if it seems too good to be true, it probably is. If the math just doesn't add up and you’re not exactly sure how the ‘science’ of the creator’s product works, don’t back it.
The best example of this is Skarp promising a clean shave from lasers instead of blades. After four years of pushing back their estimated delivery date and failing to prove to their backers that their product actually works, Kickstarter’s integrity team suspended the campaign.
If a project has amassed millions of dollars over a few years and still hasn’t delivered, it could be a scam. When a creator raises more money than their original funding goal, Kickstarter suggests they put the extra money into increasing the product's quality, conducting more research or offering loyal backers additional rewards. In other cases, the creator will simply line their pockets with the extra profits.
The Coolest Cooler (part cooler, part speaker, part USB battery, part blender) was one of Kickstarter’s most-funded projects ever, raising $13 million from almost 63,000 backers. After their teaser video showcased a fully functioning prototype, it wasn't long before they reached and surpassed their funding goals.
The company then took what limited stock it did have, and instead of shipping the product to its backers, sold it for a reduced price on Amazon. To add fuel to the fire, they then asked backers for additional funding so it could offer express shipping to its Amazon buyers. After blaming tariffs and ‘manufacturing delays’, those who had received their cooler were unimpressed, both at the $450 (USD) price point and the fact it just didn’t live up to what was promised.
Seeing is believing. The existence of a prototype or a demo video helps others believe in the viability of the creator’s ideas as much as they do. It catches people’s attention and answers their questions on how exactly the product works.
If you’re manufacturing and shipping a complex product (like a cooler), Kickstarter’s rules state that you will need a prototype. There are a few rules on how the prototype should be presented, but if the organisation or creator fails to honestly and transparently present their product, they may have their project suspended. The product should be presented based on how it is now, instead of how it might be in the future.
Much like Skarp failed to show its backers it could produce a working prototype, if the idea you’re considering backing doesn't have a believable, working prototype, it might be a scam. We’d also recommend looking out for the following when assessing a project’s prototype:
Are you getting a bad vibe from a project? Want to know if it's a scam? Use the power of community to your advantage. Try scouring the internet for some news coverage. Any negative press could indicate the organisation has a reputation for scamming its backers. We’d also recommend reading the project’s comment section and heading on over to the Kickstarter subreddit to see if other backers are having doubts, or have reported the project as a scam.
There will always be risks with Kickstarter projects, and even more so if you think it might be a scam. Do your due diligence and research the creator and product before you decide to pledge. Look for links to a website portfolio in their social media, and be wary of new creators with no digital footprint.
Kickstarter itself fails to provide its backers with financial protection in case the project does go south or is revealed to be a scam, so invest at your own risk.
