The Problem With Kickstarter
Kickstarter helped pioneer crowdfunding for creative projects. It has been enormously successful. The Kickstarter model is to set a fundraising goal. If the project meets its goal, the money is transferred to the creators to fund the development of the project. Kickstarter collects a 5 percent fee, the creator gets funding, and the backers get the satisfaction of sponsoring a new idea.
For creative projects this model works well. As long as the creator is genuine, you can expect that they’ll deliver something. An aspiring director is probably going to make a film. Sure, it might be bad. But that’s the only risk you take.
Hardware projects are different. Hardware is hard. Things blow up. You get sued for patent infringement. Going from prototype to mass production is an enormous challenge. You need the help of experienced industrial designers, engineers, and manufacturing experts to make everything work. Inventory costs and cashflow management become an issue. For the types of companies that go on Kickstarter, they often don’t have the expertise required to successfully deliver on their promises. Delays are inevitable.
Continue to Xconomy to read the full article.