Note: In this post, I use ‘Kickstarter’ as the generic term for crowd-funding websites, the same way that all vacuum cleaners in the UK are referred to as ‘hoovers’.
Crowd funding platforms have been around for a few years now – allowing someone to propose a project, and for the general public to ‘back’ these projects with up-front cash in exchange (typically) for reduced price products if and when they are backed and developed.
I don’t have a problem with the majority of projects, and have backed several myself, including the Mio Alpha
, Misfit Shine
, Kensei Fantasy Creatures
and the Scanadu Scout
. There are however plenty of Kickstarter products I have issues with, or more accurately, i have issues with how they are using these crowd funding platforms.
For Market Research
I see plenty of products on Kickstarter which, frankly, seem to be solutions desperately looking for a problem. This one
is for some lights that you fit to your helmet and depending on which way you tilt your head, they flash as turn-indicators. With 10 days left, it had raised 0.4% of its goal. So rather than risk spending your own time doing market research, you can put it on Kickstarter. If it gets the funding you probably had a good idea and you are on your way, if it sinks like a stone then your idea was probably rubbish, but you saved yourself money with free market research and you can get on the next project.
For Risk Avoidance
Someone on Twitter linked this project
today. I was amazed to see they have made 10x their goal, for an alloy framed belt drive bike. Really. The tagline is “Maintenance-Free Bicycles that Make Cycling Easy”, so I looked carefully. Does it have bearings made of ceramic or some other advanced material? No. It has a belt drive, like some bikes have had for years. Also, looking at the traditional (rather than A-head) headset, that is one part that will be anything but
maintenance free, especially when you consider the complete bike is ~$4001
So, why is this bike on KickStarter? It offers exactly nothing innovative or new. Its a cheap bike with a belt drive. Rather than risk their own cash on the venture, Kickstarter allows the project creator to get someone else’s money to fund the project, even if the bank won’t give you a loan. Why risk $30,000 of your own when you can get it funded with backers money.
One thing to remember – these are often projects that venture capitalists have passed on.
As a Business Model
Revolights were originally funded on Kickstarter in September 2011, getting roughly 5x their target funding. The first Revolights were a kit that you could fit to your bike wheels so the front half of the front wheel was white, and the back half of the rear wheel was red.
They were back on Kickstarter again in May 2013 with ‘Revolight wheels’ – wheels with permanently installed lights and with which they achieved 6x their goal, and once more in April of this year with ‘Revolight Arc’ – a light-up mudguard, which failed to get its $100,000 goal.
Given that the idea of Kickstarter is to get an idea or business off the ground, you would think that going back for a second and third round with new products was a bit much. If the first product was funded, surely they should be using profits from those to fund new projects. It is worth noting that Revolights raised $215,000 with the first round of funding and $85,000 for the second – surely enough to get a company running, if you have a functioning business model.
Essentially, Revolights model seems to be that rather than risk revenue raised from existing projects, running another crowdfunding round allows them to get free market research and offset the risk of launching a product that might fail.
To Pay for a Holiday
The Printing Bike Project
is trying to raise funds so they can build a cargo bike with a printing press on it, which they will then ride from Bristol in the UK to Mainz in Germany, where Johannes Gutenberg invented the printing press. Apparently they are going to print postcards on the way and do some outreach when they get back, but to me it looks like they want someone else to pay for a holiday in the name of ‘art’. They are looking for £8,000 and I’d just like to point out that you can get a Bullitt Cargo Bike for around £1,500 and the press for £600. I guess the leftover £6,000 covers alot of holiday.
I do like Kickstater and the other crowd-funding platforms – they certainly allow small startups to have global exposure for little cost (much like iTunes and small artists), and the natural selection process helps the good ones and doesn’t harshly punish the less good, they just don’t get funded.
Of course, once a project is actually funded, there is a whole world of issues from then onwards in terms of timely delivery and promised functionality, but those are project management issues which can apply to almost any project.