How risky is crowdfunding on Kickstarter?
First of all let me give you some keys stats on Kickstarter’s crowding success to date.
-launched on April 28, 2009
-12 million people have backed a project
-33% of people have backed two or more projects
-$2.8 billion has been pledged
-118,405 projects and counting have been successfully funded
-projects are set up by artists, filmmakers, product & fashion designers, developers, creators, dreamers and so on
-Kickstarter is a Benefit Corporation. Click here for more info
What does this actually mean? It means that Kickstarter works and it works brilliantly. Kickstarter has helped bring more than 118,405 projects to life that might never have existed in the first place. $2.8 billion pledged. Wow! So, if Kickstarter didn’t work in the vast majority of the cases, there is no way that 33% of people would continue to back more projects.
But what about the project owners & creators?
Every creator must go through an authentication process to verify the identity of the individual creator.
If you are a registered legal entity (like Toc Watch), this must be verified also, to prove it exists. A verified bank account has to be supplied also before you can set up a project.
What type of projects are prohibited on Kickstarter?
There are strict rules and guidelines in place regarding what type of projects can be launched, so no drugs, tobacco, guns, medicine, gambling or genetically modified organism and so on. You get the point.
Another no no is that Kickstarter does not allow projects to offer incentives like equity, revenue sharing, or investment opportunities. In most cases backers are pre-ordering the product at a large discount before it is actually launched fully in the market.
For more on Toc’s reason for launching on Kickstarter, see my previous blog here.
What if I back something and the campaign doesn’t hit its target or if I just change my mind?
The good thing about Kickstarter is that your credit card is only charged at the end of the campaign term (normally 30 days) and only if the project hits its target. Nonetheless you can still change your mind and cancel (or change) your pledge at any time before the project ends.
What come-back do I have if the product breaks or is damaged when it arrives?
Generally, most creators are honest, hard-working people determined to succeed and create something wonderful for backers. In most cases, they will replace or fix any defective products and cover the cost to do so.
In Toc’s case, we will be giving a 5 year warranty with our watch. We know that we are producing a top-class product from high quality materials, such as Sapphire Crystal Glass & 316L Stainless Steel, and therefore we are happy to stand over it.
Obviously normal wear and tear or reckless treatment of our watch is not covered.
How do I know my package will reach me?
Toc will ensure we use the most efficient delivery partner that suits our campaign and every package will be treated with care. We will keep a close eye on each package to make sure it arrives safely and in a timely manner.
Is there any risk?
Yes, there is always a little risk. Maybe you don’t like what you receive as much as you thought you might, but you can always sell it on and recoup all or most of what you have paid.
The real risk is on the creators side. For instance, by the time Toc launches, we will have invested 6 months in this project and a lot of money. Really, every waking minute is nearly spent thinking of the project in some way or another.
The biggest challenge is that only 10-20% of backers come from Kickstarter, the rest come from family, friends and everyone we find through social media and word of mouth.
So, the risk is with us but we are happy to take it as we believe 100% that our watch is a thing of beauty. And finally, it is fun to do something you love and are passionate about.
So there you have it…
Without Kickstarter the world (and my world) would be a duller and less enjoyable place.
Kickstarter is an enabler, it allows people take that important leap that might not have otherwise been possible. It is the platform where dreams can become reality and it should be embraced, supported and shouted about.
If you have an idea or dream, think hard about it, research it, mould it and give it the chance it deserves, launch it on Kickstarter.
The best way to test Kickstarter is to back something you like; 12 million people have already done this and many more will continue to do so.
Maybe support Toc Watch and help our dreams come true.
Written by Will, Toc Watch.