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Kickstarter pledge fatigue, scams, and stalled projects

Kickstarter and other crowdfunding platforms have gone mainstream, attracting scammers, misuse, and many have complained of Kickstarter fatigue.

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Kickstarter and a waning crowdfunding movement

Kickstarter is the largest of the crowndfunding websites wherein inventors, artists, and the like can post videos and description of why they need financial backing, listing what they will give to people for pledging cash, and if enough people chip in and they meet the financial goal they set, they get all of the cash, but if they don’t get enough pledges, no money changes hands.

It’s a wildly popular funding option with Kickstarter projects alone raising $275 million last year, and is popular enough to have the attention of the U.S. Securities and Exchange Commission (SEC) which is reviewing what regulations they will impose on crowdfunding.

Crowdfunding seeing their share of scams

Facebook users know that they haven’t won free airline tickets just because they were tagged in a picture, email recipients know the Prince of Nigeria doesn’t really want to give them a bajillion dollars, and Vine users (as well as anyone with an internet connection) knows that pornographic material has made its way into the video service. The truth is that crowdfunding isn’t unique in being vulnerable, as the web makes it easy to scam people – it’s not like a dark alley with a creepy guy offering you Foakleys, Pravdas, or PRolexes from the back of a truck or inside of his coat.

Most projects posted on Kickstarter, Indiegogo and others are legitimate and often innovative, but as with all websites, the dark alley creeps have found their way in, and are quite convincing.

Two cases of bad crowdfunding behavior

According to Consumerist.com, one Kickstarter project is currently suspended, pending an internal investigation, as a man was selling $15 watches for $100, disguising them as “high-end” time pieces, raising $9,000 before the plug was pulled.

Recently, one Kickstarter investor sued over a Kickstarter project, as an entrepreneur who formerly designed projects took the leap into manufacturing and after what backers called endless stall tactics, Neil Singh sued for breach of contract as the simple iPad he “invested” in was never created or delivered, ultimately putting the entrepreneur and his company out of business.

These two stories are not the only cases involving questionable products being sold, or struggles with the manufacturing process leading to delays in delivery (with delivery never happening in some instances). The general attitude of people who have been backing projects from the beginning is that it is an investment which comes with risk, but others see it as a creative way to buy products, so the pledge mentality is certainly changing as crowdfunding goes mainstream.

Kickstarter in particular has been very responsive to questionable projects and products and suspends accounts for investigation rather than ignoring it. PCMech has published a useful guide on how to tell if a Kickstarter campaign is bogus.

Introducing Kickstarter fatigue

If you run in any technology or art circles, you’ve probably been solicited for pledges to various Kickstarter or Indiegogo projects ranging from “Artist X wants to make an album” or “Producer Y wants to shoot an independent film,” or even “Inventor Z wants to make a new thingamajig.” We have most certainly been inundated and rarely make any pledges in an effort to maintain objectivity as we cover Kickstarter projects, but what about the average person, or particularly the well connected person?

Sallie Wood, Creative Principal at redshoestudio tells AGBeat, “One of my talented musician friends used kickstarter to record a wonderful album of lullabies. Another was the narrator for a really cool animated film. I have lots of talented friends who all seem to have a project they want to fund. I can’t possibly give to all of them. Telling friends that you might give if only their project was more compelling is not a good idea if you want to remain friends. Who wants to judge their friends project?”

Wood added, “I have given to projects I believe in and I will probably give again but I am suffering from kickstarter fatigue. Just today I had a request via inde gogo requesting funds to send a friend’s kid to Europe for a school trip. This has gone too far.”

Crowdfunding isn’t a generic collection plate, people.

Not only is fatigue setting in, the actual projects requesting funding have gotten out of hand – one source tells us that they’ve been appalled at the projects found on crowdfunding sites as they search for gadgets or art projects, rather are met with people asking for money to build their own garden, open a second food truck, cut their thirteenth album, and even pay for their child’s summer camp or swimming lessons.

While crowdfunding is an effective alternative to traditional banking, it is unfortunately becoming some random peoples’ way to pass around a collection plate, is causing investor fatigue as they get endless requests for money, and in some cases, it’s being used by creepers’ passing of counterfeit products, or inexperienced entrepreneurs unable to ever deliver a project they intended to.

Lani is the Chief Operating Officer at The American Genius - she has co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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5 Comments

5 Comments

  1. jesus fchrst

    February 2, 2013 at 1:21 pm

    I don’t care if KS is “flooded” with millions of useless projects (as you say), just go to Kicktraq and sort out the ones you want and don’t want. Somebody wants to send their kid to summer camp? Great, I’m not giving them any money, but hey look at that idiot woman who got “bullied” or whatever… people gave her a big stack of cash. Just because you don’t like a project doesn’t mean a thousand other people won’t.

    • truthandall

      March 23, 2013 at 4:01 pm

      Yeah and it just goes to show you how stupid americans are. No wonder bankers feel no shame about killing the economy, why would they if the kind of people they destroyed are the sort of idiots to give a feminist bigot money for being called out for her crap.

  2. Carlos Hoyos

    March 10, 2013 at 9:26 pm

    That woman who got “bullied” was a scammer that purposefully went to the worst places in the net and created controversy to fish for gullible idiots that would put money to see her “youtube videos”.

    • Humz tariq

      March 14, 2013 at 6:00 am

      what? are you kidding me? Neither the video nor the donation page was set up by her.

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Business Finance

Will China’s new digital currency really compete with the US Dollar?

(BUSINESS FINANCE) It isn’t the first time that China has tried to compete with the dollar, but the release of a digital currency has lead some economists to raise red flags.

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Man holding phone in one hand and credit card in other hand, handling digital currency.

For decades the US has been the world standard for foreign trade. As of 2019, 88% of all trades were being backed by that almighty dollar, making it the backbone of the world economy. However, China may be sneaking in something new for digital currency. 

In the last few months, over 100k people were “airdropped” cold hard digital currency. This currency came from People’s Bank of China (PBOC), who has created a digital manifestation of the Chinese yuan. This is planned to run concurrently with its paper and coin playmates. Upon initial inspection, they resemble the same structure as Bitcoin and Ethereum. But there’s a major difference here: The Chinese government is the one fronting the money.

The suspected plan behind this is that the government plans to tightly control the value of the digital yuan, which they are known to do with the paper one as well. This would create a unique item within the world of cryptocurrency. Personally, I don’t think that any of this is going to go anywhere soon. Too many people still need hard currency but it does open up a unique aspect of currency that has only just started since debit and credit cards. It gives the government the ability to spy on its cryptocurrency users. Being able to monitor transaction flows can reveal things like tax evasion and spending habits. There is even the possibility of experimenting with expiring cash.

But how does this affect the US? There’s a method that has been used by Americans since WWII called dollar weaponization.  The exchange domination allows the US government to monitor how the dollars move across the border. Along with that monitoring they are actually able to freeze people out of global financial products as well. It’s a phenomenal amount of power to hold. 

The concern for economists is that the price fixing capabilities of this new currency as well as its backer being an entire countries government could affect everything about the global financial system. Only time will tell how true that turns out to be.

There are a number of possibilities that could come up honestly and they could fall flat on their face unless they put their entire monetary worth behind it. Only time will tell but some economists are already calling for DigiDollars from the American government. Another step into the future.

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Business Finance

A tiger shows its stripes: The growth of Tiger Global and their investments

(BUSINESS FINANCE) Tiger Global has been acquiring a load of tech companies – let’s talk about who they have and how they’ve been so successful.

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Two business partners shaking hands as part of a Tiger Global acquisition deal.

In 2003, Tiger Global was founded by Chase Coleman who began his career at Tiger Management (brilliant name choice). In the ensuing years the investing firm expanded to include private equity and venture investing. Today it’s hitting the charts at $65B with its employees (number at ~100) being the firms’ biggest shareholders.

Earlier this month, Tiger Global raised one of the largest pots of VC money ever recorded, coming in at $6.7B. These came from a list of occurrences and investments.

  • Roblox: A sandbox gaming startup, Tiger Global owned 10% when it went public in March and the value is hitting ~$38B+
  • Stripe: A fintech firm Tiger Global leaped onto this investment when Stripe announced a $600m rise in value at a $95B monetary evaluation of the company.
  • M&A wins: In 2020, 3 portfolio companies (Postmates, Kustomer, & Credit Karma) of Tiger Global were acquired in billion-dollar deals.

The tactics that Tiger Global stands by are well documented in a few different locations. One of the biggest that they push is speed. The deals that fly across their tables are completed in just 3 days, far outpacing other firms. When you are an investment firm hour are a time between success and failure. To keep up with these ideas, they have a pre-emptive approach to startups. Doing thorough research and throwing money at people before they even start looking for it. Knowledge is power and this lets them get their foot in the door faster than anybody else.

Resources and a monstrous war chest are 2 of the other factors that they set their claim to fame on. The numerous portfolio companies have high-priced consultants thrown at them for advice on a regular basis. These consultants just add to the success of the companies and keep things building. Where does this money come from? The stakeholders. The mountainous mounds of money that this firm keeps on hand is matched very few in the world. Scrouge McDuck would be hard pressed to keep up with these guys.

They also keep to long-term holdings as an approach to their methods. Unlike traditional VCs, Tiger Global operates public market hedge funds which provides price stability for startups since it doesn’t have to distribute funds after an IPO, unlike traditional VCs.

In the first quarter of 2021 Tiger Global has closed 60 deals, keeping with their hit the ground sprinting approach. They have bids on a number of different companies already as well (ByteDance, Discord, Hopin, & Coinbase). At least one of these reaches a value into the tens of billions. This company is set to be one of the fastest growing groups in the globe. Who knows where it will stop? Let’s wait and see, or join. Whatever hits your fancy.

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Business Finance

India bans cryptocurrency prior to releasing their own

(BUSINESS FINANCE) India is potentially planning to ban cryptocurrency — and instead, they’re planning to introduce their own version of it for purchase.

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Cryptocurrency coin on a phone open to a purchasing app.

Owning mainstream cryptocurrency these days is a bit like owning a pair of Crocs: Potentially lucrative (especially if you’re Post Malone), but mostly just weird. A recent report shows that India is planning on adding “illegal” to that list, possibly ahead of launching their own cryptocurrency in place of the banned ones.

The proposed law would also fine anyone found tradingor even simply owningbanned cryptocurrencies in India. Mining and transferring ownership of cryptocurrency would similarly warrant punitive measures.

CNBC notes that this law would be “one of the world’s strictest policies against cryptocurrencies” to date. While some countries have imposed strict laws regarding things like mining and trading cryptocurrency, India would be the first country to make owning it illegal.

Some talk of jail timeincluding sentences of up to 10 yearsfor cryptocurrency owners and users was floated by Indian lawmakers back in 2019, but there is no explicit indication that those terms would be present in this rendition of the bill.

To be fair to the lawmakers involved here, the bill wouldn’t be as cut-and-dry as “has bitcoin, gets fined.” According to the CNBC report, people who own cryptocurrency would be able to “liquidate” their earnings for up to six months preceding the bill going into effect. This would theoretically allow investors to hold onto their portfolios for a bit longer before having to cash out.

But that leniency might not matter anyway. It doesn’t take a genius to see that this move could do two dramatic things to the cryptocurrency market: Add yet another niche option for investors, and destabilize every other pre-existing cryptocurrency optionor, at least, make them less stable than they already were.

In fact, the simple introduction and threat of this bill could be enough for the cryptocurrency market to take a nosedivesomething that can’t be discounted as a factor in making this decision. Current reports put Indian-owned bitcoin values at roughly $1.4 billion, though, so it’s clear that the bill hasn’t had a deleterious effect at this point.

The fact that India’s central bank has plans to introduce a government-sponsored cryptocurrency of their own cannot be separated from this bill, either. While the official government position is that blockchain is to be trusted while existing cryptocurrencies are eschewed and dismissed as “Ponzi schemes”, it’s clear that at least part of this bill is motivated by a desire to thin out the competition.

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