Failed crowdfunded gadgets are forcing Kickstarter and Indiegogo to change

When the creators of Mousr, a toy for autonomous cats, launched their crowdfunding campaign in 2013, they expected it to be a clear viral blow or an obvious failure.

"The goal was $ 100,000, we raised $ 117,000," says Dave Cohen, one of the co-founders. "We got almost half the way we could."

Even so, the team took the money and started working on their product. They anticipated shipping within a year of the launch, but the sponsors eventually did not receive their cat toy until four years later, in 2018.

] "I think the saddest for us was that the total development of our project was 20, 25 percent of the lifespan of a cat, so when you have 1,000 sponsors, it will happen when the cats that expected to play with this will die. "says Cohen. "It's still hard to see."

Mousr's situation is not atypical. Gadgets financed by crowdfunding are sometimes delayed for months or years, and in some cases, never shipped. To address this, the crowdfunding sites have been making changes designed to keep patrons informed, support campaigns so they do not end up failing, and ensure accountability if they do. The changes can protect the supporters of giving money to a project that never materializes, but in some cases, they also modify the very idea of ​​collective financing, eliminating all risk of a concept that was built around them.

Indiegogo and Kickstarter now Offer tools that can help hardware manufacturers for the first time through the production process. The platforms work with third parties that help in manufacturing: Avnet and Dragon Innovation for Kickstarter and Arrow Electronics for Indiegogo.

Kickstarter also says that it reaches the founders of the campaign and works with them before the launch to verify their identity and ensure they update the sponsors. In cases where a product has not been shipped, Kickstarter could try to find answers for the sponsors and, if necessary, it will work together with the application of the law in possible cases of fraud.

Jon Leland, Kickstarter senior director of strategy and knowledge, also says that Kickstarter is looking for "a set of tools related to transparency in campaigns "They are" quite radical ". Kickstarter also plans to develop its Hardware Studio initiative, which helps founders navigate manufacturing.

Indiegogo tells The Verge that it will launch several campaigns this year with a "guaranteed delivery" badge that tells the sponsors that they will receive their product or a refund. The Verge reported for the first time on this new financing model, which was initially called guaranteed shipping. Under this optional model, the founders will not receive the funds raised until they start sending. This means that companies must already have enough cash to develop and make their product, which in some way nullifies the purpose of collective financing.

David Mandelbrot, CEO of Indiegogo, believes that having both options on the platform makes people more aware of the risks when it comes to traditional crowdfunding campaigns. "What we are really trying to do is create a platform that is flexible enough to meet the needs of the entrepreneurs and sponsors of our platform," says Mandelbrot. If the sponsors are more aware of the risks in advance, he says, they can "be more understanding in the projects of unsecured delivery when the employer faces more challenges".

Along with this change, Indiegogo has welcomed the most established corporate partners in its platform. For those companies, Indiegogo serves as a marketing tool rather than a way to drive a business, and sponsors can usually be sure that they will get what they asked for. General Electric, for example, used Indiegogo to launch a new ice factory, and Lego used it to launch its first product, which is specifically aimed at adults.

Mandelbrot still believes that guaranteed delivery maintains the spirit of crowdfunding, even if necessary. Companies must have sufficient financial security to make their products unfunded in their pocket. "For me, collective financing is defined as the elimination of the guardians between entrepreneurs and sponsors," he says. Mandelbrot also believes that guaranteed projects could spur more people to support traditional crowdfunding projects. "That means that more projects are financed, and entrepreneurs can raise even more money."

Crowdfunding has launched some notable companies, such as the smart watch company Pebble, which acquired Fitbit, and the virtual reality company Oculus, which now owns Facebook. . But the projects that were not sent, especially the prominent ones like Lily Drone, have forced the platforms to reevaluate how they do business and how they can maintain the crowdfunding spirit of power for the people and at the same time protect the supporters from the risks of to invest. in a new company.

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