There’s no denying that crowdfunding has completely changed the way people do business, mostly for the good. Being able to reach out directly to your customers and get them to put cash down up front to grow your business and produce your product has enabled million-dollar ideas to become reality.Â Unfortunately, some of those ideas don’t pan out.
For every brilliant idea that makes it to market smoothly, there’s one that runs into trouble. Whether it’s the result of new business owners not understanding the work that goes into producing and fulfilling or just unscrupulous scammers looking to take the money and run, many Kickstarters and Indiegogos end up with very unhappy customers.Â TheseÂ 11 crowdfunding campaigns that resulted in nothing but heartbreak.
The Doom That Came To Atlantic City
As you’re reminded over and over when you back a project, Kickstarter is not an investment, and there’s a very real possibility that you won’t get what you paid for. Backers of The Doom That Came To Atlantic City learned that the hard way. The eldritch horror board game was funded in 2012, but months and then years went by without project leader Erik Chevalier shipping anything. Things got so bad that one backer filed a lawsuit against him, and the Washington State attorney general ruled that he took the $122,000 raised by the campaign and used it for his own ends. Thankfully, Cryptozoic Games picked up the game and produced it, even sending copies to backers at their own cost.
iPhone accessories are one of the most overcrowded Kickstarter categories, with thousands of cases, stands, chargers, and other peripherals taking home serious amounts of money. One example that people would rather forget about was the i+ Case, a bumper of beautifully tooled aluminum that wrapped around the exterior of the phone to protectÂ it from drops and spills. The project raised $85,731 and shipped mostly on time, so what’s the problem? Turns out that the aluminum shell wreaked havoc on the operation of the iPhone’s antenna, meaning that if you put it on you couldn’t actually make calls. Amazingly, the company refused to offer any refunds on the item.
The concept behind the digital picture cube Instagram was cute — hook it up to WiFi and it displays your Instagram feed — but the creators really had no idea what it would take to bring a project of that magnitude to market. The Instacube got tons of press and closed with over $620,000 in 2012, but when it came time to manufacture the units, things rapidly fell apart. The team had a working prototype, but by the time they got it built Instagram had changed their API, resolution and more, making it obsolete. Over the next two years, Instacube’s team slowly dwindled, with the company’s founder actually making a speech at SXSW to try and explain what a nightmare the whole process was. They finally shipped in 2014 to dismal reviews.
A video game conceptualized by sci-fi legend Neal Stephenson that promised to reinvent digital sword fighting seemed like a slam dunk in 2012, and Clang got funded on Kickstarter to the tune of over half a million dollars. Video games are hard things to make, though, especially if you’re not particularly experienced, and in 2014 Stephenson announced that the project had run out of money and would be shut down. The team had hoped to garner additional outside investment as the product became more robust, but they never got to that point. An early build was uploaded to Steam, but without the motion controllers that were the heart of the experience, it wasn’t terribly playable. To his credit, Stephenson offered unconditional backer refunds, but Clang left a bad taste in many people’s mouths.
Probably the worst kind of crowdfunding disasters are the ones that turn out to be straight up scams. Smarty Ring was a cash-in on the wearable electronics trend that swept the world in 2013, promising a high-tech ring that you could use to control your phone through Bluetooth. The India-based company brought in a massive $297,999 and promised to ship in April of 2014. Unfortunately, they didn’t even have a working prototype and when they finally revealed one, it was significantly bigger and bulkier than what they promised. Amazingly enough, they went back to Indiegogo and raised another $100,000, only to delay and delay some more. They still have yet to show a functional model of their ring.
Backers of the Lockpicks for Open Locksport campaign by Schuyler Towne thought they had something really cool going. Towne, a competitive lockpicker (yes, that is a real thing), originally asked for $6,000 to produce a line of picks. He ended up closing his campaign with over $87,000 in pledges from 1,159 backers and far more orders than he was ready to fill. The next few years were difficult for Towne, as he spent the money earmarked to produce the picks on his day-to-day survival while posting sporadic updates. Some friends stepped in to try and salvage the project and Towne’s reputation, but many backers never got what they paid for.
It’s really hard to pinpoint the exact moment when some of these projects transformed from successes to disasters. The Midnight Clock by Devin Montgomery was a charming invention — a quirky clock that features a unique locking mechanism that lets you open up the face and retrieve a book hidden inside. Montgomery made the first model for his son’s birthday and after friends praised it decided to bring it to the world. Unfortunately, since the project closed in July of 2013 only a dozen backers have been delivered their clocks, leaving some 700 in the lurch.
Glory To Rome
You wouldn’t think a card game could be a financial burden. But for Ed Carter, proprietor of the Cambridge Game Company, it would turn out to be his ruin. Carter funded a deluxe edition of his Glory To Rome game in 2011 and raised $73,000. He outsourced production to a Chinese company but the deal quickly fell apart, and Carter soon after lost the day job that allowed him to make games as a hobby. Eventually he got to the point where he was $100,000 in debt to the project without a single game shipped and had to mortgage his house. Carter hopes to get back on his feet and fulfill his responsibilities, but it isn’t looking good.
USB gizmos are another hot Kickstarter category, as people invent all kinds of things you can plug into the side of your computer. One particularly ambitious product was myIDKey from start-up Arkami. The personal security device included a fingerprint reader and, when synched with your PC, would auto-fill password forms and other private information for you. They had a working prototype and brought in half a million on Kickstarter and another $3 million in venture capital. Unfortunately, Arkami kept revising the product to add features, so the scheduled ship date of September of 2013 came and went. Arkami closed its doors in 2014 with no product shipped and tons of pissed-off backers.
The third point of the Kickstarter frenzy trifecta would have to be smartwatches. After the Pebble got massively overfunded in 2012, dozens of wannabes took to the platform with their own wearable computers. Many of them got funded, few of them delivered. One of the most notorious was the AGENT Smartwatch, which promised “the world’s smartest watch” with wireless charging, high-def display, and motion sensing capabilities. The campaign asked for $100,000 and pulled in more than a million, but not a single person has recieved a watch over two years later, and creator Chris Walker has spent the time developing and selling other products. Some backers have already filed suit in small claims court to get their money back.
Kickstarter has an anti-fraud team looking out to keep scams off the service, but somebody was asleep at the wheel in 2013 when Kobe Red slipped through. Purporting to be a high-end jerky created from Japanese Kobe beef, the page was suspicious from the start, with no product shots and no creator names listed. The page did have “taste testimonies,” allegedly collected at that year’s SXSW, that were just iPhone screenshots. Despite all that, backers pledged a staggering $120,309. Smelling a rat, a pair of documentary filmmakers hired a private investigator who discovered that creators Magnus Fun didn’t exist and the project was a scam. Kickstarter cancelled it just hours before it was scheduled to close and permanently take all the money.
So, remember: Kickstarter has been great for some things and mixed for others, but it is not a retail service, and funding doesn’t guarantee you anything other than risk. If you’re tight on cash, seriously consider the success of a project’s deliverables before you pledge.