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This article, and it seems the whole blog, is an amazing resource for anyone considering a hardware startup. Very clear and very helpful. The funny thing is th

This article, and it seems the whole blog, is an amazing resource for anyone considering a hardware startup. Very clear and very helpful. The funny thing is that kickstarter's official policy is that they are not a pre-sale platform. But if they were serious about this, they wouldn't let campaigns offer the product being developed as a "reward" in exchange for money. It's like amazon saying that they aren't a book seller, but they will give you a $30 book as a "reward" for donating $30. I'm not sure if I fully understand the title of this post, though. The author points out that Kickstarter funds are to be used only for production related costs and therefore should be considered debt (they must be repaid, unlike equity). But, in reality I don't think that there are any legal or even ethical stipulations placed on money raised from Kickstarter. The money is being donated, and unlike business debt can be used in whatever manner without having to be repaid. Wasting Kickstarter money may or may not affect someone's reputation for awhile, but it doesn't show up on a credit score. For this reason, it's always seemed to me that crowdfunding is the best way to raise money for anything. If you can do a crowdfunding campaign, do it. Most certainly for hardware. Then get a line of credit if you can, and raise money from VCs as a last resort [1]. [1] Other than Bolt of course, because their blog is so awesome that I'm thinking about pitching them right now.

bhouston 11y ago
Yeah, Kickstarter seems like debt that has no interest, and can be forgiven (in the right circumstances), and it gives you free publicity and a form of market validation. By far the best source of debt I can imagine.
- nathancahill 11y ago
  Of course it's the best source of debt for a company because it's completely one-sided. See also: scamming, ponzi schemes and ransomware, all great sources of free money.
  - simonh 11y ago
    Anyone who thinks they can renege on KS commitments needs to take care though. The FTC has pretty clear ideas about people's responsibility to meet their KS commitments. http://www.npr.org/sections/thetwo-way/2015/06/11/413676042/in-its-first-crowdfunding-case-ftc-goes-after-boardgame-kickstarter http://www.npr.org/sections/thetwo-way/2015/06/11/413676042/...
- joshvm 11y ago
  In terms of forgiveness: I think the major sin is not shipping anything at all or perhaps worse, fulfilling some of your orders but not all of them. Even if you mess up the enclosures, perhaps you can ship everyone a prototype circuit board? Because surely, surely something physical arrived on your doorstep if you burned millions of dollars. The problem is usually about being honest where the money went. Backers are mostly not aware of just how much money it takes to build stuff at scale and when the headline is "Bolt-o-phone goes under, $5M raised, nothing shipped" it's natural to say "so what the hell did you do with my money then?". That and making wildly optimistic optional extras if the funding gets high enough... keep it simple and it'll ship!
username223 11y ago
Scamming (a.k.a. "crowdfunding") is always the cheapest option.
my_username_is_ 11y ago
I very much disagree with the idea that you don't have any ethical stipulations if you receive money from a kickstarter campaign. Although they label things as "donations" and "rewards", it is a de-facto presale platform. If you're going to put a project on there and tell people you'll send them something for giving you money, you're making a promise beyond the words that Kickstarter is using. And while I know that there's a certain amount of risk with any project, you damn sure do have an ethical obligation to do everything in your power to make good on your promise to your early supporters.

bhouston 11y ago

Yeah, Kickstarter seems like debt that has no interest, and can be forgiven (in the right circumstances), and it gives you free publicity and a form of market validation. By far the best source of debt I can imagine.

nathancahill 11y ago
Of course it's the best source of debt for a company because it's completely one-sided. See also: scamming, ponzi schemes and ransomware, all great sources of free money.
- simonh 11y ago
  Anyone who thinks they can renege on KS commitments needs to take care though. The FTC has pretty clear ideas about people's responsibility to meet their KS commitments. http://www.npr.org/sections/thetwo-way/2015/06/11/413676042/in-its-first-crowdfunding-case-ftc-goes-after-boardgame-kickstarter http://www.npr.org/sections/thetwo-way/2015/06/11/413676042/...
joshvm 11y ago
In terms of forgiveness: I think the major sin is not shipping anything at all or perhaps worse, fulfilling some of your orders but not all of them. Even if you mess up the enclosures, perhaps you can ship everyone a prototype circuit board? Because surely, surely something physical arrived on your doorstep if you burned millions of dollars. The problem is usually about being honest where the money went. Backers are mostly not aware of just how much money it takes to build stuff at scale and when the headline is "Bolt-o-phone goes under, $5M raised, nothing shipped" it's natural to say "so what the hell did you do with my money then?". That and making wildly optimistic optional extras if the funding gets high enough... keep it simple and it'll ship!

username223 11y ago

Scamming (a.k.a. "crowdfunding") is always the cheapest option.

my_username_is_ 11y ago

I very much disagree with the idea that you don't have any ethical stipulations if you receive money from a kickstarter campaign. Although they label things as "donations" and "rewards", it is a de-facto presale platform. If you're going to put a project on there and tell people you'll send them something for giving you money, you're making a promise beyond the words that Kickstarter is using. And while I know that there's a certain amount of risk with any project, you damn sure do have an ethical obligation to do everything in your power to make good on your promise to your early supporters.