7 ms·

The ugly side of Kickstarter

122 points by Impossible 15y ago

gavanwoolery 15y ago
I would boil it down to one simple requirement: If you do not have an excellent track record and/or functional prototype, don't ask for my money!
- calloc 15y ago
  Oh, you can ask for money, but don't be surprised if you don't get it :-)
- waterlesscloud 15y ago
  You don't need a track record for me to invest, but you do need a credible plan.
- joezydeco 15y ago
  Functional prototype is key. You nailed it. It's a MAJOR difference to present a prototype of something like an iPod Nano watch-holder and say "well, we just need 50K to get tooled up and start stamping these out", as opposed to saying "well, we need 50K to get our ideas together and hammer out something that hopefully will be fun, on-time, and cheap". Remember that old engineering joke about good/cheap/on-time, you can pick only two? That's gonna hit every single one of these game projects. It's hard enough making a game fun, but now you have to do it while making your budget and making your schedule? That's a recipe for disaster.
  - meepmorp 15y ago
    > Remember that old engineering joke about good/cheap/on-time, you can pick only two? That's not a joke. That's the capsule summary of every programming project I've ever been involved with, and where they went wrong (if they did). Hell, sometimes you don't even get two out of three.
rollypolly 15y ago
Great article. A team composed entirely of production people, with no “business guys,” may not fully comprehend the total costs involved in creating a game. Has any startup succeeded with nothing but engineers as founders?
- olliesaunders 15y ago
  Yes of course. There are startups just started almost by accident with no money. Game development projects are nothing like that though.
  - masklinn 15y ago
    > Game development projects are nothing like that though. Game dev was very much like that 30 years ago before budgets in the millions and teams of dozens. That's pretty much how Interplay was built. And Indie studios still usually start out that way. Playdead (Limbo) was started by a dev/des and a developer.
    - AlecM 15y ago
      id Software also comes to mind, just four guys working out of their house.
- eaurouge 15y ago
  Much of the business knowledge required to launch a successful startup can be acquired in a few months of dedicated studying. So it's no surprise teams of engineers have launched successful businesses, and do so routinely.
  - Estragon 15y ago
    "Months" actually sounds pessimistic to me, but I am ignorant, and I'd welcome a pointer to a list of the necessary biz knowledge and how to acquire it.
  - jiggy2011 15y ago
vsviridov 15y ago
It feels to me that the article is packing a lot of FUDge...
- sliverstorm 15y ago
  I am inclined to trust a Penny Arcade editorial on video game-related subjects. "Observe & comment on video game culture/industry" is basically their entire business model.
  - teamonkey 15y ago
    Getting page hits is their business model.
- LaGrange 15y ago
  So? Fear, uncertainty and doubt can also be seen as being careful. Yes, they are spoiling everyone's fun by pointing out how everything would fail, but would you really prefer if nobody questioned the wonderful silver-bullet business models? It's even quite benign for FUD — they're not saying "this is a load of crock," only "this is not magic".
  - vsviridov 15y ago
    So, you're saying that we should just give up and trust big publishers who know best?? Kickstarter is inherently risky and pointing it out with a big hoopla is kinda silly. It's as "buyer beware" as it gets. Out of all successfully funded projects that I backed on kickstarter - most came through... Only very few didn't.
sparknlaunch12 15y ago
At the end of the day every startup needs to consider 'business fundamentals'. Without knowing how your product will build value and profit, you are pretty much sailing on a sinking ship. Taking funding too early in the process also puts your future ownership at risk. How hard are you willing to work with no or minority equity?
patio11 15y ago
There are a lot of indie game developers who come from an enthusiast background rather than a business background (some may have been professional enthusiasts but someone else gets them a check every two weeks), which causes a lot of this. Enthusiasts don't understand that salaries for engineers chew money really, really quickly. HN is not exactly immune to this: see people commenting like that $20k for a ruby project was more than a few week's wages.
- dasil003 15y ago
  > see people commenting like that $20k for a ruby project was more than a few week's wages. I suppose if you're 20 years old with no responsibilities and you sit in a room coding 16 hours a day you could stretch $20k pretty far. If someone has the ability and desire to work for a formal $30k salary then I don't begrudge them declaring what they can do on the cheap. On the other hand, I roll my eyes when someone who spent 500 hours building an app says it's profitable because they have enough paying users to pay the server costs.
  - jiggy2011 15y ago
    That really depends on a few things. If they built it as something that they wanted to build anyway than having it pay for the hosting + some change might be a good outcome. Also if your app is making a profit, even a small one then everything else being equal it will eventually make a return on those 300 hours if it holds.
- ido 15y ago
  As someone who went from professional enthusiasts (web-game industry) to indie about a year ago and crowd funded my first game[1], I think I can say a few words on the subject. First of all, you correctly identified the biggest cost to making games: paying programmers. The solution to that is to be the programmer yourself (or have a programmer friend be your equal partner). Past that tho, making 2d indie games is (or can be, if you're smart about it) very cheap - Cardinal Quest's entire art budget was around $3000 (music, graphics, etc). Since it also took about half a year of my time to make that's an almost negligibly small amount of money. The game ended up making a bit over $30k from the desktop and flash versions (direct sales for the former, branding deals and ad revenue from the latter) and the android (done but not yet released) and ios (almost done) versions will hopefully make at least that much again. It's less than a normal programmer's salary (I didn't get to keep all of it as there were some costs such as the aforementioned music & graphics) but it's enough to pay my living expenses and thus fund my next game. [1] http://cardinalquest.com http://cardinalquest.com
dave_sullivan 15y ago
Great article, two great points I got: Once you're 90% done, you've still got the second 90% to do (so much for 80/20) If someone is selling a porsche for 5000 dollars, you wonder what's wrong. With some of the proposed budgets for kickstarter projects, you've got to wonder what's being overlooked.
- Anirak 15y ago
  I think the idea is still there: it takes 20% of the time to do the first 80% of the work; the last 20% takes 80% of the time.
iamgopal 15y ago
I did't read the article. gray on black ? seriously ?
- Emouri 15y ago
  It takes one or two clicks to change that. If you feel so strongly about it you might want to install some readability clone. I used http://readable.tastefulwords.com/ http://readable.tastefulwords.com/ for this article myself.
- dalore 15y ago
  I prefer a black background, it's easier on the eyes. Green on black is my preferred setup. Gray on black is far better than white on black. It's also better at night if there is little to no light in the room.
  - iamgopal 15y ago
    That was serious overlooking on my part. I didn't realized that most people read at night with little or no light in the room.
    - msabalau 15y ago
      It seems possible that a site based on a web comic about video games may well often be viewed at night rather than during business hours. Penny Arcade is reported to have several million readers, and has extended this success to run a series of conventions (one of which just signed a 10 year contract with the convention center authority in Boston), a series of video games, and the founding of the charity Child's Play. Some people might believe that Penny Arcade has a rough understanding of the type of design that engages their intended audience. If you are intending to make a point, say, about usability, you would likely be more persuasive if you were clear and direct about the argument you are advancing. Perhaps you could reference some research or other facts that supported this line of thinking. As it stands now, your comments might give the impression that you were startled by colors used on a website and that this has driven you into a snarky, sarcastic rage. Regardless, it is not immediately clear how you intended these comments to be useful to the community.
Radzell 15y ago
I think the beauty of kickstart is that you lose you money, but in most cases you lose very little. Professional VC and backers know not every project ends up where you want. Not everyone succeeds. This way you lose a little money if it doesn't instead of a professional VC taking thousands on a flawed ide see groupon or pets.com. I doubt you would ever lose your shirt over a failed kickstart investment matter a fact backing for more than some extra money you have laying around complete defeats the purpose.
- georgemcbay 15y ago
  You lose very little, sure, but you never gain any money. Using this logic, one should just play the lottery because hey its only a buck and the EV, while a sucker's bet, is still better than any Kickstarter project.
idspispopd 15y ago
I can't help but think they're writing with the Yogventure! kickstarter in mind. The article mentions a "two-man team with a game prototype", an unproven studio, an example of a minecraft-related game costing over 1.2M and much discussion about the cost of development being high. These talking points match criticisms held for the Yogcast kickstarter project. The main concern being that their budget is incredibly small for a game with such an ambitious feature list. That the duo don't have the necessary experience or expertise to develop a title. That the studio is unproven, with this as their first project. Alongside a feature list which reads like "Minecraft /w better graphics."
ruediger 15y ago
The problem with start ups is that engineering is fun but business and administration is no fun. Nobody is enthusiastic about filling out tax forms and yelling at people because they are missing deadlines. People with experience in administration are rarely looking for a chaotic start up that can't pay a good salary.
ABS 15y ago
totally misleading title, something I wouldn't have expected from a site like penny arcade.
rpwilcox 15y ago
I'm actually kind of surprised the love kickstarter gets from the HN community. You know what I want from my kickstarter investment? Equity. Yes, rewards are OK ("yay a poster!") and there is something to be said about getting the satisfaction of early investment in a product... But I see kickstarter projects as an investment, and thus I want to see a (potential) return. Perhaps this is an advantage of the JOBS act: let 100 "kickstarter clones but with community expectation that you're buying stock options instead of kudos." bloom.
- _delirium 15y ago
  > I see kickstarter projects as an investment, and thus I want to see a (potential) return. They are pretty explicitly not an investment, though, and the site is quite clear about that. I don't think an equity model would serve them well in most of the markets they're working in, either; it would attract a different audience that they aren't targeting. Kickstarter is modeled off some successful crowdfunding efforts in the arts from the early 2000s, like Trent Reznor's and Radiohead's, and aims to connect fans, not investors, with people undertaking projects. Would it really be an improvement if, instead of getting a limited-edition box set and maybe access to preview chats/etc., fans got an equity stake in Reznor's label in return for crowdfunding his next album? Do the thousands of fans who kicked in for his last crowdfunding drive even know what equity is and what to do with it? That seems like adding a huge amount of complication for something few fans actually want.
- Impossible 15y ago
  Equity just doesn't make sense at the level that most people are backing KS projects. What kind of equity are you expecting if you back a $100K project for $15? Maybe, if the project is wildly successful post Kickstarter, you'll see a couple hundred dollars? There are also projects on Kickstarter that will never be profitable, not because of failure but by design. People use Kickstarter for art experiments and to fund parties and special events that don't generate a product that will be sold after the initial funding. You'd be better off going on AngelList if your goal is to fund projects for high amounts of money and get a return on your investment. That said, I don't think there anything explicitly stopping someone on Kickstarter from giving small amounts of equity to backers, and it might be something that people do for very high tier ($5K-$10K) reward levels.
24pfilms 15y ago
As a recent indie game developer Kickstarter does somewhat look like a viable model to fund your development. But like Hollywood, there is great stuff and there is crap with a lot of gray in the middle. In my situation I am making a very small iOS twitch game built on the Unity3d platform. As most know the advantages of Unity is it's ability for delivery to a variety of platforms and rapid iteration of development. Our project will have 2 month development. Our team is comprised of myself (Ex-EA, ex-Squaresoft and serial startup guy) a pair of outsourced programmers, a optimization and art integration programmer (ex-UBI) and a 3d artist. I will handle many of the art and sound tasks as well as the final call on things. The budget is under $30k. I know this is doable and possible because I have a clearly defined budget, and experience to quantify this budget. This game is to provide hopefully two things: To quantify that a financial success can be built from this model. Positive Revenue versus Negative Revenue. Build a core following of player who like our work. To use the potential revenue to build a bigger project. There will always be scammers and people who want to rig the system. I have thought closely about using KS for our second game which will require a budget of $100k, but at this time I don't have the followers and the public cred (in my mind to validate the success of a kickstarter campaign) although we do have great a prototype, art and a working business plan and design doc. Hopfully this first game/risk will allow us to grow into what we desire as a viable business model for all involved.
- JabavuAdams 15y ago
  Two months sounds unrealistic to ship a polished game, even though Unity is a very productive platform. I've done a GDC demo in Unity in one month with a team of about 7. It was a good concept demo, but not polished enough to release as a product. I also shipped a Unity game in about 2 months, doing all the programming and art, with predictable results. The game-play needs polish, and let's not even talk about the visuals. Games really do benefit from iteration. In some sense, this is the danger of trying to schedule a game project. It's a great way to build some life-less me too game. Often the most successful new games have had schedule disasters that forced almost complete re-writes.
evincarofautumn 15y ago
Just read this the other day, and it was humbling. I’m working on a game with the intent of launching a funding campaign via Kickstarter. Basically, whenever you’re dealing with any non-trivial amount of money, there are going to be unpleasant complexities to deal with. I sat down and factored in all the fees, taxes, deductions, and hidden costs I could think of. Thanks to this article, my budget is now a lot more realistic and a lot less hand-wavey.
CoffeeAndCoffee 15y ago
I think we're still in the infancy of crowdfunding. Backers are donating real dollars into crowdfunded projects, and they're obviously going to want to see a finished product. It's going to be interesting to see how crowdfunding evolves over the next 10 years.
state_machine 15y ago
"I’m going to go ahead and call it: We’re a few months away from the first Kickstarter scam or controversy. There is too much money at stake and too little critical thinking at the moment, and that’s an inviting situation for people looking to make a quick buck."
- jiggy2011 15y ago
  Yes, what's to stop someone posting: "Hey guys we need $100,000 to make $awesome_thing" then once/if you raise the money paying someone on eLance $300 to crank out some POS that technically ticks the boxes?
- driverdan 15y ago
  There have already been failed projects (with controversy) and we'll continue to see this increase in line with the increase in volume of deals. I haven't heard of any outright scams but I'm sure they're either in progress or coming soon. (IANAL) I also expect to see lawsuits in the near future, possibly with government investigation into Kickstarter resulting in changes to required project terms. Very few projects have clear legalese defining what your money will be used for and any (or no) guarantees. I bet the percentage of people running projects that consult with an attorney beforehand is in the single digits. This will inevitably lead to legal issues. When you fund a project you're generally pre-purchasing. Pre-purchases are a legal obligation to the company. If they don't deliver they have to return your money. Very few people running projects realize this. Clearly stating no guarantees in the project description may get around this but then again, possibly not. If you're going to run a Kickstarter project speak with an attorney and make sure you have a solid business plan with all expenses calculated, including Kickstarter's cut and tax obligations.
deleted 15y ago
[deleted]
Ralith 15y ago
Echoes of Eternia comes immediately to mind: http://www.kickstarter.com/projects/1465600975/echoes-of-eternia-a-modern-take-on-a-classic-desig http://www.kickstarter.com/projects/1465600975/echoes-of-ete...
hristov 15y ago
Can somebody explain exactly how one would owe taxes on Kickstarter? Let's say you get a bunch of money from Kickstarter by preselling a game. What you have is money but you will also have a liability (i.e., the obligation to provide the game). If your funding matches your budget, by the time you fulfill your liability, (i.e., you finish the game and send it off), you will have spent most of the money on development. You would not have significant profits. So I do not see how you would owe a lot of taxes other than payroll taxes, or various incorporation taxes.

122 points by Impossible 15y ago

I would boil it down to one simple requirement: If you do not have an excellent track record and/or functional prototype, don't ask for my money!

calloc 15y ago
Oh, you can ask for money, but don't be surprised if you don't get it :-)
waterlesscloud 15y ago
You don't need a track record for me to invest, but you do need a credible plan.
joezydeco 15y ago
Functional prototype is key. You nailed it. It's a MAJOR difference to present a prototype of something like an iPod Nano watch-holder and say "well, we just need 50K to get tooled up and start stamping these out", as opposed to saying "well, we need 50K to get our ideas together and hammer out something that hopefully will be fun, on-time, and cheap". Remember that old engineering joke about good/cheap/on-time, you can pick only two? That's gonna hit every single one of these game projects. It's hard enough making a game fun, but now you have to do it while making your budget and making your schedule? That's a recipe for disaster.
- meepmorp 15y ago
  > Remember that old engineering joke about good/cheap/on-time, you can pick only two? That's not a joke. That's the capsule summary of every programming project I've ever been involved with, and where they went wrong (if they did). Hell, sometimes you don't even get two out of three.

rollypolly 15y ago

Great article. A team composed entirely of production people, with no “business guys,” may not fully comprehend the total costs involved in creating a game. Has any startup succeeded with nothing but engineers as founders?

olliesaunders 15y ago
Yes of course. There are startups just started almost by accident with no money. Game development projects are nothing like that though.
- masklinn 15y ago
  > Game development projects are nothing like that though. Game dev was very much like that 30 years ago before budgets in the millions and teams of dozens. That's pretty much how Interplay was built. And Indie studios still usually start out that way. Playdead (Limbo) was started by a dev/des and a developer.
  - AlecM 15y ago
    id Software also comes to mind, just four guys working out of their house.
eaurouge 15y ago
Much of the business knowledge required to launch a successful startup can be acquired in a few months of dedicated studying. So it's no surprise teams of engineers have launched successful businesses, and do so routinely.
- Estragon 15y ago
  "Months" actually sounds pessimistic to me, but I am ignorant, and I'd welcome a pointer to a list of the necessary biz knowledge and how to acquire it.
- jiggy2011 15y ago

vsviridov 15y ago

It feels to me that the article is packing a lot of FUDge...

sliverstorm 15y ago
I am inclined to trust a Penny Arcade editorial on video game-related subjects. "Observe & comment on video game culture/industry" is basically their entire business model.
- teamonkey 15y ago
  Getting page hits is their business model.
LaGrange 15y ago
So? Fear, uncertainty and doubt can also be seen as being careful. Yes, they are spoiling everyone's fun by pointing out how everything would fail, but would you really prefer if nobody questioned the wonderful silver-bullet business models? It's even quite benign for FUD — they're not saying "this is a load of crock," only "this is not magic".
- vsviridov 15y ago
  So, you're saying that we should just give up and trust big publishers who know best?? Kickstarter is inherently risky and pointing it out with a big hoopla is kinda silly. It's as "buyer beware" as it gets. Out of all successfully funded projects that I backed on kickstarter - most came through... Only very few didn't.

sparknlaunch12 15y ago

At the end of the day every startup needs to consider 'business fundamentals'. Without knowing how your product will build value and profit, you are pretty much sailing on a sinking ship. Taking funding too early in the process also puts your future ownership at risk. How hard are you willing to work with no or minority equity?

patio11 15y ago

There are a lot of indie game developers who come from an enthusiast background rather than a business background (some may have been professional enthusiasts but someone else gets them a check every two weeks), which causes a lot of this. Enthusiasts don't understand that salaries for engineers chew money really, really quickly. HN is not exactly immune to this: see people commenting like that $20k for a ruby project was more than a few week's wages.

dasil003 15y ago
> see people commenting like that $20k for a ruby project was more than a few week's wages. I suppose if you're 20 years old with no responsibilities and you sit in a room coding 16 hours a day you could stretch $20k pretty far. If someone has the ability and desire to work for a formal $30k salary then I don't begrudge them declaring what they can do on the cheap. On the other hand, I roll my eyes when someone who spent 500 hours building an app says it's profitable because they have enough paying users to pay the server costs.
- jiggy2011 15y ago
  That really depends on a few things. If they built it as something that they wanted to build anyway than having it pay for the hosting + some change might be a good outcome. Also if your app is making a profit, even a small one then everything else being equal it will eventually make a return on those 300 hours if it holds.
ido 15y ago
As someone who went from professional enthusiasts (web-game industry) to indie about a year ago and crowd funded my first game[1], I think I can say a few words on the subject. First of all, you correctly identified the biggest cost to making games: paying programmers. The solution to that is to be the programmer yourself (or have a programmer friend be your equal partner). Past that tho, making 2d indie games is (or can be, if you're smart about it) very cheap - Cardinal Quest's entire art budget was around $3000 (music, graphics, etc). Since it also took about half a year of my time to make that's an almost negligibly small amount of money. The game ended up making a bit over $30k from the desktop and flash versions (direct sales for the former, branding deals and ad revenue from the latter) and the android (done but not yet released) and ios (almost done) versions will hopefully make at least that much again. It's less than a normal programmer's salary (I didn't get to keep all of it as there were some costs such as the aforementioned music & graphics) but it's enough to pay my living expenses and thus fund my next game. [1] http://cardinalquest.com http://cardinalquest.com

dave_sullivan 15y ago

Great article, two great points I got: Once you're 90% done, you've still got the second 90% to do (so much for 80/20) If someone is selling a porsche for 5000 dollars, you wonder what's wrong. With some of the proposed budgets for kickstarter projects, you've got to wonder what's being overlooked.

Anirak 15y ago
I think the idea is still there: it takes 20% of the time to do the first 80% of the work; the last 20% takes 80% of the time.

iamgopal 15y ago

I did't read the article. gray on black ? seriously ?

Emouri 15y ago
It takes one or two clicks to change that. If you feel so strongly about it you might want to install some readability clone. I used http://readable.tastefulwords.com/ http://readable.tastefulwords.com/ for this article myself.
dalore 15y ago
I prefer a black background, it's easier on the eyes. Green on black is my preferred setup. Gray on black is far better than white on black. It's also better at night if there is little to no light in the room.
- iamgopal 15y ago
  That was serious overlooking on my part. I didn't realized that most people read at night with little or no light in the room.
  - msabalau 15y ago
    It seems possible that a site based on a web comic about video games may well often be viewed at night rather than during business hours. Penny Arcade is reported to have several million readers, and has extended this success to run a series of conventions (one of which just signed a 10 year contract with the convention center authority in Boston), a series of video games, and the founding of the charity Child's Play. Some people might believe that Penny Arcade has a rough understanding of the type of design that engages their intended audience. If you are intending to make a point, say, about usability, you would likely be more persuasive if you were clear and direct about the argument you are advancing. Perhaps you could reference some research or other facts that supported this line of thinking. As it stands now, your comments might give the impression that you were startled by colors used on a website and that this has driven you into a snarky, sarcastic rage. Regardless, it is not immediately clear how you intended these comments to be useful to the community.

Radzell 15y ago

I think the beauty of kickstart is that you lose you money, but in most cases you lose very little. Professional VC and backers know not every project ends up where you want. Not everyone succeeds. This way you lose a little money if it doesn't instead of a professional VC taking thousands on a flawed ide see groupon or pets.com. I doubt you would ever lose your shirt over a failed kickstart investment matter a fact backing for more than some extra money you have laying around complete defeats the purpose.

georgemcbay 15y ago
You lose very little, sure, but you never gain any money. Using this logic, one should just play the lottery because hey its only a buck and the EV, while a sucker's bet, is still better than any Kickstarter project.

idspispopd 15y ago

I can't help but think they're writing with the Yogventure! kickstarter in mind. The article mentions a "two-man team with a game prototype", an unproven studio, an example of a minecraft-related game costing over 1.2M and much discussion about the cost of development being high. These talking points match criticisms held for the Yogcast kickstarter project. The main concern being that their budget is incredibly small for a game with such an ambitious feature list. That the duo don't have the necessary experience or expertise to develop a title. That the studio is unproven, with this as their first project. Alongside a feature list which reads like "Minecraft /w better graphics."

ruediger 15y ago

The problem with start ups is that engineering is fun but business and administration is no fun. Nobody is enthusiastic about filling out tax forms and yelling at people because they are missing deadlines. People with experience in administration are rarely looking for a chaotic start up that can't pay a good salary.

ABS 15y ago

totally misleading title, something I wouldn't have expected from a site like penny arcade.

rpwilcox 15y ago

I'm actually kind of surprised the love kickstarter gets from the HN community. You know what I want from my kickstarter investment? Equity. Yes, rewards are OK ("yay a poster!") and there is something to be said about getting the satisfaction of early investment in a product... But I see kickstarter projects as an investment, and thus I want to see a (potential) return. Perhaps this is an advantage of the JOBS act: let 100 "kickstarter clones but with community expectation that you're buying stock options instead of kudos." bloom.

_delirium 15y ago
> I see kickstarter projects as an investment, and thus I want to see a (potential) return. They are pretty explicitly not an investment, though, and the site is quite clear about that. I don't think an equity model would serve them well in most of the markets they're working in, either; it would attract a different audience that they aren't targeting. Kickstarter is modeled off some successful crowdfunding efforts in the arts from the early 2000s, like Trent Reznor's and Radiohead's, and aims to connect fans, not investors, with people undertaking projects. Would it really be an improvement if, instead of getting a limited-edition box set and maybe access to preview chats/etc., fans got an equity stake in Reznor's label in return for crowdfunding his next album? Do the thousands of fans who kicked in for his last crowdfunding drive even know what equity is and what to do with it? That seems like adding a huge amount of complication for something few fans actually want.
Impossible 15y ago
Equity just doesn't make sense at the level that most people are backing KS projects. What kind of equity are you expecting if you back a $100K project for $15? Maybe, if the project is wildly successful post Kickstarter, you'll see a couple hundred dollars? There are also projects on Kickstarter that will never be profitable, not because of failure but by design. People use Kickstarter for art experiments and to fund parties and special events that don't generate a product that will be sold after the initial funding. You'd be better off going on AngelList if your goal is to fund projects for high amounts of money and get a return on your investment. That said, I don't think there anything explicitly stopping someone on Kickstarter from giving small amounts of equity to backers, and it might be something that people do for very high tier ($5K-$10K) reward levels.

24pfilms 15y ago

As a recent indie game developer Kickstarter does somewhat look like a viable model to fund your development. But like Hollywood, there is great stuff and there is crap with a lot of gray in the middle. In my situation I am making a very small iOS twitch game built on the Unity3d platform. As most know the advantages of Unity is it's ability for delivery to a variety of platforms and rapid iteration of development. Our project will have 2 month development. Our team is comprised of myself (Ex-EA, ex-Squaresoft and serial startup guy) a pair of outsourced programmers, a optimization and art integration programmer (ex-UBI) and a 3d artist. I will handle many of the art and sound tasks as well as the final call on things. The budget is under $30k. I know this is doable and possible because I have a clearly defined budget, and experience to quantify this budget. This game is to provide hopefully two things: To quantify that a financial success can be built from this model. Positive Revenue versus Negative Revenue. Build a core following of player who like our work. To use the potential revenue to build a bigger project. There will always be scammers and people who want to rig the system. I have thought closely about using KS for our second game which will require a budget of $100k, but at this time I don't have the followers and the public cred (in my mind to validate the success of a kickstarter campaign) although we do have great a prototype, art and a working business plan and design doc. Hopfully this first game/risk will allow us to grow into what we desire as a viable business model for all involved.

JabavuAdams 15y ago
Two months sounds unrealistic to ship a polished game, even though Unity is a very productive platform. I've done a GDC demo in Unity in one month with a team of about 7. It was a good concept demo, but not polished enough to release as a product. I also shipped a Unity game in about 2 months, doing all the programming and art, with predictable results. The game-play needs polish, and let's not even talk about the visuals. Games really do benefit from iteration. In some sense, this is the danger of trying to schedule a game project. It's a great way to build some life-less me too game. Often the most successful new games have had schedule disasters that forced almost complete re-writes.

evincarofautumn 15y ago

Just read this the other day, and it was humbling. I’m working on a game with the intent of launching a funding campaign via Kickstarter. Basically, whenever you’re dealing with any non-trivial amount of money, there are going to be unpleasant complexities to deal with. I sat down and factored in all the fees, taxes, deductions, and hidden costs I could think of. Thanks to this article, my budget is now a lot more realistic and a lot less hand-wavey.

CoffeeAndCoffee 15y ago

I think we're still in the infancy of crowdfunding. Backers are donating real dollars into crowdfunded projects, and they're obviously going to want to see a finished product. It's going to be interesting to see how crowdfunding evolves over the next 10 years.

state_machine 15y ago

"I’m going to go ahead and call it: We’re a few months away from the first Kickstarter scam or controversy. There is too much money at stake and too little critical thinking at the moment, and that’s an inviting situation for people looking to make a quick buck."

jiggy2011 15y ago
Yes, what's to stop someone posting: "Hey guys we need $100,000 to make $awesome_thing" then once/if you raise the money paying someone on eLance $300 to crank out some POS that technically ticks the boxes?
driverdan 15y ago
There have already been failed projects (with controversy) and we'll continue to see this increase in line with the increase in volume of deals. I haven't heard of any outright scams but I'm sure they're either in progress or coming soon. (IANAL) I also expect to see lawsuits in the near future, possibly with government investigation into Kickstarter resulting in changes to required project terms. Very few projects have clear legalese defining what your money will be used for and any (or no) guarantees. I bet the percentage of people running projects that consult with an attorney beforehand is in the single digits. This will inevitably lead to legal issues. When you fund a project you're generally pre-purchasing. Pre-purchases are a legal obligation to the company. If they don't deliver they have to return your money. Very few people running projects realize this. Clearly stating no guarantees in the project description may get around this but then again, possibly not. If you're going to run a Kickstarter project speak with an attorney and make sure you have a solid business plan with all expenses calculated, including Kickstarter's cut and tax obligations.

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Ralith 15y ago

Echoes of Eternia comes immediately to mind: http://www.kickstarter.com/projects/1465600975/echoes-of-eternia-a-modern-take-on-a-classic-desig http://www.kickstarter.com/projects/1465600975/echoes-of-ete...

hristov 15y ago

Can somebody explain exactly how one would owe taxes on Kickstarter? Let's say you get a bunch of money from Kickstarter by preselling a game. What you have is money but you will also have a liability (i.e., the obligation to provide the game). If your funding matches your budget, by the time you fulfill your liability, (i.e., you finish the game and send it off), you will have spent most of the money on development. You would not have significant profits. So I do not see how you would owe a lot of taxes other than payroll taxes, or various incorporation taxes.