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Isn't that a seed round? I don't see why crowdfunding should be any different than more formal investors here.

by Firehed 14y ago

guiambros 14y ago
Not at all. Founders (usually) give updates to their investors. They report the progress, ask for help, explain the issues. When things go wrong, usually investors are the first ones to offer help - providing experience, contacts, or sometimes more money. It's their money that is at stake, after all. That's exactly the opposite of failed projects on Kickstarter. Usually (and I'm generalizing here; just using my own sample of 60-70 projects I sponsored, with 5% failure rate or so) the authors simply stop providing updates. They realize they were overly ambitious, or underestimated the costs, or had issues with the team, or simply don't have the competence needed to execute within the time/budget available. Updates become more sparse, and eventually stops. The crowd starts to smell blood and gets angry, digs personal information about the founder, and things get nasty really quick. Just like it happened with the OP, or OpenVizla, or several other pseudo-failed projects. I still think we need one good public failure, with all the drama associated, to clarify to everybody - authors & backers - some very wrong misconceptions about crowdsourcing. Yes, projects CAN fail, and as a backer you have to accept that risk, or wait to buy the product at Amazon. But no, authors cannot simply disappear, run ashamed of their own failure. It doesn't matter if you underestimated the effort, or worked really hard over the weekends, or lost your day job, or life got in the way. Nothing will matter, unless you explain, clearly, to your backers. They may get pissed off, but it's better than the alternative. Authors have to understand that if the ship sinks, you'll have to man up and stay till the end. So be prepared; this is not a free ride, with zero risks. Another thing that would be very positive is to have public financial disclosure. Authors should be required to submit a financial plan explaining how the money will be used - and another one mid-project explain how the money was spent. I'm sure it'd be eye opening, in both ways (people would see how expensive it is to make, say, a game, and authors would think twice before spending every penny).
- Firehed 14y ago
  Ok... but what you described about how traditional investment works is how Kickstarter tells their project-runners to operate. My point was that KS and traditional investment should operate in more or less the same way, especially regarding issues - whether that's simply letting people know they've hit a snag and are working on it, or are asking for advice on the best way to proceed. I realize it's difficult to scale the concept of a seed round to hundreds or thousands of backers, but an email blast to 5-10 is just as easy (or hard) to write as one going to 5000. You just need much better filters on the responses.

Isn't that a seed round? I don't see why crowdfunding should be any different than more formal investors here.

by Firehed 14y ago

Isn't that a seed round? I don't see why crowdfunding should be any different than more formal investors here.

Not at all. Founders (usually) give updates to their investors. They report the progress, ask for help, explain the issues. When things go wrong, usually investors are the first ones to offer help - providing experience, contacts, or sometimes more money. It's their money that is at stake, after all. That's exactly the opposite of failed projects on Kickstarter. Usually (and I'm generalizing here; just using my own sample of 60-70 projects I sponsored, with 5% failure rate or so) the authors simply stop providing updates. They realize they were overly ambitious, or underestimated the costs, or had issues with the team, or simply don't have the competence needed to execute within the time/budget available. Updates become more sparse, and eventually stops. The crowd starts to smell blood and gets angry, digs personal information about the founder, and things get nasty really quick. Just like it happened with the OP, or OpenVizla, or several other pseudo-failed projects. I still think we need one good public failure, with all the drama associated, to clarify to everybody - authors & backers - some very wrong misconceptions about crowdsourcing. Yes, projects CAN fail, and as a backer you have to accept that risk, or wait to buy the product at Amazon. But no, authors cannot simply disappear, run ashamed of their own failure. It doesn't matter if you underestimated the effort, or worked really hard over the weekends, or lost your day job, or life got in the way. Nothing will matter, unless you explain, clearly, to your backers. They may get pissed off, but it's better than the alternative. Authors have to understand that if the ship sinks, you'll have to man up and stay till the end. So be prepared; this is not a free ride, with zero risks. Another thing that would be very positive is to have public financial disclosure. Authors should be required to submit a financial plan explaining how the money will be used - and another one mid-project explain how the money was spent. I'm sure it'd be eye opening, in both ways (people would see how expensive it is to make, say, a game, and authors would think twice before spending every penny).

Firehed 14y ago
Ok... but what you described about how traditional investment works is how Kickstarter tells their project-runners to operate. My point was that KS and traditional investment should operate in more or less the same way, especially regarding issues - whether that's simply letting people know they've hit a snag and are working on it, or are asking for advice on the best way to proceed. I realize it's difficult to scale the concept of a seed round to hundreds or thousands of backers, but an email blast to 5-10 is just as easy (or hard) to write as one going to 5000. You just need much better filters on the responses.