I was always curious, what happens if Kickstarter(and other similar crowd funding projects) project doesn't reach the goal? Let's say it has reached 40% funding goal and creators will decide to cancel the project? Will the money paid by the supporters get charged back/refunded to their bank accounts? If not, there might be a pretty elaborate modern day scams - some authors starting a Kickstarter knowing that the project is doomed, but just enough interesting to receive some donations. I have never used Kickstarter, correct me if I'm wrong.

Kickstarter only takes funds when a project ends successfully. You could scam by pushing it over the edge with your own money, of course, but it's not as simple as just siphoning money from people. You can do that with IndieGoGo flexible funding, though.

Also, it is illegal. Kickstarter does apparently legally require creators to deliver on their tier rewards or provide equal compensation.

You aren't charged unless the project is above its goal at the end of the funding period. You won't be charged at all during the campaign.

Im actually wondering about this because if the KS project uses US amazon, people just pledge and funds are only taken once project is successful on KS. If not successful no money is taken anyway.
Does the UK amazon payment system used goes through same process with UK projects?. Reason i ask is it seems to ask for your cc details directly when your making a pledge for a project

They both require your card info, but it's only charged when the projects end successfully.

I am skeptical about KS, but for entirely different reasons.

The concept is in FACT a glorified pre-order service, where those who enable the project get a tiny discount on the retail price, in return for having their money tied up for months or years.

The concept tries to be an investment vehicle, which of course it fails miserably at, since no consumer product, by definition, is an investment.

The ONLY way I would kickstart ANY project would be if I got a royalty on sales, however small, or shares in the company, IE, real investment.

Oh i thought there was a slight difference as UK projects tend to require the CC details directly when you pledge, whereas US ones go through the usual amazon payments screen... Its not an investment though. Technically its a donation to a project if successfully funded, could easily fail afterwards... ie unscrupulous devs run away with a carload of money. Not sure how anyone could see this an an investment.....

Oh, I misunderstood you. I assume it works the same in any case, though.

Giving shares to pledgers would be pretty much impossible. The amount of people and the potential profits would be so miniscule in most cases, that nobody would ever get anything but pennies and not even that.

There's however some other site (which name I don't remember), which operates with that idea, you just have to pldge a lot more money than 10 dollars in there to actually get your shares.

Might as well invest in normal shares then. Less risky (so to say ) :P

This. I recall reading an article about Tim Schafer and his KS campaign; he said no company wanted to publish his idea, so he had to turn to those who care: the consumers. Sure, it's risky: the devs could run out of money or the project could fail for some other reason. But, if it succeeds, you'll get the product which otherwise wouldn't exist at all. Anyone who thinks they are guaranteed to receive the product the devs want to make, is backing for wrong reasons - ultimately, you're backing the idea that the product in question might see the light of day, nothing more. Of course, should the product get finished, you always receive it at a lesser price: the reward for waiting the months/years it took for the product to be finished.

Here's what I have backed:
Project Eternity
Xenonauts
Dead State (really, REALLY hope this one gets finished, looks super awesome!)
Haunts: The Manse Macabre (the example that Kickstarters can indeed fail, even if fully funded, although not all is lost yet; Rick is still doing his best to deliver and called help from backers with programming know-how)
Carmageddon: Reincarnation
Wasteland 2
Make Leisure Suit Larry come again

So that's seven in total. Games I would've bought anyway when/if they hit the shelves, so why not support the development process and maybe get the game for a lesser price.

Your return upon your investment is the product and the pledge rewards that you claim (if indeed you choose to claim any). Yes its not typical investment in that you don't get a constant stream of money or shares or suchlike, but you do get a return upon your investment - a product (or it might be less if you choose to contribute less - depending upon the rewards on offer).

It is also investment, the goals and companies are in need of the money to invest in their project to continue it through to development; now this can be done at many stages from funding concepts and ideas through to a finshed product to helping to overcome the final stages of taking a product from a finished item and into mass production.

Remember even if the company has a finished product the actual process of producing your first batch orders costs a significant amount of money - those using it just for pre-orders are not freeloading on the idea and are likely in great need of that financial investment to help them build up the stock levels to go with a major product release (as opposed to being restricted to a longer lag time waiting to build up those funds or a smaller release that might simply have too small a footprint on the market to gain a secure foothold).


KS itself doesn't validate a companies ability to deliver on their project either - they leave that to the investors to judge for themselves. KS itself is only aiming to join interested businesses in need of investment with a crowd source based market of potential investors (ie the customers/public). The whole process is very open to the point where KS even requires of KS projects to note potential problems in their proposal on their main KS page.



In the end I do agree that KS and the whole concept is not for everyone; some people are going to invest in lots of things and others are not. There is no shame in that, its just a different approach. Myself I often talk of the bonuses of KS and yet I've funded almost nothing (although that's more a reflection on having limited funds and other commitments that tend to soak up what ready money I have). I do believe that the process itself is solid though and I also keep an eye on several KS projects which were funded and of which I've an interest in once they mature to a finished product.

Kickstarter is NOT:
An investment platform.
A pre-order platform.
A charity platform.

Kickstarter is a Crowd-Funding platform and a gamble, to call it anything else is inaccurate.

Kickstarter exists to help artists and creators, of absolutely any medium, gain the funding in order to produce something that they can not afford to do otherwise. In some cases it's an artist seeking to make a sculptural piece that they cannot afford all the material for on their own, in others it's an author seeking to get enough money to get their novel(s) professionally edited and printed (along with possible marketing expenses).. it can also be a game developer, be it single or entire company, looking to get a game put together that is outside of what a normal publisher would pick up. It can be a group producing their own tabletop RPG.. it could be a film maker trying to get his Steampunk web series off the ground. These (and more) are all just examples of projects I personally have backed, the list of potential KS projects is endless.

Kickstarter only really requires a few things:
Your KS campaign has to be for a project- it can't be a "fund my vacation" (Now it could be "I want to produce a book of underwater photographs, fund my 5 month SCUBA diving adventure to get the photographs for the book." - whether or not that would be a success is an entirely different story), it can't be a "I'm starting a business!" (Creating a business can be part of what you're doing, of course), etc. There has to be something at least semi-artistic, that has an end result.
You must set an amount of money to seek. (No "just give me money, whatever I get is good")
You must make good on any promises you make for reward tiers.

There is no requirement of goods with any form of monetary value being sent to your backers.
Let's go back to the "underwater photography book" project, just for shits and giggles. You could have the only reward be "A personalized thank you email".

Kickstarter is meant to appeal to the people who want to help awesome independent artists create something- That it's been considered some kind of "pre-order" system and a marketing tool (Fuck you, Trick Concepts) is horrible. It's grown way to gorram big.

That aside:
As has been mentioned, Kickstarter only ever takes the money if funding is a success. That isn't to say that you'll never lose your money though, unfortunately.

Projects fail, it's not common (yet), but they do sometimes.. someone miscalculates costs, runs in to a major snag, personal issues, death, etc.. Life happens to everyone. Sometimes, also, people are just shit business men and/or con artists.. Kickstarter has a lot of potential to con artists, honestly.

That said, however, Kickstarter does offer some legal 'protection' to backers. Creating a project you are required to read and agree to the ToS/contract, which indicates that you have to "deliver the promised rewards for tiers by the date promised" or refund the money of any backer who has requested otherwise.
May not seem like much, but the way it is written gives backers the ability to pursue legal action against the project creator if they fail to deliver.. of course, Kickstarter has all their information on file. >.>

Is one backer going to pursue legal action? Probably not, since most pledge for $50 or less. However, if it becomes apparent that someone was using Kickstarter as a scam platform, a large number of the backers can band together and form a lawsuit- which has happened at least once.

In general, some simple rules to backing Kickstarters that will help you not get burned:
1) Never back more than you can afford to lose. Seriously.
2) Pay attention to things like what kind of experience the creators have in the field they're working in.
3) Watch for "too good to be true" projects.
4) Back projects that are already in the works- it shows that the creators are passionate about what they do and just can't afford to do it on their own dime anymore.
5) Only back projects that the money they're asking seems reasonable for the project they're working on.
6) Never be afraid to cancel your pledge if something just doesn't seem right.

(For the record, I've been using Kickstarter since almost the beginning, have backed 24 projects (plus 2 I've backed out of), 3 of those have failed. Of the remaining 21, 12 have been completed, and the remaining 9 are all still actively plugging away at their work- The oldest 'most recent' update is from 1/12/13.

I am stopping with Kickstarter for a while, simply because I've spent too much money on projects >.>)

There are good projects and bad projects. I believe that there is a 'wisdom of the crowds' at work that helps with gauging whether or not a project is worth backing. However, it is always a good idea to look at all of the materials that the kickstarter presents, because the proof of whether or not they can handle the project is often quite clear in the presentation. When it comes down to it, a Kickstarter is an calculated risk, but the payoff for consumers can be tremendous.


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