But it most definitely IS a preorder platform in function, most people visw it sas an investment, and the concept relies on charity! Drink all the flavor-aid you want, but KS MOST DEFINITELY is primarily a preorder system, masquerading as investment.

I know nothing about X but I will state serious concern Y anyway.

Gambitious is a crowfunding platform that actually allows equity investments:

www.gambitious.com

I can understand that. But, most of the things that I back wouldn't be done at all otherwise. It's also proven to be one of the few ways of demonstrating to the gaming industry that there's still a market for P&C adventure games.

But, yeah, a lot of the projects don't deserve to be funded as they should be able to self fund and do a proper pre-order once the production has started.

BTW, quirky.com is a bit like KS, but you get a small sliver of the profits if you participate in the production or preorder one of the units.

Sorta, but not really.

Kickstarter has elements of pre-order, but it's not that because you can do more than pre-order things. It has elements of investment, but it's not an investment platform, because there also real indication you'll get an actual 'return' on your investment. It has an element of charity, but it's not entirely charity because often there are items of value in exchange for your backing.

To call it any one of those things is erroneous, because it only paints part of the picture. It can only be defined as "crowd funding", because that's what t is, and that encompasses all of the above elements.

Nothing comes out of any accounts until a project funds.
It's patronage with a lot of patrons instead of just one. Patrons often enjoyed the fruits of their funding, but not exclusively so.

"What I like best about his argument is its complete factual inaccuracy."

No, it is not merely a "glorified" pre-order. A traditional pre-order happens when the creator has already secured his funding from other sources. This happens when the creator needs to secure his funding.

And it seems to me you are missing the point, this is not about getting a share. All the kickstarters I contributed to I did because of any or all of the following: 1) I wanted to help the creator do his thing, 2) I wanted the creator to do his thing free from outside interference/preconditions a traditional funding method would entail, 3) I wanted to get what the creator wanted to create and it wasn't gonna happen any other way.

I think its important to realise that getting funding from traditional investment methods can be very hard. If anyone has ever watched Dragons Den then you can often see some legitimate ideas and concepts which will turn a profit after investment - however the Dragons often don't invest because the scale of the return for their investment is just too small for them.

If you need large amounts of money you have to source that, sadly often as not regular investors putting up large sums want a return, and they want a bigger and faster return than if they'd just left it in the bank to gather interest. This can be a barrier as many investors don't want to invest in marginal, new or small niche products and will instead invest in proven concepts (They are, after all, already proven to give a level of return).


Furthermore lets not forget that with a big investment can often come company control reduction of the original owners. They end up partners or having to follow the instructions of their investors - that might well compromise or change the nature of the project itself.

In addition taking on regular investors means that the company will often have to pay out to those investors for a very long time (if not indefinably). Now whilst this comes with the bonus of gaining the needed funds it is another drain on the companies income.


Crowd sourcing lets companies avoid many of these problems although it also raises its own problems. A person able to invest in your company will likely have additional funds at their disposal which can be critical if unforeseen events occur which increase your costs and require re-investment to continue. That is a lot harder to do when you have 100s or even 1000s of investors - the potential is there, but there is also the fact that its a lot harder to talk to them on a one to one basis and some might not re-invest.

In the end it is a risk, but for typical crowd sourcing investors the risk is very minimal, in fact its only a risk to their hobby money; ie their disposable income. If the project fails then they are not financially crippled by it - regular investors can be if they have put a major amount of their investment money into a project.

Kickstarter is Kickstarter. There are parallels between pledging to Kickstarter and making an investment, and there are parallels to placing a pre-order, but it never claims to be either, and trying to unilaterally define it to be one or the other, and then complain when it isn't ("This thing that never claims to be an investment vehicle fails as an investment vehicle!") doesn't seem to me to serve much purpose.

Of course Kickstarter is always a gamble and can be abused. There is no guarantee that the devs won't simply take the money and run (although they are obliged to fulfill the pledge rewards, there are surely countless ways to dodge that obligation). And even leaving bad will aside, there is no guarantee that the devs will succeed with what they planned. But up to now it seems to be working and it is a chance to create games that would otherwise not be financed because the big publishers (have to) fear the risk of (apparent) niche products.

Kickstarter is not just about games. Or projects that are delivered. Or to fund something that will guarantee a profit / be replicated (the sculpture example above). This local project that I have funded, for example, will not give me back anything of any value, directly. But it'll enable the people behind it to produce goods I can purchase - separately from my Kickstarter pledge. In this case it is more akin to a charitable donation.

I.e. Kickstarter and similar crowd-funding pages are something different than the established 'traditional' funding streams and don't fit the box you try to push them into. Some projects may use it in a way more like traditional investments / pre-orders, others don't.

KS is great in collecting money. About a hundred million dollar was it last year, right? That's huge. That's many, many jobs created. Now if they are also great on the delivering side... can be rightfully doubted. I think more experience is needed and everybody should be carefully selecting projects. That means only support projects that have an experienced team with a history in the profession and which is reacting to your question satisfactorily and who have an idea that sounds realistic and want to make a product, you really want to support and make it happen and don't ask for too much money. Low tiers probably should be preferred unless you are doing it for charity. Apart from that I think KS is a great invention.


So you have to be selective. Don't back everything but also distribute your money among different ones lowering the risk additionally.

And the best thing: start a KS project yourself and profit from the fruits of crowdfunding. Everybody can be on the other side.

Let's start a KS to project to take over GOG. All we need is a 50 million US-$ and soon every backer will have the whole catalogue for free. :)

In a way that's the law of the market. The implicit assumption is that the less profitable investments are also the least beneficial or desirable. In the best case it promotes that the best projects are realized. Now the in my eyes relatively open question is who has an edge: KS or traditional investors. KS backers might give crazy projects a chance but will face more often failure. KS backers might have a better feeling what customers want as they are part of it but maybe they lack professional judgement about the viability of a project. Probably both will find a niche.