When I first heard about Kickstarter I thought it was a novel approach for people with ideas to get funding from a community of users who would like that item/service but for which banks and other regular sources of funding might not be so willing to lend funds to.
Now I’m not so sure. For every original project requiring funding there appear to be 6 or 7 dubious projects that, quite frankly, should be directed towards a bank.
My biggest bugbear are those projects set up by quite successful trading individuals and companies who are looking to expand their operation. You can’t go on social media these days without someone hawking their Kickstarter project to pay for new premises or a bigger and faster version of a piece of equipment that they already have.
I’m sick of reading bullshit business plans that 2 or 3 years ago a bank would have gladly lent funds for, even during the recession, if only the person behind the project wasn’t too tight to go take out a loan and pay it and the interest on it back. Instead they crowdfund by offering pre-orders of whatever product is being sold to the backers.
In some instances this is not such a bad thing, in mind I’m thinking of one project I saw and backed where a designer had created a design for a range of bed linen but needed enough funds to cover production costs, the reward was a set of bed linen. I could get behind that idea as I envisaged the reaction a bank would have; something along the lines of, “You want money to make bed linen? Who is going to buy it?”
It’d be a tough sell to the bank and then you’d be faced with waiting until you had sold everything. With Kickstarter you know who your customers are before hand and they’re happy to pay up-front knowing they’ll get their linen in a few months time and they can then humblebrag about how they helped an independent small business (see what I did there?)
Contrast that with a food trader, we’ll call him Mick, who is generating a weekly income from his one mobile outlet selling crepes but Mick wants to expand and open another outlet because everyone just loves his £5 a pop crepes and he can’t be in two places at once currently. I use food as an example because I’m both hungry and there’s a lot of street food vendors plying their wares on Kickstarter.
In any other instance Mick would rock up to his bank, armed with his accounts, projections and business plan and his bank manager would say, “Sure, here’s £20k pay it back over Xyrs at £XYZ a month” and everyone is happy. Or would have been.
Now with crowdfunding, Mick doesn’t want to, or indeed have to, pay anything back. He pops along to Kickstarter, uploads his business plan and offers his backers rewards in the guise of a shit load of crepes (they only cost Mick 75p to make), maybe a few badges, possibly a t-shirt and who knows, maybe even a tote bag if they invest £1,000.
Mick’s crepes are very popular and in demand at the various food pitches he attends and no doubt backers will feel it’s a great investment if they’re going to get 6 months of crepes for just £300. However that’s a lot of crepes to be snarfed before you’ve realised your investment (60 in this scenario) and whilst it’s great that you can get Mick’s crepes every Tuesday at the Kings Cross pitch near the office, what about the other 6 days of the week?
The reality is more likely to be that in order to get a return on your investment you’ll find yourself traversing the length and breadth of London, to postcodes you didn’t know existed because Mick cleverly stipulated you can only claim 1 crepe a day or unlimited crepes, as long as you order them in person, 2 at a time.
Now, don’t get me wrong, there are some great projects on Kickstarter but they are becoming the minority as far as I can see and I’m finding it harder to get behind a lot of them as more and more people treat it as an alternative to a bank loan. If you do browse Kickstarter think carefully before committing your hard-earned, in most cases, money.
Is the reward worth your investment? Will you actually make use of the reward? If not, it’s a donation and would you rather donate £300 to a guy who wants to sell crepes to hipsters or to a worthwhile cause (there’s still a few of them out there) that could make a difference to people’s/animal’s lives with that £300?
The above scenario is fictitious and any similarity is purely coincidental. I’m not aware of any crepe vendors called Mick much less one who has used Kickstarter to raise funds. If you’ve got a Kickstarter running and the above scenario sounds like you, don’t be offended, you’re just one of many who have earned this rant, even though I’m unlikely to have seen your project.
What do you think about Kickstarter? Have you ran a successful project or even one that failed? Would you do it again or stay well clear? Leave a comment below but try not to just post a link to one you have running or I’ll have to get my link eraser out.