Kickstarter makes changes; says the site is "not a store"

The crowd funding website Kickstarter has jump started the development of a number of hardware and software projects in the past year, including products such as the the upcoming Android-based $99 game console Ouya and the Pebble eWatch. Many of these projects, including a number of PC games, have generated millions of dollars via Kickstarter backers.

Now, the site's organizers are making some changes to make sure that the people who fund the projects, along with the projects themselves, have a better understanding of what being hosted on Kickstarter actually means. In a blog post today, Kickstarter said:

It's hard to know how many people feel like they're shopping at a store when they're backing projects on Kickstarter, but we want to make sure that it's no one. Today we're introducing a number of changes to reinforce that Kickstarter isn’t a store — it’s a new way for creators and audiences to work together to make things.

One of the changes will require that all Kickstarter projects display their answer to the question, "What are the risks and challenges this project faces, and what qualifies you to overcome them?”. This is supposed to give any potential Kickstarter backers a better idea about if the people behind a project can actually pull it off.

In addition, Hardware and Product Design Kickstarter projects can no longer show project simulations or renderings, saying, "Products should be presented as they are. Over-promising leads to higher expectations for backers. The best rule of thumb: under-promise and over-deliver." Finally, Hardware and Product Design projects on the site cannot offer multiple quantities of a reward, saying, "The development of new products can be especially complex for creators and offering multiple quantities feels premature, and can imply that products are shrink-wrapped and ready to ship."

Source: Kickstarter website | Image via Kickstarter

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To everyone using the term "investment" or "investing" - you are not making an investment or investing in anything when backing a project on a site like Kickstarter or IndieGoGo. These sites are very careful not to use any term related to those because investment implies return and is heavily overseen by federal regulation. With these sites, there is no recourse if a project gets fully funded, takes your money and nothing happens.

It's better to think of it as a pre-order. You believe that the project creator can and will make the thing and are willing to put your money to buy one up front to make sure it happens.

As for not losing money - it's still possible. Just because a project gets funded does not mean the project was successful. Funding is only the first stage. After the project gets the funds, they still have to actually go and make the thing.

@Sranshaft - You replied back to @mrp04 with the following:

You don't get charged for your pledge unless the project gets fully funded. You don't lose any investments for failed projects.

While the first statement is true, your second is false. Just because a project gets funded, doesn't mean that it's going to succeed and be completed. (Maybe they underestimated the amount of money that they needed.)

I've personally invested in dozens of companies over the last 10 years (they are funded), and have not succeeded for various reasons.

I'd personally love to see every Kickstarter project have a business plan and provide an overview of where they money is going to be used. If a group of individuals comes to me and asks for $100,000.00, I personally want to have an idea of it's use. (It's still my money until the investment is returned.)

Kaos DComo said,
@Sranshaft - You replied back to @mrp04 with the following:

You don't get charged for your pledge unless the project gets fully funded. You don't lose any investments for failed projects.

While the first statement is true, your second is false. Just because a project gets funded, doesn't mean that it's going to succeed and be completed. (Maybe they underestimated the amount of money that they needed.)

I've personally invested in dozens of companies over the last 10 years (they are funded), and have not succeeded for various reasons.

I'd personally love to see every Kickstarter project have a business plan and provide an overview of where they money is going to be used. If a group of individuals comes to me and asks for $100,000.00, I personally want to have an idea of it's use. (It's still my money until the investment is returned.)


There's also the case where a project gets a lot more money than expected -- and they weren't prepared for that high of a scale. I backed a lockpick project that hoped to raise $6k. It raised around $85k, and the picks haven't been made yet -- ~2 years later. (the project is still alive; I just received some other things a few weeks ago, but not the picks).

Kickstarter is pretty risky to put your money into. You basically invest and if the project works you get one of the first batches of product. If it fails your money is gone. It's much safer to just see if it comes to market, and if it does just buy it then.

mrp04 said,
Kickstarter is pretty risky to put your money into. You basically invest and if the project works you get one of the first batches of product. If it fails your money is gone. It's much safer to just see if it comes to market, and if it does just buy it then.

Some ideas are too good not to invest in.
And whilst banks take interest, kickstarter backers take rebates, and if you're lucky quite big ones at that.

In the end, the same economic principles apply.

GS:mac

Glassed Silver said,

Some ideas are too good not to invest in.
And whilst banks take interest, kickstarter backers take rebates, and if you're lucky quite big ones at that.

In the end, the same economic principles apply.

GS:mac

You get a rebate? Like a return on your investment plus some extra? I thought you just get one of the products.

mrp04 said,

You get a rebate? Like a return on your investment plus some extra? I thought you just get one of the products.

You don't get a rebate. You get the product at a discounted price; less than the normal consumer that buys it off the shelf.

Also, @mrp04: You don't get charged for your pledge unless the project gets fully funded. You don't lose any investments for failed projects.

mrp04 said,
Kickstarter is pretty risky to put your money into. You basically invest and if the project works you get one of the first batches of product. If it fails your money is gone. It's much safer to just see if it comes to market, and if it does just buy it then.

It's just like any other investment, but instead of getting the bank, uncle ted or a company to sponsor you you can take it direct to the people who will buy it. Got a great idea? People like it? they can help make it a reality.

Never pleged myself but if I had extra money I'd definitely help some of the *awesome* projects that are out there

Sranshaft said,

Also, @mrp04: You don't get charged for your pledge unless the project gets fully funded. You don't lose any investments for failed projects.

People should really stop saying that. You don't lose any investment on failed fundraising campaigns. You do lose money on failed projects.

lol...

No more multiple quantities?
No more renderings?

Ugh... Why do they destroy some of the fun and possibilities...

Guess we'll see more external links in future

GS:mac

That could be bad in the case of game design (which i've backed 4 of so far).
Many games work on rendering shots of what the game should look like, hence my desire to back it. To remove that would be a problem I feel.

As for multiple quantities... not sure about that one.

Raa said,
That could be bad in the case of game design (which i've backed 4 of so far).
Many games work on rendering shots of what the game should look like, hence my desire to back it. To remove that would be a problem I feel.

As for multiple quantities... not sure about that one.

Thats software not HARDWARE.