Avoid Getting Burned by Kickstarter

(Look at me, writing something semi-useful for a change! )

According to statistics just released today, 2012 saw 2,241,475 people pledge $319,786,629 to fund 18,109 projects. That’s a staggering amount of money moving through a crowdfunding platform that’s still relatively new and not fully matured. As you might expect with that kind of volume, a large amount of projects aren’t successful. It’s disappointing for everyone involved when this happens, but at least pledges are returned safely to backers.

But what about those projects which are successfully-funded but, for some reason or another, never see the light of day? Scams, failures, frauds, mismanaged funds or whatever you want to call them–they’re the “successful” projects people have pledged their hard-earned money to only for nothing to ever materialize. Over the past year I’ve seen several notable cases (like this one and most notably this one) of these phantom Kickstarter projects making the news–one of which I even pledged to (more on that in a bit–see #8).

As someone who has backed over a dozen projects on Kickstarter ranging anywhere from $1 to over $250–some of which were successful, a few which were not so lucky–I feel I’m at least moderately qualified to dispense a few pieces of advice about how to be smarter about managing your pledges and avoid getting burned.

1. Be aware of the risks up front and understand what you’re really getting into.

There’s this gross misconception that Kickstarter is like a store where you can pre-order goods that you’re guaranteed to get. This could not be further from the truth. Your Kickstarter pledge is more like an investment. You are investing money in a project you believe in but there’s no guarantee you’ll get a return. Kickstarter is just the middle man who provides the funding platform, and they are not obligated in any way to reimburse you if the project doesn’t deliver. I recommend reading this article for a better understanding of how Kickstarter works and what risks you, the backer, assume when you pledge money to a project.

2. Pay attention to those “estimated delivery” dates.

They’re just that–an estimation. You can save yourself a lot of grief and heartache if you treat them as such. In fact, I would advise you to expect delays, because in my experience, it’s rare that successful Kickstarter projects are able to deliver on time. Again, this is part of that whole “understand what you’re really getting into” point I mentioned above. If you’re really passionate about a project, delays are forgivable if they mean ending up with a better finished product. Most backers understand this and support projects regardless.

3. Stick with what you know.

I’ve found the “safest” projects to pledge money to are those whose creators have a proven track record of successfully delivering a similar product, or projects Kickstarted by people I know, whether through a friend or even a friend of a friend. Two examples that come to mind for me: I donated to Jane Jensen’s Pinkerton Road project because I’m familiar with Jane’s work as a game designer and I know she’s capable of producing a quality game based on her veteran industry status, accomplishments, and previous work. I also donated to Strange Kid Comix magazine because several of my friends in the blogosphere contributed articles and had a vested interest in seeing the magazine published. Which brings me to my next point…

4. Size up the situation and adjust your pledges accordingly.

Rather than blindly giving your money away, take the time to really investigate the people you’re backing. Do some research. Question their motives. Compare the the amount of money they’re asking for with the scope of the project–does it seem unrealistic? Suspiciously greedy? Treat the situation as you would an investment. If something doesn’t seem to add up or rubs you the wrong way but you still think it’s a cool project and want to support it, lower your pledge–or don’t pledge at all! Even though there’s tiered pledge amounts, there’s no rule that says you have to pledge at those amounts. How about only pledging $1?

Here’s a good case study: I only donated $5 to a game called Haunts: The Manse Macabre because I wasn’t familiar with the developers and their Kickstarter presentation didn’t seem as polished or professional as other games I’ve pledged. And thank goodness for that because this project DID end up being one of the ones that fell apart after being successfully funded. The lead developer quit, the money well ran dry, and now the project owner is scrambling to resurrect the game with volunteer help from the open-source community. I really don’t care about losing that five bucks. It was a very tiny risk I took based on my assessment of the project. I’m happy to consider it a donation toward…whatever this game becomes. But I imagine I’d be pretty ticked if it was something like $25 or more.

And that’s a great segue into my next point…

5. Just because a Kickstarter project was successful doesn’t mean you’ll get anything from it.

With Kickstarter, you have to keep in mind there are no guarantees. You, the backer, assume all of the risk when donating to Kickstarter projects. Sure, Kickstarter’s terms of service may state that project owners are legally required to make good on their pledge rewards–but those are just words that exist solely to provide a legal recourse for backers. If that situation ever does arise, you’re the one responsible for pursuing legal action. And would legal costs really be worth it compared to the meager amount you pledged?

6. Keep close tabs on the projects you’re backing.

Don’t just pledge money to a project and then do nothing but wait around until it’s funded (or fails). Keep a close eye on the projects you’re backing. Read all of the updates. Be active in the community. Monitor the situation with a critical eye. If things look like they’re starting to go south for any reason, the things you’re hearing from the creator don’t seem trustworthy, or you just get a bad feeling about anything, you can always pull out (see #7).

7. Remember: you have the power to withdraw your pledge!

Once you’ve backed a project you are under no obligation to continue backing it. Kickstarter does not remove any money from your account until the time runs out on the project’s funding period after achieving “Successfully Funded” status. Just remember that you can pull your pledge at any time while the project is still active.

8. Most problems can be resolved through effective communication.

Is the project you pledged late on delivering what was promised? Did you receive the wrong reward? Usually these kinds of issues can be resolved through communicating directly with the project creator, using Kickstarter’s built-in communication tools, comment system, or getting in touch with project owners outside of Kickstarter. I always check to see if the people I’m backing provide a means of contacting them outside of Kickstarter, such as through email, social media, or a website. I feel better having that extra layer of legitimacy, knowing I can contact them via another channel if I ever need to. Backers who pledged the Fairy Quest project, for example, experienced extreme delays in receiving the finished product, due to a changeover in staff who was managing the shipments, and a mailing database mix-up. After backers took to Kickstarter’s comments and message system, the project owner stepped in personally and was able to get everything sorted out and all the shipments on their way. There was no need for torches and pitchforks–just a little patience and communication.

9. Exercise your powers as a backer.

Despite what it may seem, backers are not completely powerless. We have the power and collective voice to hold project owners accountable. If something about a project looks shady, speak up. Ask the hard questions. Interact with other backers. Take advantage of Kickstarter’s communication tools. Use social media to your advantage. Call it like you see it and share your opinions on Twitter, in the comment sections of blogs promoting the project, and other places where people are deciding to pledge their hard-earned money or not. One of the great things about this internet of ours is how judicious and democratic it allows us to be with our support and opinions.

10. Backer Beware.

This is kind of a reiteration of my first point, but it’s worth stating again, with a little more context. The larger Kickstarter grows, the more potential for scams, misconduct, and fraudulent activity. There’s also a huge gray area for projects that technically aren’t scams but make you stop and question the motivations and integrity of the project creators. Now that Kickstarter has proven to be a viable and successful way to fund projects–especially for the gaming industry–I have the sneaking suspicion that more and more people are abusing it. I’ve seen game developers using Kickstarter as an easy cash-grab even though they have other avenues of funding available to them. I’ve also seen cases where people are using Kickstarter to fund projects that are already complete and don’t need any more money–but that doesn’t stop them from jumping on the crowdfunding bandwagon to panhandle for some more. As should be the case with any transaction involving your money, keep your guard up, use good judgement and common sense.