the creators of Mousr, an autonomous cat toy, launched their crowdfunding campaign in 2013, they hoped it would either be a clear viral hit or an obvious failure.
“The goal was $100,000. We raised $117,000,” says Dave Cohen, one of the co-founders. “We got pretty much as middle of the road as we could.”
Still, the team took the cash and began work on their product. They anticipated shipping within a year of launch, but backers ultimately didn’t receive their cat toy until four years later, in 2018.
“I think the saddest part for us was the total span of our project development was 20, 25 percent of a cat’s lifespan, so when you have 1,000 backers, it’s going to happen where cats pass away that were hoping to play with this,” Cohen says. “That’s still a hard thing to watch.”
Mousr’s situation isn’t atypical. Crowdfunded gadgets are sometimes delayed for months or years, and in some cases, they never ship at all. To address this, crowdfunding sites have been making changes designed to keep backers informed, support campaigns so they don’t end up failing, and ensure accountability if they do. The changes can protect backers from giving money to a project that never materializes. But in some cases, they also reshape the very idea of crowdfunding, taking away all of the risk from a concept that was built around it.
Indiegogo and Kickstarter both now offer tools that can help to get first-time hardware makers through the production process. The platforms each work with third parties that assist in manufacturing: Avnet and Dragon Innovation for Kickstarter and Arrow Electronics for Indiegogo.
Kickstarter also says it reaches out to campaign founders and works with them ahead of launch to verify their identity and ensure they update backers. In cases where a product hasn’t shipped, Kickstarter might try to find answers for the backers, and, if necessary, it will work alongside law enforcement in potential cases of fraud.
Jon Leland, senior director of strategy and insights at Kickstarter, also says Kickstarter is looking to build “a number of tools related to transparency on campaigns” that are “fairly radical.” Kickstarter plans to build out its Hardware Studio initiative as well, which helps founders navigate manufacturing.
Indiegogo tells The Verge it’ll launch multiple campaigns this year with a “guaranteed delivery” badge that tells backers they’ll either receive their product or a refund. The Vergefirst reported on this new funding model, which was initially called guaranteed shipping. Under this optional model, founders won’t receive their raised funds until they begin to ship. That means companies have to already have enough cash to develop and make their product, which somewhat defeats the purpose of crowdfunding.
David Mandelbrot, Indiegogo’s CEO, believes having both options on the platform makes people more aware of the risks when it comes to traditional crowdfunding campaigns. “What we’re really trying to do is create a platform that’s flexible enough to meet the needs of the entrepreneurs and backers on our platform,” Mandelbrot says. If backers are more aware of the risks up front, he says, they may “be more understanding in those non-guaranteed delivery projects when the entrepreneur faces more challenges.”
Alongside this change, Indiegogo has welcomed more established corporate partners onto its platform. For those companies, Indiegogo serves as a marketing tool rather than a way to jump-start a company, and backers can typically rest assured they’ll receive what they ordered. General Electric, for example, used Indiegogo to launch a new ice maker, and Lego used it to launch its first product, which is aimed specifically at adults.
Mandelbrot still thinks guaranteed delivery maintains the spirit of crowdfunding, even if it requires companies to be financially secure enough to make their products without funding in their pocket. “To me, crowdfunding is defined as the elimination of the gatekeepers between the entrepreneurs and the backers,” he says. Mandelbrot also thinks guaranteed projects could spur more people to back traditional crowdfunding projects. “That means that more projects get funded, and entrepreneurs are able to raise even more money.”
Crowdfunding has launched some notable companies, like the smartwatch company Pebble, which Fitbit acquired, and the VR company Oculus, which Facebook now owns. But projects that failed to ship, especially prominent ones like the Lily Drone, have forced the platforms to reevaluate how they do business, and how they can maintain the power-to-the-people crowdfunding spirit while also protecting backers from the risks of investing in a new company.