I spend a good deal of time on Kickstarter and Indiegogo (the latter, especially) looking for travel and outdoors products to feature in Rasp And Rivet’s On Paper section.
These are great platforms and crowdfunding is an awesome way to get funding. Unfortunately that counts for good products and products that look good.
Because crowdfunding scams are prevalent, I thought I’d put together this checklist for those wishing to protect themselves from making bad investments.
Here are five tips to follow if you want to protect yourself from a crowdfunding raw deal.
Lower your expectations
Many companies that launch a crowdfunding campaign use experts to create media (especially video) highlighting their product.
It’s all smiling faces, beautiful background music and a changed world; everyone standing in a circle around the amazing, life-changing product, holding hands and singing Kumbaya.
That might suck you in immediately.
Resist the urge to fund. Don’t let a video trip up the investigative journalist inside you.
They’ve managed to create an expectation that this thing they’re selling is going to change your life for the better, forever.
Be careful of that.
Understand the concept of overpromise and underdeliver
Let’s say a guy wants to sell his rust bucket.
He takes it to the carwash, changes the oil, pumps the tyres and polishes what’s left of the body to a high gloss.
He wants this jalopy to look as much like a car as it can.
He places an ad on Gumtree along with some blurry photos taken at dawn. He tells potential buyers that this piece of junk is the apex of the automobile world.
If he’s of the disingenuous variety, he throws a few bent truths into the mix when a potential buyer comes round. He “forgets” to mention that the sump leaks and that the gearbox has turned to jelly some months ago.
It’s a piece of junk, it’s been a piece of junk for a long time and yet, now, at this pivotal moment of his wallet’s existence, the seller’s car has become a Rolls Royce.
The seller over-promised and it’s clear to everyone else that he will be under-delivering.
But not all people have good eyesight. It’s easy to persuade the blind ones that his rattletrap is the epitome of automobile grandeur.
This happens on crowdfunding platforms too.
Some companies oversell their offering and under-deliver (if they deliver at all). They tell you only what you want to hear and convince you to see only what they want you to see.
They polish their crap to a high shine and forget to mention that it doesn’t work; it only looks like it works.
The safest option is to take every claim with a pinch of salt.
Don’t be an early adopter
This flies in the face of why crowdfunding exists, but if you’re worried about whether a product is legit, refrain from being an early adopter.
Wait for the product to reach full maturity and check review sites for unbiased opinions. Make sure that the reviewer states that they actually own the product.
Sometimes all it takes is a Google search to see counter opinions of a product.
Take the KAISR Original, for instance. Their name is deceptive. They did not invent the product they tried to sell, nor were they the first to sell it.
This same product has been available from many sources, under a slew of different names, long before they started out.
Yet they managed to convince people to give them $4,129,046. They received 19415% of their campaign on Indiegogo!
How is this possible?
A simple Google search should have shown crowdfunders that there was something amiss.
You could blame KAISR for being deceptive, but the real problem is not with them. They would not have enjoyed this sort of exposure if people were more vigilant.
Use Google to search for the company name. Get the name of individuals involved in the company. Search their names on Google. If you can’t find their names, ask yourself why they’re not transparent.
Contact the company
Send them an email or give them a call. This is a great way to see how they respond and what they respond with. Ask a critical question.
Take note of how they answer.
Let’s use KAISR as an example again. If you do a search for their name on Facebook you’ll come across their Facebook page. Here you’ll find a whole lot of ranting and raving and a company that doesn’t respond. These are neon red lights.
Further investigation leads to the KAISR Original Backers Page, where you’ll find valuable info about the company and their product.
Bonus tip: use Kickscammed
I came across Kickscammed while checking up on what happened to the KAISR Original.
Kickscammed offers a great service. They report scammy crowdfunding projects. You can support them too, by reporting possible scams, which they’ll post to Kickscammed if valid.
Crowdfunding sites have been the launchpad for great products, and continues to offer companies a wonderful way to connect with investors.
Although some companies and individuals abuse crowdfunding platforms, countless amazing products receive the funding they deserve.
But be careful. Before you commit, perform a few simple background checks. If you’re uncertain about something, don’t invest. Don’t trust your feelings.