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Another $1 Million Crowdfunded Gadget Company Collapses (techcrunch.com)

Posted by Soulskill on from the caveat-emptor dept.

An anonymous reader writes: In 2012, a company raised over a million dollars on Indiegogo to build a robotic dragonfly. It was originally supposed to be delivered in 2013. Unfortunately for backers, the company seems to be struggling to complete the project. They haven't been able to resolve issues with the drone falling apart after just a few seconds of flight. Unless they locate investors soon, they're going to run out of funds to continue work at full force. They're in the process of uploading all design work and their knowledge base, in case they have to officially cancel the project. They say some part-time work will continue as long as funds allow. The TechCrunch article warns, "This is just the latest example of how consumers need to be more careful with crowdfunding. There are no guarantees with crowdfunding and there is more risk involved than what's advertised."

15 of 109 comments (clear)

  1. Duh... by Lumpy · · Score: 5, Insightful

    They did not even have a working prototype just a bunch of guys with an idea they had on a napkin. Only fools invest in these things.

    --
    Do not look at laser with remaining good eye.
    1. Re:Duh... by west · · Score: 4, Insightful

      I think KickStarter, et al, have perhaps unintentionally blurred the lines between research, development, and order fulfillment.

      Ostensibly these organizations are supporting development, but by essentially treating projects as order fulfillment, they ignore the fact that development can fail.

      Now in this case it appears that, whether they knew it or not, people were funding research, and of course research can (and in fact usually does) fail.

      Obviously greater transparency would help, but I'm not sure that crowd-funding would survive that reality. I suspect the majority of crowd-funding participants want the feeling of actually investing/participating in development, but they don't want any of the associated risks - they just want order fulfillment.

      Personally, I'm waiting for someone like Amazon or Alibaba to optimize the order fulfillment part of they system by holding the money in escrow. The manufacturers have to get a loan based on the money held in escrow, which should be doable if (1) they have the manufacturing contracts in hand, (2) some reputation, and (3) guaranteed payment by a reputable company. Probably means there's a minimum and maximum order size, but the option of guaranteed deliverable or 100% refund would probably cause mass migration, leaving KS and others doing actual crowd-funding, with all the risks it implies.

    2. Re:Duh... by moosehooey · · Score: 3, Insightful

      But these people aren't investors. An investor has unlimited upside, so that even if a few projects fail, the ones that do succeed will make up for it. The most these project backers can get is the product they ordered. So it's all of the risk with none of the reward.

    3. Re:Duh... by loneDreamer · · Score: 4, Insightful

      Except that crowfunding has never been an "investment". You get no shares, you get no money back (certainly not more money that you put in) and the risk would be ridiculously high. It has always been about trowing a piece of disposable income for a nice idea that you would love to see realized, in the off chance it happens. ESPECIALLY if the market would never attempt such a thing. Neither the people with the dreams, nor the people that indulge in patronage deserve to be called fools.

    4. Re:Duh... by tomhath · · Score: 4, Informative

      Not really. Oculus VR had a working prototype before they launched their kickstarter. These guys raised money based on vapor.

    5. Re: Duh... by Jarik+C-Bol · · Score: 5, Insightful

      Thats his point (i think) His ideal Kickstarter is more along the lines of "Hey, i've been tinkering in my garage for the past 5 years with my own money, and have finally proven that my idea is not only cool, but not actually impossible! I have a functioning prototype that does not explode 5 seconds into use, and am now kickstarting to bring it to manufacturing and retail."

      At which point, millions of dollars are put into an escrow account by thousands of enthused people, and a loan for some amount less is issued to the inventor to actually produce the product. When units start shipping, the money from the escrow account is used to pay off the loan and any balloon expenses, with any extra going to the inventor.

      This would help filter out the people who use kickstarter in the "Hey, I have a neat idea, but i'm going to need about 500K to find out if its even physically possible." but say it in a way that insinuates that the 500K will bring it to your doorstep. Those projects belong on GoFundMe.

      --
      I've decided to Diversify my Holdings. I've divided my cash between my left and right pockets, instead of all in one.
    6. Re:Duh... by JoeMerchant · · Score: 5, Interesting

      I've "bought in" to 3 kickstarter like projects... One - an RC paper airplane, came off very much like a long lead time order fulfillment. Another, attempting to compete with Amazon Firestick and Chromecast, perhaps predictably, faltered when they tried to swim with the competition in delivery of "protected content" and ultimately refunded the "investment;" personally, I didn't want delivery of protected content and they weren't going there when I bought in, but I understand why they later decided it was "essential to the product," and from that point, their failure was all too predictable. The third: Jolla Tablet, remains to be seen.

      I've worked in a half dozen startup environment companies where a 33% success rate would be huge, and investors rarely get anything back from failures in "the real world." If you're putting money into kickstarter and similar projects, you have to know that money is at risk, subject to anything from delays to total loss. I view it more as "philanthropic investment" than product purchase. You're tossing these guys a few bucks because you believe in them, and maybe if they succeed you get the first round of cool widgets when they come out. So far, I've always eventually gotten product or a refund - that's a really amazing track record in the world of inexperienced business people.

      If you want to purchase products with hard delivery dates and money back guarantees, stick to Amazon. Startup ventures are something else entirely.

  2. ANOTHER one? by Anonymous Coward · · Score: 5, Insightful

    You do know that most ventures fail within the first few years, right?

    I mean, 1 MILLION DOLLARS? Even Trump recognizes that's a small sum—for old buildings, let alone a robotic fucking dragonfly.

    You know what, though? The crowd got what it wanted: They crowd was able to participate in helping really smart people spend a few years tinkering away on something interesting to both them and the crowd; that's exciting enough, especially if the world gets access to the fruits of their labor.

    Christ. "Another one"; get real.

    1. Re:ANOTHER one? by Beezlebub33 · · Score: 5, Insightful

      I completely agree with this sentiment.

      Making a robotic dragonfly is very hard, they had a good idea, and a plan, and were able to sell it. They spent the money trying to do it, did some research, and now they are trying to make sure what they did ends up available to everybody.

      Yeah, it's a failure in that they weren't able to do what they wanted to; but it wasn't a scam, or dishonest, just normal everyday good-effort failure.

      --
      The more people I meet, the better I like my dog.
    2. Re:ANOTHER one? by BarbaraHudson · · Score: 4, Funny

      "six year old prodigy invents perpetual motion machine"

      Six year olds ARE perpetual motion machines :-)

      --
      "Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
  3. Why more careful? by mseeger · · Score: 5, Insightful

    This is exactly what crowdfunded projects are supposed to be.Projects can fail.

    This seems to be a 100% genuine failure. I would not even regret having spent money there. Other projects (e.g. Clang!) failed in a more circumspect way.

    Indiegogo and Kickstarter are no warehouses like Amazon.

    1. Re:Why more careful? by mseeger · · Score: 3, Insightful

      Yep, it is only a failure in delivery.

      Had I spent money on it, I would not have considered the "investment" failed.

      I (co-)founded several companies in my career. The chances of success are rarely better than 1:4, rather 1:10 in most cases.

      So instead of saying "it failed" let's use "We found a 1-million-US$ approach that doesn't work" ;-).

  4. Re:It's almost as though there is a moral here by JaredOfEuropa · · Score: 4, Insightful

    There's a lesson there for our gov't buying into the F-35 programme as a tier 2 partner.

    --
    If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
  5. Re:It's almost as though there is a moral here by ranton · · Score: 4, Interesting

    Personally I like to buy things that already exist rather than plunk down money on something that doesn't, and would probably suck even (if ever) it does get made.

    Or, only spend money on kickstarter that you are willing to lose. It should be treated no differently than spending money on a trip to Vegas. If I give myself a budget of $500 to gamble with, I am perfectly happy if I leave Vegas with $10 of that money left. And if someone spends $500 on 10 kickstarter campaigns, he should be very happy if 5 of them end up sending him a product someday.

    Kickstarter is only for pie in the sky dreams that couldn't get traditionally funded, but where people want to give the founders a shot because their products sounds cool. Or at least that is how I think people should treat Kickstarter. People can spend their money however they wish.

    --
    -- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
  6. Another IndieGoGo scam by SkOink · · Score: 3, Interesting

    It's worth pointing out that Kickstarter would never have allowed this campaign. IndieGoGo is so much scammier that it's ridiculous. I don't think I'd ever 'invest' in a crowdfunding campaign from either site, but if I did it would be Kickstarter because of the following policy differences:

    - With IndieGoGo, you get to keep the money even if you don't reach your funding goal.
    - With Kickstarter, you can only show actual prototype hardware in your videos/campaign site - no mockups or 3D rendering allowed.

    It's pretty easy to see how these differences mean that IndieGoGo is the go-to site for products like:

    https://www.indiegogo.com/projects/robot-dragonfly-micro-aerial-vehicle#/
    https://www.indiegogo.com/projects/batteriser-extend-battery-life-by-up-to-8x#/
    https://www.indiegogo.com/projects/anonabox-access-deep-web-tor-privacy-router#/
    https://www.indiegogo.com/projects/kreyos-the-only-smartwatch-with-voice-gesture-control#/
    https://www.indiegogo.com/projects/solar-roadways#/

    just to name a few.

    --
    ---- I'll take you in a Hunt deathmatch any day.