Another Crowd-funded Drone Project Collapses (bbc.com)

An anonymous reader writes: Less than two weeks after we heard about the "robotic dragonfly" project failing, the BBC brings news that an even bigger crowd-funded drone project has given up development as well. The ZANO mini-drone raised a whopping £2.3 million on Kickstarter ($3.5 million), after asking for a mere £125,000 to get off the ground. They were supposed to start delivering drones in June, and a few hundred of them slowly trickled out. In October, they posted a long update detailing their plans for shipping the other ~15,000 drones they had been paid for. Their latest update, posted today, says, "Having explored all options known to us, and after seeking professional advice, we have made the difficult decision to pursue a creditors' voluntary liquidation." This will leave thousands of backers without a drone, despite paying £140 or more apiece.

Comments

Follow the money

[BarbaraHudson]

For once, the advice "follow the money" is especially apropos. How can you make $3,500,000 disappear? Sounds like there should be some recovery options against the people running this.

Re:Follow the money

[The-Ixian]

If you want to invest your money in risky ventures you should expect to lose it.

Don't risk what you cannot afford to lose.

Re:Follow the money

[fustakrakich]

How can you make $3,500,000 disappear?

Oh please! You're kidding, right? We can make 8.5 trillion disappear, okay? In fact, multiply that by about 500, and you have the derivatives markets...

Re:Follow the money

[Lumpy]

Not just follow the money. They had NOTHING but a napkin idea at the start, that is how you end up with a guaranteed failure.
Back projects that have real prototypes and real ideas on how to scale up to delivering thousands or tens of thousands. Honestly if any of the people running it was getting more than 100K a year in income from this then they are dirty thieves that need to have their pants set of fire.

Re:Follow the money

[jwdb]

Further, considering that they raised nearly 30x the crowd funding goal -- the estimated necessary funding required to fulfill pledges ...

That's not how manufacturing works. Minimum funding goal is how many pledges you need to at least overcome your anticipated fixed costs, but there's still a marginal cost associated with fulfilling each individual pledge. When you get 30x the expected number of pledges, that means your variable costs will also be 30x greater. On top of that, if you have to produce 15,000 pieces rather than 500 (say), then your fixed costs also rise as you now have to redesign your product for volume manufacturing, whereas previously your prototype process might have been sufficient.

... there's clearly something worthwhile to investigate ...

No, there's not much to see here, just another startup that underestimated the challenges in going from prototype to volume, spent too much money on the transition, and went bust. The backers have my sympathy, but without evidence there's no basis for assuming malfeasance.

Re:Follow the money

[Triklyn]

... you took that analogy way further than necessary... or i would say desired. but yeah, if i fund a kickstarter it's generally with the understanding that "if this project doesn't implode, then i've made a purchase, if it does implode, well, that's what happens sometimes."

Re:Follow the money

[Balial]

So much this. If you think it's a great product, wait until it's all built and buy it on the store shelves. if you think it won't land on store shelves, and you really want it, and it's worth losing your money over it, then chip in on the kickstarter. All kinds of businesses fail, surely the ones that are started by a couple of guys with no experience and only a webcam are going to fail more. I'm not sure why people think these are risk free.

Re:Follow the money

[vux984]

Why do people act like these things are any different than throwing change into someone's guitar case?

I expect it is because the guy with the guitar case isn't promising to give anyone a drone if you put money in his case.

You aren't wrong that people are setting their expectations wrong with kickstarter. The money goes in and the product may or may not ever come out. That's a gamble you take.

Its certainly not really an "investment" because your maximum reward is a consumer product worth roughly what you put in, and you certainly aren't a shareholder of the venture that creates the product.

But kickstarters do have an obligation to make a good faith attempt to deliver on their promise. Its not illegal or even a breach of contract to fail at the attempt. But it would be a breach to simply take the money and walk away or otherwise act fraudulently.

Its clearly a very different proposition than outright charity too.

Re:Follow the money

[viperidaenz]

Right, it's not an investment.
It's a gamble.
People don't seem to get upset when their lottery tickets don't win. Kickstarter isn't much different.

Re:Crowd Funded = Scam Artist

[tnk1]

Presumably that can and does happen, although most are not scams, just poorly run or run into unforeseen difficulties.

Kickstarter is about backing projects, and when those projects are advanced, like this concept, the project can fail due to either technical difficulties or inability to cost effectively manufacture the objects.

So, realistically, while most people would prefer to invest in projects that will produce a result, there is a substantial difference between a Kickstarter for something like a board game, which is relatively easy to publish, compared to an advanced drone, which is not easy to build, and the manufacturing process has to be built from the ground up.

People who get into Kickstarter projects expecting a product at the end are advised to have some understanding of the relative difficulties involved of the project they are supporting and then not support it if it is too speculative.

In this case, the project was sort of speculative. They were asking for 120,000 to get started, and they got two million. While that improved their ability to work on the project, it caused expectations to rise, and probably caused the team to make the mistake of increasing the scope of their project beyond their comfort zone.