The Cycle of Crowdfunding Disappointment
Crowdfunding has become synonymous with high expectations followed by disappointing outcomes. A notable example is Central Standard Timing, which amassed over $1 million for what it claimed would be “the world’s thinnest watch,” only to declare bankruptcy in 2016. Similar tales have unfolded, such as the startup Taxa, which recently shuttered its doors after an ambitious campaign to bioengineer glowing plants fell short. Even more shocking was a $13 million project aimed at creating the “smartest cooler,” which needed to ask its backers for additional funding years after the original campaign concluded.
When Kickstarter and Indiegogo first appeared, they heralded a new era of accessible entrepreneurship, allowing anyone with a creative idea to seek funding and launch a product. However, as we reflect nearly ten years later, the platforms are marred by notable failures that rival their success stories. As a result, improving the chances for high-risk ventures, particularly in sectors like high-tech hardware, has emerged as a key focus.
In response to these challenges, Kickstarter has initiated a program that provides project creators with guidance from design and manufacturing experts. Indiegogo followed suit with a similar initiative last summer. These offerings include comprehensive design assessments, global component sourcing, and branding support—insights usually reserved for larger corporations.
This effort is timely, as every week seems to bring new setbacks for crowdfunding platforms. Recently, Indiegogo suspended a campaign for the Titan Note, a transcription device marketed with unrealistic features. Meanwhile, Kickstarter’s Gravity blanket faced backlash due to exaggerated claims about its health benefits.
For crowdfunding to thrive, these platforms must build trust and credibility while maintaining enthusiasm. They have the potential to reshape the economy by making entrepreneurship accessible to more people—but only if they evolve.
An insightful case study involves the Zano drone, a project that collapsed spectacularly. I was brought on by Kickstarter to investigate why this highly funded initiative failed to deliver. With £2.3 million (about $3.5 million) raised from 12,000 eager backers, the Welsh company Torquing Robotics found themselves unable to fulfill their ambitious promises, ultimately going into liquidation.
My analysis concluded that Torquing’s leadership lacked the necessary skills and experience for such an intricate project. The Zano drone was marketed with incredible capabilities, including automatic tracking and obstacle avoidance, yet a misleading promotional video exaggerated its potential. Furthermore, the overwhelming success of the campaign created complications, including the need to scale production unexpectedly.
I suggested in my findings that crowdfunding platforms need to rethink how they approach complex hardware projects, especially those with overwhelming financial backing. Stronger vetting procedures and enhanced support for projects would help filter out weaker candidates and ensure more sustainable outcomes.
As noted by Julio Terra, Kickstarter’s director of Technology and Design, “Hardware is hard.”