Miniatureships | 17 Dec 2015 11:10 a.m. PST |
In the past year or so, I have seen several threads dealing with kickstarters in which people talk about being ripped off, either personally or expressing an opinion of a given kickstarter that people are talking about. My question is, what is your understanding of kickstarter and the purpose it serves to both entrepreneur and those interested in what they have to offer? |
Random Die Roll | 17 Dec 2015 11:31 a.m. PST |
For the entrepreneur, it is a chance to get investors---without having all the problems of investors---for an investment of monies there is a promise to deliver an item or possibly just a hearty "Thank you" For people interested in what Kickstarters there are---based on response (negative and positive) I would say that most people think of a kickstarter as a pre-pre-order system that offers incentives for paying monies early and then having to wait an extended time for a delivery |
Sgt Slag | 17 Dec 2015 11:33 a.m. PST |
It's usually a way for the maker to get their hands on the necessary cash to be able to put their product into production (for the honest folks); it can also be used by criminals to steal cash from "customers", seemingly without much work. I backed a non-gaming Kickstarter last year, but the delays kept mounting, so I asked for, and received, a full refund. The company did bring its products to market, successfully, after the Kickstarter was completed (also, successfully), but I was no longer a part of it. I've since seen their products reviewed by a trusted industry reviewing web magazine. If I were to order their product today, I would have to pay a higher price than I was guaranteed in the Kickstarter. Usually, the Kickstarter offers early customers a discounted price, but they will be waiting months, or possibly more than a year, to receive their products. I don't believe the wait is worth the discount, personally. They can be a great way to fund a project, as well as a great way to rip folks off. Caveat emptor! Cheers! |
Porthos | 17 Dec 2015 11:36 a.m. PST |
I have done (and am doing) various kickstarters since at least a year and am very happy about it. Perhaps it depends on who the kickstarter offers ? I find it a really great solution to the problem of the often one-person-manufacturer who cannot afford to have too many failures in selling. Often before I invited people who posted here to not just ask for the charging Bavarian kettledrummer on horseback from 1704, but to put their money where their mouth is. Kickstarter is a great way to do that. |
Who asked this joker | 17 Dec 2015 11:40 a.m. PST |
Good for the business man with a grand idea. Less so for the consumer/investor. |
MajorB | 17 Dec 2015 11:42 a.m. PST |
I won't touch Kickstarter with the proverbial … |
Rhysius Cambrensis | 17 Dec 2015 11:50 a.m. PST |
I agree with MajorB – wont ever touch it. |
Old Glory | 17 Dec 2015 12:11 p.m. PST |
Kickstarter is an "INVESTMENT", not a "PURCHASE" and if you read – Kickstarter is very up front about the risk/reward ratio. The people who launch the Kickstarter have an obligation to do all in their power, practice due diligence, and work towards the goal of providing the final dividend (whatever that may be)to the investor -- some fail, some succeed. "Investor beware" Do not risk that which you are not willing to lose. regards Russ Dunaway |
Miniatureships | 17 Dec 2015 12:13 p.m. PST |
Okay, a follow up question to MajorB and others, What is the problem with kickstarter projects? And, as follow up the last question, "What causes kickstarters to go wrong that lead to negative views? |
michaelsbagley | 17 Dec 2015 12:25 p.m. PST |
I've backed a handful of kickstarters, and have been lucky to not be ripped off yet. Now, one project (non-gaming related), was delayed…. And I mean delayed to the point I thought I was losing the money. But in the end, it did come through (in the 6-8 month late range). All others I have backed have been either on time, or only delayed by a factor of weeks (maybe a month or two). I am willing to gamble on kickstarters with 3 caveats 1. The buy-in is little enough money I can lose without great pain (this is a personal subjective number, but generally under $100 USD US for me) 2. The product is worth the wait (to me) and a delay or cancellation won't cause great pain or inconvenience. 3. I have a good feeling for the individual or company running it (may not mean I know them personally, but they have to have a good enough reputation to give me confidence they will deliver). But all of that is said, knowing eventually I may get bit and "lose" on a gamble with Kickstarter. |
martin goddard | 17 Dec 2015 12:27 p.m. PST |
If I were to invest in a company i would expect to be a part of their financial future. If I pay up front for some agreed amount of product that seems like a purchase. Kickstarters seem to want the use of your money to get things going but expect to exclude you from potential profits etc. I have nothing against Kivkstarters. they seem good fun. But not really an investment. No offence intended. martin |
Old Glory | 17 Dec 2015 12:39 p.m. PST |
Martin, you are totally correct in your statement! That is the potential downside of investing in a Kickstarter. Look at the tens of millions of dollars zombizide games have brought in -- your dividend for the investment was a board game --or whatever -- thats it. "risk/reward ratio" !!! Call them what you want = Kickstarter refers to the program as investment = read the print. Regards Russ Dunaway |
45thdiv | 17 Dec 2015 12:45 p.m. PST |
Martin brings up the difference between kickstarter and true investments Kickstarter is not a true investment. Kickstarter rules do not allow a profit sharing like real investments do. That is why kickstarter projects have reward levels and stretch goals. I think this is where folks get caught up in the preorder thought process. It is not a pretty order and there is very little one can do besides request a refund if the product changes after the kickstarter ends. Why would it change? New companies learning the hard way about resource management and what works best for their project. As Russ said, don't pledge if you can't afford to loose your money. Matthew |
Bashytubits | 17 Dec 2015 12:55 p.m. PST |
I like the idea but as a consumer won't touch it with a ten foot pole. When the product is actually on the shelf I will get it then. |
vexillia | 17 Dec 2015 1:00 p.m. PST |
Kickstarter is an "INVESTMENT", not a "PURCHASE" and if you read – Kickstarter is very up front about the risk/reward ratio. The HM Government (UK) do not agree and kickstarter "rewards" are deemed to be purchases and subject to VAT. -- Martin Stephenson Vexillia: Wargames Miniatures & Accessories Shop | Rules | eBay | Twitter |
Flashman14 | 17 Dec 2015 1:05 p.m. PST |
Here's my threshold: I support new projects from established companies (West Wind, Reaper etc). But I don't pledge to start-ups, whatever it is. |
Dynaman8789 | 17 Dec 2015 1:22 p.m. PST |
Kickstarters are a way to get people to pre-order without the laws that normally protect them. |
StoneMtnMinis | 17 Dec 2015 1:26 p.m. PST |
Interesting subject. I have a friend who works for the IRS and recently while enjoying the latest offerings from our local brew pub this subject came up. According to him, they(the IRS) are starting to look at kickstarters to determine that if they are an "investment" how should should the "return" on the investment be taxed. He also said he had heard because they are framed as an investment the SEC was interested to see if the offerings fell under their rules. As I said this was a discussion induced by the consumption of adult beverages so that should be taken into consideration. Dave Stone Mountain Miniatures wargamingminiatures.com |
Saber6 | 17 Dec 2015 1:48 p.m. PST |
I see it as a way to support something cool and get in on the ground floor. Those that I choose to support, I do because I expect them to continue after (or it is clearly and one-time project that needs funds) |
Disco Joe | 17 Dec 2015 1:52 p.m. PST |
Not a fan. Will purchase items directly if they do become available. |
IUsedToBeSomeone | 17 Dec 2015 2:14 p.m. PST |
It is strange when people will only pledge to established companies but not startups as the startups are EXACTLY what Kickstarter is supposed to be for! It started as a platform to provide seed capital to "kickstart" an idea and get it into a physical form. I think that the overuse of preorder KSs from people such as Mantic, Reaper, etc have ruined that aspect of it. Mike |
Bosco05 | 17 Dec 2015 2:30 p.m. PST |
Kickstarter is not an "investment" by any definition of the word. Nor is it a debt instrument. It is a way for small businesses to get capital by pre-selling an item typically at a discount. The reward for the participant is the ability to get the item first and typically at a significant discount to the ultimate retail price. That's the gain part, but theres a risk that come with it in that the entity raising funds cant't complete the project. The University of Pennsylvania did a study on total kickstart fulfillment rates and found 9% of the projects don't meet their full commitments. One should remember that the people seeking funds via kickstarter are often not really seasons business people and can often grossly underestimate the true cost to deliver or the complexity of their reward structures. It's very clear in the terms and services what the risks are and they are significantly higher than waiting to but a product at retail but sometimes the discount is worth rolling the dice. |
advocate | 17 Dec 2015 3:39 p.m. PST |
I would back a kickstarter if it was something I wanted that wasn't available, and probably only if UK based. 15mm ww2 Norwegians anyone? |
Baron Trapdoor | 17 Dec 2015 4:37 p.m. PST |
I'm with Mike (BHM) Unfortunately one of the side effects also is these large companies have almost conditioned their customer base and the broader 'hobby' to buy exclusively via the Kickstarter method and the flow on effect to smaller companies and LFGS has been quite devastating. Anton |
Old Glory | 17 Dec 2015 4:59 p.m. PST |
Let's see? A person (first party) gives some amount of money ( let's call that money capital) to another person (second party) for a project in the hopes of some form of future return? The second party who has received these funds now has a moral and legal obligation to practice due diligence and a sincere effort to deliver this future reward to the first party--- however if the second party --- after practicing due diligence and giving a sincere effort to deliver the return as agreed upon suffers a real and true failure in their efforts it leaves the first party no recourse? Yep !!! Sounds like an investment to me? Regards Russ Dunaway |
clibinarium | 17 Dec 2015 5:53 p.m. PST |
Use of the word investment muddies the waters a bit. While it can mean (in its wide sense) putting money, or effort, or support or time etc into a project with the hope of some goal being met (and not necessarily direct personal benefit), in a narrower financial sense it means putting in money or similar into a project or business in the expectation of profitable returns, dividends, interest or some other enforceable interest or stake in the business or project. That second narrower sense is not usually what's on offer in a kickstarter; they call it "investment" but only in the wider sense of putting money in for an agreed term; such as amount X gets you item Y. It need not be in return for an item, in some you are effectively giving money for a thing or event to exist; you don't get any physical item . There may be no return for you other than the terms stated by the individual project(but the vast majority of miniature related projects are for physical items in the form of pre orders). No interest or stake in the business is on offer, but some people get the impression that it ought to be from the word "investment". If you pre order an item on Amazon months before its released (or even exists)you are in the wide sense "investing" in Amazon, and while that pre order is legally enforceable, one wouldn't imagine you'd got any more of an interest that that; you don't get a (microscopic) fraction of Amazon's value simply because you've handed them money. Its not an investment in the commonly understood sense. They really ought to drop the use of the word as it causes much confusion. |
Mike Bravo Miniatures | 17 Dec 2015 5:58 p.m. PST |
Russ, I suspect pretty much all of the bigger KS campaigns over here (UK) would be seen as more akin to pre-orders than genuine investments. I think you'd have to look at each campaign on its merits, but being a typically cautious lawyer, I'm just not convinced that the usual consumer protection laws over here would not apply to a typical wargaming KS. They're almost all essentially just pre-orders. From a business perspective to me they just look to be a very expensive source of external funding, and as I personally would not want to launch one without having the bulk of sculpting in hand anyway (and in today's climate I can't see how a KS can be successful without having made the investment up front to get greens and so on to tempt people in), I'd still be taking a risk that the range might bomb. I can see a benefit for the Mantics of the world as it's a great PR/cash generation exercise, but I just look at Baker Company's Winter War KS and think that the downside potential from getting it wrong far outweighs any upside potential from PR/risk mitigation. Particularly once you factor in the opportunity cost of the management time required, the KS fees, the freebie rewards and expected discounts, the fact that a big chunk of your potential market will have jumped in on the KS… I'm not sure what the upside really is. |
clibinarium | 17 Dec 2015 6:02 p.m. PST |
From the Kickstarter site; What do backers get in return? Backers that support a project on Kickstarter get an inside look at the creative process, and help that project come to life. They also get to choose from a variety of unique rewards offered by the project creator. Rewards vary from project to project, but often include a copy of what is being produced (CD, DVD, book, etc.) or an experience unique to the project. Project creators keep 100% ownership of their work, and Kickstarter cannot be used to offer equity, financial returns, or to solicit loans. |
Old Glory | 17 Dec 2015 6:03 p.m. PST |
This is simply called a "limited" or "fixed" return. The word "investment" --- to me anyway -- does not necessarily imply some amount of ownership and/or continued future return A purchase from Amazon for the future release of a book --it would indeed be a purchase and if the book or product was never produced I would have the legal right to demand the return of my money +- had it happen once actually. Mike Bravo Miniatures -- I completely agree with you on the potential downsides in doing a kick starter!!
Dictionary = " The investment of money, time, capital in order to gain a profitable return --- to use money in accumulating something". Perhaps it just makes us a wee bit uncomfortable to really recognize the inherited risks in the program Regardless in how "we veiw it"--- the program is what it is??? Regards Russ Dunaway |
McKinstry | 17 Dec 2015 10:18 p.m. PST |
I've participated in three. Two have worked just fine being both on time and delivering exactly as promised. I've made a very modest third investment/prepayment/whatever on the Hawk Dropship Commander Space Game and have no reason to think that won't work as well. That said, any deal is always caveat emptor. |
Bosco05 | 18 Dec 2015 4:29 a.m. PST |
Russ, I think we're splitting hairs here. Kickstarter are essentially pre-sales where there is a defined and limited return (usually in the form a discounted purchase price). In other words it's similar to a loan but the return is measured in reduce price / early access rather than interest rate. The retail price discounts can be very high (30-40%) and then theres the 10% cut kickstarter takes so the effective cost to the small business is very high with an effective APR as high as 35-45%. If things go sideways the kickstarter supporter becomes an unsecured creditor. An equity investment conveys some form of ownership and rights to the continued success / failure of the business and are much more open ended. Their also riskier as in the event of failure equity holders stand behind all other creditors (including the unsecured) to receive the proceeds of a bankruptcy. Either way, Kickstarters are not a bargain for the small business and represent a financial risk for supporters that falls somewhere between a loan and an equity investment. People who choose to participate as a kickstarter supporter need to realize there is a much higher chance of failure (9% cited above vs <1% for an online purchase) and if the project sponsor has put in just a bit of effort there is no recourse. I do get a kick out the constant wails and cry for the Attorney General when a kickstarter fails. Read the agreement, with exception of outright fraud (no work done at all) the supporter is out of luck. Caveat Emptor, indeed |
Fergal | 18 Dec 2015 8:26 a.m. PST |
Call them what you want = Kickstarter refers to the program as investment = read the print. Regards Russ Dunaway
Got a link to where they call it that? I've always been a staunch supporter of the 'it's not an investment' crowd, and would love to be educated if they do refer to it as one. I found this on the site as to why Kickstarter believes people back projects: Why do people back projects?Many backers are rallying around their friends' projects. Some are supporting a new effort from someone they've long admired. Some are just inspired by a new idea, while others are motivated to pledge by a project's rewards — a copy of what's being produced, a limited edition, or a custom experience related to the project. Backing a project is more than just pledging funds to a creator. It's pledging your support to a creative idea that you want to see exist in the world. That's why I back projects, but I'm an idealist first on the site, realist second. |
Weasel | 18 Dec 2015 9:23 a.m. PST |
I tend to only back projects that are artsy-fartsy stuff. |
Old Glory | 18 Dec 2015 11:20 a.m. PST |
Perhaps we are talking about how we define the word investment? When I make a "purchase". Pre- purchase or not -- I fully expect a return on that purchase and have every right to demand that return or a full refund = That's what I would call a "purchase" I do not legally risk my money. When I make an "investment"- in a product,concept,design,or whatever -- where I have no promise, legaly or otherwise of a return, and in the case of failure of said product, concept,or design I cannot expect a refund of any sort -I would refer to that as an "investment" = risk. I legally risked my money,time,effort,etc. If I make a "purchase" "pre" or otherwise I have a legal right to expect to receive said promised product or a full refund -- if I do not then I believe that would be fraud. I have made all kinds of "investments" in my life of that nature = my Childrens future, my future health, my marriage,etc. have been just some of my "investments" that I have no guarantee of a happy outcome. I risked that money. Just because you have no ownership or voice in whatever you "gave" your money to does not mean you have not "invested" in that concept and/or product = Perhaps just a bad investment? Word it how you like = when you give your money to a kickstarter, you are risking that money in the hopes of getting something you are not guaranteed of receiving. Perhaps it is just semantics so to each their own --but for me -- when I "pledge", "financially support", "back" with my hard earned cash with no promise of a return in some form I would call that investment, Regards Russ Dunaway |
Miniatureships | 18 Dec 2015 12:19 p.m. PST |
I brought up this subject, because as Bosco05 said, people keep bringing up the Attorney General or taking about fraud when things don't go well. What I think consumers are being to learn is what bankers have learned along time ago, people maybe good at their hobbies, but that doesn't make them good at business. The hobbyist or creator may a great idea, and a lot of people like it, but they have very little understanding of what it takes to get that idea to market. I have read stories where people have raised good money on a kickstarter, far beyond what they needed to launch the project, only to find unforeseen things appear after the close of kickstarter. Things like people contact for pricing information, who now know what you raised, raise their prices, or the supplier takes their money and runs, etc. Basically, if they had no control over the manufacturing of the product, they see their kickstarter money just vanish into thin air. Now with the word investment, what we are hoping with kickstarter is that the person or company that we are giving our money to will succeed. We hope that they have crossed all their "T,s" and dotted all their "I,s" but in the end they maybe just a victim of their success. |
Bosco05 | 19 Dec 2015 6:27 a.m. PST |
Russ – I think we broadly agree – if we're using the term investment in its most general sense then pledging for a kickstarter is, indeed, an Investment of personal resources -(cash, time, personal reputation etc) I think I'm being a bit narrower (or geeky) to try and define the recourse rights a supporter has – since pledging to a kickstarter isn't either a - "Equity investment" as no ownership rights convey - "Debt investment" as there no interest, principal return or collateral. Most kick starters are just pre-sales at a discounted price – that's it. Still an "investment" of your cash but that's about it. There are very limited recourse avenues if the program isn't completed successfully if there has been a good faith effort to fulfill it. In a failure supporters become unsecured creditors to the entity and are way down the waterfall for any recoveries. About the only recourse if there's been blatant fraud – no work done at all. Inexperience, incompetence or bad luck just isn't fraud. Kickstarters aren't bad, but they do involve risk and if you can't accept the potential loss (and 9% fail) then don't participate. But if you do, don't whine about it after the fact! You place your bets and you take your risks |
PrivateSnafu | 19 Dec 2015 9:05 a.m. PST |
I've only done one KS. I'm in the latest one from Ganeesha for the Advanced Song of Blades and Heros stuff. I went with it because they have a good reputation in the market, successful products, and have successfully fulfilled a previous KS. I would tend to stay with established companies, as other persons have mentioned, for this product category (gaming and miniatures). I know some perceive KS as intended for startups but I don't think it needs to be exclusively for them. Companies go public all the time and raise equity in Initial Public Offerings (IPO's). Companies also create secondary offerings to make acquisitions, restructure debt, expand business. Those are from established businesses. If Google or Apple announced a secondary to create some new exciting product I'm sure it would be widely subscribed to in the investment community. It is like an investment for the backer in that you can lose all your money but its not like an investment because you have no owners equity. So in practical sense it is a pre-order for a backer but is not like a retail purchase where you have buyer protections. For KS operators I think it is most like micro lending where the packback on the loan is delivering the goods. But its not like a loan where your lenders have legal rights. People should not mistake KS as investing in something. By all relevant (legal) definitions its not investing. It would be better to consider oneself as a stakeholder. Stakeholders can be just about anyone associated with a business; customers, employees, business partners, suppliers, etc. Stakeholders matter to business but just not in the same way investors do. The whole concept of stakeholders is an evolving area of business ethics. Kickstarter gets right into the middle of that debate as its successes and failures are the end products of Trust between backers and operators. Trust is at the core of Ethics. It's its own thing apparently! All in all I think it has been a positive device to bring new and interesting products to the market. |
GypsyComet | 19 Dec 2015 12:28 p.m. PST |
"What causes kickstarters to go wrong that lead to negative views?" Even the experienced companies run into unplanned complications. How a KS runner handles those sets the average long-term opinion. There will also be the truly patient and the festeringly impatient. I've backed over thirty KS campaigns and only been truly burned once. Several others have been less than communicative, but they eventually delivered. Several KS campaigns that I merely observed, due to funds or my own due diligence keeping me away, have turned sour, but there are hundreds of KS campaigns going at any time. If the true failure rate was really that bad KS would have shriveled up already. |