The dark side of crowdfunding

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  • Published on Apr 16, 2019
  • Crowdfunding gives gadget makers the power to launch their own companies, but sometimes their dream dies not long after launch. In this episode of In the Making, reporter Ashley Carman looks at how crowdfunding platforms Kickstarter and Indiegogo are changing their business to prevent creators from never shipping their product.
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Comments • 351

  • The Verge
    The Verge  2 months ago +164

    Have you ever backed a crowdfunded gadget, and did you receive it?

  • nishadam
    nishadam Hour ago

    lengthy video

  • Lokesh Shanmuga
    Lokesh Shanmuga Hour ago

    Here glass frame is so cool

  • uindy4
    uindy4 21 hour ago

    The founders are the ones responsible.

  • azamean
    azamean Day ago +1

    Kanoa and Radiate Athletics were 2 I funded who disappeared, thankfully I got a chargeback for the Kanoa!

  • Warren Scott
    Warren Scott 2 days ago

    Top of the range Eve V backer here, still haven't received it over 18 months later and I still haven't seen anything about my refund either.

  • ReX Slayer
    ReX Slayer 2 days ago +1

    Ashley is divine

  • Philip Jan
    Philip Jan 2 days ago

    Isn’t the risk the whole point of investing? I think that the platforms should inform pledgers more clearly about the risk they are taking and at the same time, the platforms should request frequent updates from startups.

  • aswin ganesh
    aswin ganesh 2 days ago

    Nice series i like it 👍🏻 good work team✊

  • Batam City Tour
    Batam City Tour 3 days ago

    If you want to materialize your project for cheap in China you got what you deserve... Copied and cheated

  • William Frias
    William Frias 4 days ago

    I just feel like if you're one of these backers that shelled out a lot of money just to be the first person to get that "hot new piece of tech", then you're delusional and irresponsible in gambling your money like that.

  • Israel Lai
    Israel Lai 4 days ago

    I only ever back companies that have already made and sold stuff before

  • Anirudh Pratap Singh

    Are you daughter of Benazir Bhutto ?

  • Withcakeinmymouth
    Withcakeinmymouth 7 days ago

    My friend gave like 5K to some crowd funding project towards a 3D printer. He gave enough that once they developed and completed the project 4 years later, he was sent one! 😁 We love messing around with 3D designs and trying to facilitate all of it's capabilities.

  • MILAN
    MILAN 7 days ago +1

    The dark side of empty promises and bad management

  • Marco Turetta
    Marco Turetta 8 days ago

    Fontus

  • Alan Martinez
    Alan Martinez 11 days ago

    Whats her @

  • cattigereyes1
    cattigereyes1 16 days ago +4

    Sounds like a unregulated scammers dream,
    Big promises and large sums of cash to be lost quickly in the shuffle and folks left with nothing.

  • Kacper Bartoszak
    Kacper Bartoszak 28 days ago

    This is why I wish all the best to Pledgecamp project. Really good video btw

  • TJ Marx
    TJ Marx 29 days ago +1

    You're backing an idea, not preordering a product. It is 100% the backers responsibility to understand that point. They aren't buying something, they're making an investment in a company. It comes with risks, including getting nothing and losing that money. Don't back products you can't afford to not receive. Simple.

    • Artam Studio
      Artam Studio 29 days ago

      This concept is apparently too difficult for many to understand *sigh*

  • Shreyas Subramaniam

    As someone who's lost at least $500 on hardware products that didn't ship, I've often thought about how best this problem could be addressed. One solution that I came up with was for the platform to fund in tranches - release the funding in 3 or 4 tranches on hitting pre-determined milestones. It would then be the platform's responsibility to ensure that the milestone is hit. This will mitigate some of the risk, and backers can at least get back some of their money.

  • Blake Cornforth
    Blake Cornforth Month ago

    Why don’t they loan the money to the creators so that there’s some protection of the money? Then if they deliver on the product, don’t collect interest because they held up their end of the deal.

  • Michael Crosby
    Michael Crosby Month ago

    This is exactly why we need to see crowdfunding projects on the blockchain!

    Pledgecamp will change the game in this respect - transparency, trust and accountability for all parties involved.

  • Sawyer Seth
    Sawyer Seth Month ago

    Is it just me, or are the Kickstarter and Indigogo offices way nicer then I thought they would be?

  • Sawyer Seth
    Sawyer Seth Month ago

    verge actually has a good series.
    it's like "worth it" for buzzfeed, wow

  • Matt Rose
    Matt Rose Month ago

    So I wash watching TV, the presenter said 'Crowdfunding', I scroll down on my phone and this video pops up. I had a heart attack.

  • Luis Antonio Perez
    Luis Antonio Perez Month ago

    Crowdfunding is pre-sales - plain and simple. Anyone (entrepreneur or platform) who doesn’t recognize or honor this is being willfully ignorant.

  • Rayeen Fardeen rayeen

    Wow that's garls is so hot

  • Red Butterfly
    Red Butterfly Month ago

    No one to blame but the kikstarter because they create this group and give them a flatform to scam.. Ive been cheated 1time actually took almost 2yrs and nothing.. Im not gonna chase someone for 25$ but i learn not to trust so fast.

  • lnl4Universe
    lnl4Universe Month ago +1

    The platform needs to take some responsibility. As a buyer for the government, we pay according to the milestone: Concept paper, mock draft/model, prototype, tooling, etc.... I worked with many Engineers, they're not motivated if there is no deadline.

  • Redcatrobe
    Redcatrobe Month ago

    Amen amen

  • Anthenor Jr
    Anthenor Jr Month ago

    If it don't ship, is a problem with the courier probably!

  • Samarth Narladkar
    Samarth Narladkar Month ago

    Best Series for a Begineer!

  • cmdr corp
    cmdr corp Month ago

    Alright everyone one more time. DONT PREORDER ANYTHING
    That is essentially what you are dping when you back, you are just preordering, there is no collateral if they company folds. You are throwing money into a product that doesn't exists.

  • Cesar Perez
    Cesar Perez Month ago

    Love this series!!!

  • Alan Castaneda
    Alan Castaneda Month ago

    The entrepreneur should be solely responsible, just as other businesses are. Crowdfunding websites provide a means, whether the entrepreneur fails, is not the websites' fault. Unfortunately, patrons are vulnerable. As far as I know, no regulation protects their investment.

  • hbarudi
    hbarudi Month ago

    So many just charge their credit card on this stuff asking for its conveniences and not thinking that they might not be capable of actually creating the listed product.

  • Sylen
    Sylen Month ago +8

    Did you not even mention what cut of the funding the crowd-funding websites take from each project?

  • AtrumNoxProductions

    I wish someone would look into the Znaps campaign.

  • kirby M
    kirby M Month ago

    Really liking this series

  • mitchlaz954
    mitchlaz954 Month ago

    I have backed many projects. many have come through and unfortunately more and more are not. Ibackpack was one of the campaigns I backed. There are many more. I think the platforms need to take some responsibility as they profit from the backers backing the projects. I'm not sure what the answer is, and its current state lacks workability for backers.

  • Nosferatu
    Nosferatu Month ago

    Kickstarter and Indiegogo are full of scammers, or technically challenged people with half-baked ideas. anyone for perpetual motion machines ?, what about levitating cars. Never back risk your money on vaporwares thinking you are saving money.. buy it in stores or amazon if they become available several years down the road, if ever.

  • ploy T
    ploy T Month ago

    Where do you buy your 👓 , A. Carman?

  • MAbehrens1
    MAbehrens1 Month ago

    Unless there is fraud, that's just the nature of what is essentially small scale vc. You're not guaranteed a success. Ultimately it's the backed individuals fault, but I'm not sure it's anyone's liability.

  • disciprine
    disciprine Month ago

    Backers should bear some of the blame as well. There are enough examples of obvious warning signs for projects that get massive funding.

  • MsSunhappy
    MsSunhappy Month ago

    Dont give money to strangers. You shouldn't even give money to friends if you mind not getting anything back.

  • Shreyansh Jain
    Shreyansh Jain Month ago

    This is where smart contracts and blockchain can help. We can write contracts where we will check if people who funded the project got their product or not before the time promised to them. If not then revert the money to their account. Problem solved :)

  • Zach T
    Zach T Month ago +4

    I think it goes both ways. Backers have to understand that the product may never come to market. And that can be part of the fun. But also innovators need to understand that manufacturing is a whole different skill set than inventing or software coding.

  • Agent Office
    Agent Office Month ago

    Indiegogo ceo is a scam artist

  • Agent Office
    Agent Office Month ago

    Indiegogo intentionally makes money off fraud

    • Jamberry Piquencer
      Jamberry Piquencer Month ago +1

      I don't believe this was the initial intent of crowdfunding sites however but an inevitable side effect. I agree to the general notion that backers need to be aware that they are taking a risk to begin with.

  • Elise Erickson
    Elise Erickson Month ago

    I LOVE this series and I LOVE the host's glasses!!

  • P Gill
    P Gill Month ago

    This video only provides half baked subjective statements by the leaders of the platforms without taking any responsibility of protecting the backers .. There are no real actions / terms that have been specified which help give some confidence in the actions these crowdfunding platforms are taking to protect the backers.
    Its money that is being invested into a venture and it needs to be protected (either we get the product or we get the money back or these platforms take some legal action against the founders on behalf of the backer)

  • Gabe Shakour
    Gabe Shakour Month ago +7

    I’ve lost combined about $1000 on Kickstarter when a couple products (two drones and an air purifier) I backed around the same time never delivered. That’s the last time I ever have given to a crowdfunding campaign for hardware.

  • bhagyash ingale
    bhagyash ingale Month ago

    One solution is to make founders personally liable and be prosecuted for fraud with a clause which protects them in case of issues beyond their control. For e.g the factory making the product breaching their contract, etc. This way the backers are protected and the founders aren't treated harshly in cases where it wasn't their fault.

  • VideoTzar19
    VideoTzar19 Month ago

    While I do feel there should be more accountability, there is still a risk with any crowd funding project. It's the same with investors who back large, visible projects. Even with a business plan in place and established manufacturers and suppliers it can still flop. You have to understand you are taking a risk.
    I have only backed a few projects but they have been only for projects that have successful completion and transparency with their backers.
    In any case, if you are backing a project make sure you know that there is a high chance it may never come to completion or face serious delays. Some are just a little overzealous or overconfident of their product or ability to deliver but there is still a good number that are just con artists using the ToS to scam you.
    If you can't afford to loose that money, don't invest it.

  • Photelegy
    Photelegy Month ago +1

    Who is here because of the PexiDrone from DreamQii?

  • Cellphone Dave
    Cellphone Dave Month ago +1

    4:40 "which he didn't by the way" is not a credible argument.

  • Cellphone Dave
    Cellphone Dave Month ago +2

    Walking gives the illusion that the story is moving forward

  • Robert Ri
    Robert Ri 2 months ago

    Crownfounding companies should have close ties to the people who make the product to make sure they're legit and not a fraud.

  • Ashish Gupta
    Ashish Gupta 2 months ago

    Title is bit click baity

  • gabeosx
    gabeosx 2 months ago +1

    It would be great if these platforms could offer mentorship and assistance to projects. I imagine there's quite a few good ideas where the creator doesn't have a ton of experience. I think mentorship would be a good value add.

  • Afro Millenials
    Afro Millenials 2 months ago

    Our cat has plenty of rats to play with😂😂😂

  • GamerGuy51
    GamerGuy51 2 months ago

    Is Ashley, Blossom?

  • Luana V
    Luana V 2 months ago

    LIX Pen was a major scam. Took several years to deliver and many users reported the pen stopped working after the first try. Mine only worked once and I threw away.

  • Jon Doe
    Jon Doe 2 months ago

    Still waiting on my Coolest Cooler...

  • Sumanitu
    Sumanitu 2 months ago

    Crowdfunding sites should be required to refund their share of the money for any campaign that doesn't succeed. If kickstarter takes 10% of donated funds, they should refund that money to the backers if people never get what was promised.

  • Tomas
    Tomas 2 months ago

    I have backed 2 different campaigns, both on Indiegogo. Fingbox (no issues).
    And the Eon Scooter, what a joke that was and still is.. I think it's going on 2 years late now.

  • Chris Churchill
    Chris Churchill 2 months ago

    About 2 years ago a bookmarked all of the cool gadgets I found on Indiegogo and kickstarter. There were about 20 in total. A few months back I remembered the list and went through each saved link one by one. SIXTEEN out of the 20 campaigns were full of comments from backers saying how the project had never been shipped, they had been scammed, and that they were still waiting for a refund. 16 out of the 20 campaigns never shipped to any of their backers. They were a scam.
    I would NEVER back anything on one of those kickstarter websites, and you are a god damn fool if you do.

  • Apple Juice Simpson
    Apple Juice Simpson 2 months ago +2

    *Hold the* *_"shareholders"_* *responsible.*
    You're investing in a product that does not yet exist, you accept the risk for it's failure to an extent. That does not include fraud, or remaining funds that the manufacturer agreed to refund in the licensing agreement, but both of those examples are legal liabilities that have already existed outside of crowd funding anyway.

  • HENRY THE RC CAR
    HENRY THE RC CAR 2 months ago +1

    2:00 the dude on the left is soooo awkward 😂

  • iwolchuckup
    iwolchuckup 2 months ago +2

    I mean... I've never done one of these things but I always thought of it as micro-investing. Part of making an investment is taking a risk that you might lose your money... the idea of having a guarantee seems a little excessive. By all means go after fraudsters but there's some responsibility on the part of the investor to know who they're giving money to I think.

  • KryzMasta
    KryzMasta 2 months ago

    I see two options:
    1) Consider the project as an investment, and your “profit” if it succeeds is (usually discounted version of) the eventual product (possibly with extras to entice you). But it’s an investment, so if it doesn’t pan out, it’s money lost.
    2) The platform can promise a full refund if the product is never delivered. That can be achieved in two ways: a) the platform takes the risk (which significantly increases the overhead cost of the platform for that project or for all projects), or b) the platform only pays out after delivery, which means the initial r&d and production costs will have to come out of the founder’s pocket (which doesn’t sound like a viable solution).
    So why not mix option 2b with a “regular” investor: the platform collects the money from the backers up to a target, but retains it until the product is delivered. The money from the backers (up to a limit) goes to the investor, not to the founder. The investor in the meantime pays the founder, so he can do the r&d and production of the promised products.
    There is a number of upsides to this: the investor knows there’s a market with committed funds if the project succeeds, and can do a much more thorough due diligence than the backers or the platform. The investor becomes shareholder, but since his risk is much lower than that of an angel investor, the founder gets to keep a larger stake in his company while receiving a bigger investment. And through negotiations the founder might be able to secure the full investment (long) before the project has enough backers, if the investor has enough faith.
    Much safer for everyone involved, and will still allow entrepreneurs to create products that would otherwise never be made. And the risk lies with the traditional investor; which sounds about right to me, since the other three parties (backers, platform and founder) will hardly be able to take that risk, if you want to sustain this business model.

  • Joonas Loppi
    Joonas Loppi 2 months ago +8

    The very least the crowdfunding companies should do is return their commissio to the backers once a project fails. It would also bring incentives to the platforms to do everything they can to see that a project goes through. Currently they get paid for failed projects as well and that actually incentivizes them to host failing projects as well.

  • durai prasanth
    durai prasanth 2 months ago +2

    The owner's cat would have died waiting for 4 years

  • v2Drake
    v2Drake 2 months ago

    After putting a small amount of savings into stocks and shares, this is no different. You are not a customer, you are an early investor.

  • Funkteon
    Funkteon 2 months ago

    The good thing is that only 99.9999% of Indiegogo and Kickstarter campaigns are scams, the rest are amazing and legit..

  • Aaron Aaron
    Aaron Aaron 2 months ago

    Surprised to see no mention of Ossic. I backed on indiegogo as a "pre-order" and even prepaid shipping. In the end we know what happened and indiegogo didn't care to do anything about it.

  • spambot71
    spambot71 2 months ago +1

    if the maker compensates the backers: they probably burned all that money trying to launch the product and will be in crushing debt for the rest of their life. a massively disproportionate punishment for what amounts to a mix of bad luck and naivete.
    if the platform compensates the backers: oops turns out it's not practical to run a business like that. no more crowdfunding.
    if the backers are not compensated: a bunch of whiny upper-middle class tech enthusiasts are out like, a hundred bucks.

  • Michæl Alan Baker
    Michæl Alan Baker 2 months ago +1

    What about backers owning the responsibility for the investments they make? These are not stores‽ MOST enterprises fail or lose money, the vast majority; Success has always been the exception. Crowd funding is a gamble and though I do believe platforms can adopt strategies to even out some of the risk, it will never eliminate it.

  • Noam Adler
    Noam Adler 2 months ago

    I bought a product from one of these two websites. I did end up getting the product after some time the only thing was it wasnt anything as close as promised. Watch out!

    • Noam Adler
      Noam Adler 29 days ago

      @Artam Studio Its true what your saying but I dont think most people believe that when INVESTING on one of these sites. Most people want a good deal on a cool product

    • Artam Studio
      Artam Studio 29 days ago

      Repeat: You are not *buying* a *product.* You are *investing* in an inventor's venture which may or may not come to fruition. If you don't understand this concept, stick to Amazon.

  • Anna Mouse
    Anna Mouse 2 months ago

    9:36 is the best thing I've ever seen. Why aren't they in every library and university yet?

  • Anna Mouse
    Anna Mouse 2 months ago

    This is such an awesome series

  • KinGizzard
    KinGizzard 2 months ago

    I think that the entrepreneurs should be heald responsible, however the crowd funding site could make some extra money by selling insurance.
    Giving people the option to get most of their money back if the product is delivered...

  • Amara  Jordan
    Amara Jordan 2 months ago

    I wish you included more stats about the failure to ship. If you don’t get your item within how long, you’ll be 80% more likely to never get it. Or if it’s a company’s second prospect, they are 150-175% less likely to need a significant extension from 6-9 months a they would be on their initial project.
    The ideas in this series are really good. They’re worth exploring. But without more detail to help solidify the real world risks, the ideas remain more abstract and almost diaphanous. I’d like to be able to hear more about earnings and losses and those potentials would mean not just for the companies and consumers, but for the new creators with the next crop of ideas, the people trying to figure out where we go next from here.
    Im looking forward to the next epi but I do wish it had that little extra something extra; I may be hard on stuff I like but it’s because I know it’s close enough that it can get there and be a favorite I recommend and rewatch all the time. The script is such a tricky element in this, but if it can be better balanced, I think it’ll be really really powerful.

  • Bradley Duck
    Bradley Duck 2 months ago

    I think the platform should give the raised money as a loan to the creator the does not accrue interest until the advertised delivery deadline passes and the loan will be written off once the customers who payed receive their product as advertised, if not the platform must pay back the funders and the creators must pay back the loan just like at a bank.

  • WellzTheDude
    WellzTheDude 2 months ago

    Why she wearing safety goggles?

  • Fid Fyodor
    Fid Fyodor 2 months ago

    One thing I know for sure - You could fit a whole crowdsourcing campaign in that coat.

  • Nathaniel Lo
    Nathaniel Lo 2 months ago

    FlashBack to Jibo...

  • LM SORENSON
    LM SORENSON 2 months ago +28

    All these videos... She's never going to catch that camera without a bit more hussle...

  • Duane Libby
    Duane Libby 2 months ago

    crowdfunding is a joke

  • Fawzan Fawzi
    Fawzan Fawzi 2 months ago

    Hey a good Verge video for once

  • il tano toscano
    il tano toscano 2 months ago +1

    backed one ... got scammed ... never again

  • LittleRainGames
    LittleRainGames 2 months ago

    Im getting ready for a kickstarter campaign, im trying to get everything as ready as i possibly can. I plan to do 95% of the manufacturing myself, mold making, cnc milling, injection molding.
    If i get what i ask for, first thing ill do is order circuit boards, and about 10 more cnc machines, once my campaign is up, the only thing left will be mass production.
    If im unable to finish my injection molding machine, i have my eye on one that is around 5k.

  • Blair Bryngelson
    Blair Bryngelson 2 months ago +1

    Excellent video.
    As a long time entrepreneur and kickstarter creator and backer, I preeciate ya
    Well done

  • MrSyrian123
    MrSyrian123 2 months ago

    Why I can't stop looking at her hands while she is talking? And why she moves them a lot?

  • Simon
    Simon 2 months ago

    That’s by far my fav series from The Verge yet

  • ElGringo
    ElGringo 2 months ago

    Indigogo/Kickstarter should have an agreement to pay back backers, even if its only a percentage, and then the platform can go after the project managers. Assets could be put up like a house when getting a mortgage. Projects with those sorts of guarantees or assurances would have a higher chance of panning out. Might not be perfect, but it'd be a big help.

  • ElGringo
    ElGringo 2 months ago +2

    After two backed projects, one pebble watch and the other a video game controller, I can say, I HIGHLY doubt I'll ever back another project. Pebble launched obviously, but the controller is now a full year past due, with every update from the maker for the past 7 months saying it'll be delivered "next month". No more crowdfunding for me.

  • Adalore
    Adalore 2 months ago

    Crowd funding isn't a secured investment failure should be a recognized possibility, but it mostly comes down to how much genuine effort went into trying to produce the product, now deciding how much effort is enough effort is definitely hard to figure out and probably becomes a case by case basis issue. Maybe Kickstarter and other platforms like it should start hiring people to simply keep up with 'funded' projects to make that educated decision.

  • OneStudPuppy
    OneStudPuppy 2 months ago

    How about that “Plexidrone” eh... there is a great one for ya if no one still has a damned thing 3 million Usd raised

    • OneStudPuppy
      OneStudPuppy 2 months ago

      Oh yea and mind you multiple years now!