Backing a product on a crowdfunding site like Kickstarter can be risky sometimes. When you put money toward a project, it's basically an investment. But there are no guarantees of return.
In an ideal scenario, innovators bring their ideas to Kickstarter and create a campaign to raise funds for production. If the target goal is met, those innovators keep the funds for the production of their product or service. If the target isn't met, in most cases the funds are returned.
For backers, a major allure is being part of something new and upcoming. The hope is that by donating to the campaign, you'll be one of the first to have access to a truly innovative new product.
But what if everything goes well with the Kickstarter campaign, but after that everything falls through?
That's what happened recently with two popular products that began as Kickstarter campaigns. Zano, the British "nano drone," and also Coolest Cooler—both of which had record-breaking crowdfunding campaigns.
In January 2015, Zano saw huge success and raised millions of dollars for what it called, "the world's most sophisticated nano drone." The company boasted of a drone that could be controlled by a smartphone and ordered to "follow" its owner at the touch of a button.
Surprisingly, selfies were also a big marketing angle for the Zano drone. "Taking selfies to new heights," was the slogan. And Zano became the most successful Kickstarter project in Europe to date.
Coolest Cooler had a similar story. It wasn't your average beer cooler. The product cost $499 and included a built-in Bluetooth speaker, iPhone dock, ice-crushing blender, USB charger, bottle opener, LED light, plates, corkscrew and cutting board.
It was the ultimate party cooler, packed with everything you'd need, and backers flocked to the product in swarms.
But backers of campaigns like these aren't guaranteed full customer satisfaction.
In the case of the Zano, the manufacturers declared bankruptcy. Backers were left with nothing but a thank you. "We are greatly disappointed with the outcome of the Zano project," the company said. "We would like to take this opportunity to thank everyone who has supported us during this difficult period."
In the case of the Coolest Cooler, the manufacturers didn't lose all their money. Instead, they struck another deal with Amazon. So, everyone who invested in the cooler had to watch while the general public gained first access to the product.
Both of these examples demonstrate the risks involved with backing campaigns on Kickstarter, and nothing has been offered that suggests anything will change.
Should Kickstarter be required to provide more reassurance to those backing campaigns? Let us know what you think.