One of the largest Kickstarter scams just ran off with the money. $3.4 million.

Waterlily

http://arstechnica.com/business/2015/11/after-raising-record-3-4m-on-kickstarter-uk-drone-startup-collapses/

Company promised drones

$3.4 million in funding

only 600 of the more than 15,000 Zano drones ordered were shipped

they say they are bankrupt, they ran off with over 3 million dollars



Be careful if you invest large sums of money in games like MMO.

Kickstarter will not protect you in any way when the people simply run off with the money.




Kickstarter says they hold no responsibility:

Sirmatthias

Stupid is as Stupid does

Panther2103

I'm pretty sure I read that they just mismanaged money horrendously. The problem is most people that start kickstarters are people with ambitions but absolutely no idea of how businesses work. So they get all this funding then piss it away because they think it's endless. It's like that other kickstarter that failed because they spent more money on the rewards than they earned not realizing how much it would cost.

immodium

Donating to kickstarter is a gamble.

Panther2103

Evocationz said:

Man that's harsh, isn't there a legal thing people who donated can do?

No because when you pay for their kickstarter it always says "Kickstarter does not guarantee projects or investigate a creator's ability to complete their project. It is the responsibility of the project creator to complete their project as promised, and the claims of this project are theirs alone. ". So if they don't provide it, it isn't kickstarters fault, it's yours for backing it, it's a gamble every time unless you know a big company is behind it.

Thorkune

It seems like I've heard and old saying: A fool and his money are soon parted.

I have not, nor ever will I ever donate to these kickstarters. People get scammed and then they are shocked?!

Waterlily

Evocationz said:

Man that's harsh, isn't there a legal thing people who donated can do?

There probably is, but the problem is this project is from the UK, which probably complicates things.

US State Attorney General Bob Ferguson , filed a lawsuit against a Kickstarter project recently. But it was a US project I believe.

XImpalerX

Did anyone ever watch the original promo video for this thing lol?
I could tell right away that it was garbage. Unless the wind is perfectly calm that thing would get blown all over the place.

Even the videos of it operating indoors it is wobbling back and forth.

People sitting around drinking wine? The obligatory brain washing backing track about having fun? Suckers falling for a well produced marketing video rather than actual proof of concept lol.

SlothnChunk

Think I just caught Derek Smart's red cape out of the corner of my eye while looking up as he journeys to the UK to initiate the investigation.

breadm1x

Can be YOUR'S today

And law suit, rotfl good luck, look up the word "donation"

(not going to mention the video is terrible, its impossible to fly even indoors and its dead in 4 minutes)
But hey thats why i have a TBS Discovery and not some Chinese toy. (costs more to :P )

BigRambo

How about avoiding kickstarter all together?  Never cared for it, never will.  So simple, yet people find the way to bring it to a whole new level of idiocy. I'm pretty sure those scammers used to play EVE-Online.  

udon

Evocationz said:

Man that's harsh, isn't there a legal thing people who donated can do?

If they stole the money than yea the people who ran this business could end up in jail.  However if it was just bad mismanagement and they ran out of money than that's a lot harder case to make as it's not really fraud.  The difference is sometimes hard to prove such as how much is a fair salary for the management of a startup like this?  Most likely they like tons of other well meaning people wanted to make this work but just didn't anticipate how much taking the product from 95% to shipped was going to cost.  It's not uncommon for the last 5% of work for a project like this to consume 30-50% of the budget yet I see people ignoring this fact time and time again.

CrazKanuk

Thorkune said:

It seems like I've heard and old saying: A fool and his money are soon parted.

I have not, nor ever will I ever donate to these kickstarters. People get scammed and then they are shocked?!

You do know what the term "scam" means, right? Just checking because it seems like people throw this term around quite often regarding crowdfunding, but it doesn't really fit the definition. Yes, if they are sitting on a beach in the Cayman Islands with $3.4 million in their pockets, that's a scam. When they blow through that funding and have nothing left to show for it, that's not a scam. In fact, they are actually the ones taking a risk because they could end up being sued or losing their homes or whatever other assets might be unprotected. 

borghive49

I don't get why people get upset. This is no different than the risk that a big venture capital firm takes when they invest in a startup. You need to do your homework, like a VC,  and make sure you are investing in a solid company that can produce a viable product. 

Waterlily

borghive49 said:

 This is no different than the risk that a big venture capital firm takes when they invest in a startup.

Clearly it's not the same thing, if it was just as easy to get that money from investment firms or banks, Kickstarter wouldn't have a reason to exist.

SlothnChunk

borghive49 said:

I don't get why people get upset. This is no different than the risk that a big venture capital firm takes when they invest in a startup. You need to do your homework, like a VC,  and make sure you are investing in a solid company that can produce a viable product. 

Not even up to that legal standard.  A venture capitalist at least gets equity and legal protection.

Kickstarter is nothing more than an online patronage system.

Jermzy

BigRambo said:

How about avoiding kickstarter all together?  Never cared for it, never will.  So simple, yet people find the way to bring it to a whole new level of idiocy. I'm pretty sure those scammers used to play EVE-Online.  

What an idiotic thing to say, lol.  You just need to do your research first.  You are not buying anything, just helping to fund an idea that you think you will like.  

udon

Rhoklaw said:

So it cost them 3.4 million to make 600 drones? Bwhahahaa.

No, it cost them 3.4 million to do the development, engineering, testing, and developing the manufacturing process needed to produce the drones.  The 600 where probably the first run of that process and they didn't have the money to do any more after that.  That does seem on the high end to me personally.  It's a lot cheaper than a government contractor would have done it for but seems higher than a self funded startup could have.  

SlothnChunk said:

borghive49 said:

I don't get why people get upset. This is no different than the risk that a big venture capital firm takes when they invest in a startup. You need to do your homework, like a VC,  and make sure you are investing in a solid company that can produce a viable product. 

Not even up to that legal standard.  A venture capitalist at least gets equity and legal protection.

Kickstarter is nothing more than an online patronage system.

Don't forget the tax right offs for venture capitalist either.  Can a person right off kickstarter donations that don't pan out like companies can when they pour money into these kinds of things?

GeezerGamer

I will never EVER donate to crowd funding.
So many times, it's not the product, dream vision or market that causes entrepreneurs to find themselves unable to get funding through investors, but the entrepreneurs themselves and their own history (or lack there of)

Seriously, if something looks too good to be true, why weren't investors sold? 

Some have argued that it's free money, but it's not. If I had a fully funded product by standard investors, then I can pay them back out of the profits after my product ships. That's not the case with KS. This company here, probably shut down when they realized they weren't going to make any money on all those orders.

Albatroes

I know I'm horrible for saying this, but I always laugh when I read stories like these. Personally, I dont support anything crowd-funded or in early access etc. I believe if you have a great idea then you pitch it to a company and get funding that way. But every time I see projects like this, I always get the feeling that the individuals involved are always thinking "Well corporate skims off the top, so why can't I?!" At least this is proof that some people think this way.

Iselin

DMKano said:

Why is this surprising to anyone is still something I don't get 

it's a donation without any guarantees, just blind hope.

people don't understand donations?


I still donate to kickstart projects, but I am 100% aware that it's just me giving money away, zero guarantee that it will result in anything.

I do my best to research and donaste to reputable developers but again it's still just blind hope.

You know, the donation card when used in the crowdfunding context is just too simplistic and ignores the basic difference between typical donations, as the term has always been used, and giving money to an enterprise with the clear expectation of getting something in return.

KS crowdfunding projects are not charities nor are they used for continued funding of non-profit services you already enjoy, such as donating to PBS or Wikipedia.

Every KS crowdfunded project wants to be a for-profit enterprise. That all by itself differentiates them from charities or non-profit services.

Calling giving money to a project that clearly emphasizes in its promotional material the goods or services you will get proportionate to the amount given, a "donation" is really stretching the use of the word for no reason other than rationalizing the money away.

These are closer to standard consumer transactions than donations and they're marketed that way for good reason: if they weren't the money raised would be a lot smaller. What they actually are is risky purchases of future goods with no consumer protection.

Quirhid

Its a donation. Its certainly not a purchase or an investment.

LynxJSA

Rhoklaw said:

So it cost them 3.4 million to make 600 drones? Bwhahahaa.

Well, at least 600 people got what they hoped for. 

SlothnChunk

Quirhid said:

Its a donation. Its certainly not a purchase or an investment.

Nope. Not a donation either...it's patronage.  Donations (in the U.S) are tax deductible, come with legal protections and are regulated actively by the government.

So crowd sourcing would be in the same category as someone who goes on one of those 'sugar daddy / sugar baby' websites.

Iselin

LynxJSA said:

Rhoklaw said:

So it cost them 3.4 million to make 600 drones? Bwhahahaa.

Well, at least 600 people got what they hoped for. 

Actually, no. By all accounts what they got didn't work worth a crap.

http://www.bbc.com/news/34787404

mgilbrtsn

Kickstarter doesn't have any responsibility.  They merely provide the means by which to donate.  If you can't risk the money, don't donate.  It's as simple as that.  I fund kickstarters that I hope to succeed.  If one goes belly up, I am fully prepared.  I don't donate anything I can't afford.