6 Kickstarter nightmares, and how to prevent them

Crowd funding has taken investing from the hands of the venture capitalists and given it to the masses. Here's how not to screw it up.

By Christopher Null, PC World |  IT Management, crowd funding, kickstarter

For tens of thousands of entrepreneurs frustrated by Washington's arcane legal rules for raising business capital, Kickstarter has been nothing short of a red-tape weed whacker. The crowd-funding website lets individual investors pledge money directly to inventors and artists, handily upending the complex and often impossible process of raising financing one person at a time.

If you succeed, that is.

Since its launch in 2009, Kickstarter has hosted more than 76,000 projects. About 32,000 of them, or 44%, have been successfully funded, with a total of $345 million raised.

The road to success on Kickstarter is far from assured, and third-party statistics show that Kickstarter projects have about a 41% failure rate. And that's only counting projects that Kickstarter accepts. Countless additional projects have never even made it off the launching pad.

How do you avoid having your project become a statistic while others succeed? Here are some of the most common pitfalls other Kickstarter users have encountered, and ways you can overcome them.

All of the information below comes courtesy of entrepreneurs who've experienced failure, success, or both, at the hands of the Kickstarter system. Kickstarter declined to participate in this story.

1. Problem: Kickstarter rejects your project

It's impossible to tell how many Kickstarter projects never even get a chance, because there aren't any statistics on how many are rejected outright by the company.

It is in Kickstarter's interest to accept only projects that are reasonably likely to succeed, because Kickstarter gets paid (5% of your total funding) only if you reach your stated funding goal. Miss the goal, and Kickstarter collects nothing--but it still has to do all the legwork of running your funding campaign and hosting your project.

The reasons for rejecting a proposal are numerous and often cryptic. Kickstarter's guidelines establish rules for what qualifies for Kickstarter funding, but these aren't always clear and can even be contradictory. The fundamental rule--that funding is for "projects only"--is at odds with entrepreneurs who want to use funds to build a physical product that they hope to sell on an ongoing basis, or to use as the basis for the beginnings of a startup. No one is getting into the Kickstarter game to create a limited run of iPad keyboards that, once produced, will never be sold again.


Originally published on PC World |  Click here to read the original story.
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