A Kickstarter watch project that was obsolete before it even shipped to backers is just the latest in a long series of crowdfunding fails — projects that run out of money, encounter manufacturing roadblocks or are so questionable that crowdfunding sites like Kickstarter and Indiegogo ban them outright. With this particular Kickstarter watch project, called Syre, the creator promised iPod Nano Bluetooth-enabled watch bands to his backers, who funded the project 78% beyond its original goal of $75,000. The problem? Apple (AAPL) soon released an iPod Nano that came with Bluetooth already built in, making third-party products like the Kickstarter watch unnecessary.
Granted, there is still a small market for the Syre Kickstarter watch– people who already own the older iPod Nanos and don’t want to buy the newer, larger style. But beyond the fact that his product was obsolete before it was even created, creator Anyé Spivey had to change the design significantly, encountered problems getting iPods for backers, and still hasn’t shipped a thing, more than a year since the project was crowdfunded. Though Kickstarter has taken pains to emphasize that Kickstarter is not a store where receiving an item is guaranteed, the backers of the Kickstarter watch, who are collectively out $133,702 for a failed Kickstarter project, are understandably upset.
It’s no secret that investing in crowdfunding — whether the project is as small in scope as manufacturing a single type of shoelace, or as large as creating a new video game console — is inherently risky. Funding a product on Kickstarter or Indiegogo is akin to being a mini venture capitalist, putting money on the line and hoping that your investment will pay off with either a successful product or (thanks to recent developments in the JOBS Act) with stock in a successful startup. Of course, it doesn’t always — or even usually — work out that way. According to Kickstarter’s own data, 56% of crowdfunding projects fail.
Here are a few of the more spectacular crowdfunding flops.
Kickstarter Fail #1: The Doom That Came to Atlantic City
Crowdfunding Goal: $35,000
Actual Amount Funded: $122,874
Date Funded: June 6, 2012
The crowdfunding of this board game that took a dark take on Monopoly shared many of the downfalls of the failed Kickstarter watch — backer rewards were never delivered, and the creator faced unforeseen challenges.
But backers were especially upset with the lack of transparency. Though the product was funded nearly four times its original $35,000 goal amount, backers received few updates and no information about how the money was being spent. Project creator Eric Chevalier later revealed the many problems that came up, and canceled the project, saying he would personally refund backers’ money as he could afford it. However, the trust was gone — many backers have complained to Kickstarter and threatened legal action.
Months later, many backers have still not received refunds. Just goes to show that a cool idea and slick artist renderings could cover up a crowdfunding project creator’s inexperience or possible ill intentions.
A company called Cryptozoic Entertainment took over the project in July 2013 and is working to get the game in Kickstarter backers’ hands.
Kickstarter Fail #2: Crypteks USB
Crowdfunding Goal: $12,000
Actual Amount Funded: $196,404
Date Funded: Dec 23, 2011
The Crypteks USB drive, which exceeded its crowdfunding goal sixteen times over, looks and acts like a cryptex out of the Da Vinci Code, but as a general rule, it’s a bad idea to keep updates on the project itself under lock and key. Unfortunately, that’s exactly what happened with the Crypteks project, and backers are still angry about it two years later, with complaints posted on the Kickstarter page almost weekly.
And rightfully so — Cryptrade Inc. received sixteen times the goal amount. What have they been doing with that money over the past two years? Well, the last public update showed what looked like a run-of-the-mill USB drive … a far cry from the promised product. Subsequent updates detailed how to get a refund.
Kickstarter Fail #3: iPlifier
Crowdfunding Goal: $7,500
Actual Amount Funded: $8,576
Date Funded: Apr 20, 2013.
The iPlifier was supposed to be a small plastic amplifier for iPhones that would allow users to listen to audio without noise interference in crowded areas. The free white headphones that come with iPhones do the same thing, but 800 crowdfunding backers still threw $8,576 at the project … with no results.
This Kickstarter project was touted in Wired magazine and GadgetMac.com, but the product was never shipped, no refunds were issued and no updates have been posted since May 2, 2013. In the months since then, backers speculate that the creator ran out of money and jumped ship, but thankfully it was a low dollar-amount crowdfunding project, with a maximum donation of $15.
Since several failed crowdfunding projects, especially manufacturing-related ones like the Syre Kickstarter watch, had issues in common, Kickstarter has tightened its requirements on what kinds of rewards are allowed, and what types of projects will be approved.
As of this writing, Carla Lake did not hold a position in any of the aforementioned securities.