Thread: Why you should never crowdfund

I was never into the crowdfund model. And still am strongly opposed to it from a business and economical point of view.
Generally, business plans are carefully delineated strategies for the launch of a product or service, with clear goals and clear financing needs. Crowdfunding throws all of that away and promotes bad management habits by:

• Fostering the idea you can approach your potential investors with an non-documented and crude business strategy, no studies and no financial reports, and still gather mass amounts of funds.
• Subverting the core notion that a good business strategy should set minimum and maximum goals, not just minimum.
• Driving you business by sight, by promoting ad-hoc decisions based on the amount of funds you are receiving without due consideration for the cost-benefit of those decisions.
• Forcing the continuous accumulation of those hasty/bad decisions because you can't or don't want to turn the funding machinery off.
• Ignoring the know-how differences between managing a project that met its goal of 100,000 USD and the same project that overshot its goal to 3,000,000 USD. The first can be managed by about anyone, the second should take a business degree to manage successfully.
• Providing almost complete immunity to accountability, which facilitates the idea that all of the above doesn't matter, and you can just ignore the basic and time-honored rules of an healthy and sustainable business.

Because of numerous loopholes in the law and the fact that crowdfunding only recently took on a dimension that warrants closer scrutiny by regulators and legislators, you will be left hung out to dry. That's bad luck, crowdfunding advocates will say. And they will say even more: In an attempt to insult your intelligence and drive a stake through the last vestige of human decency, they will tell you after you lost something to it, that what is important is that most projects succeed.

And that's how slowly, you kill what is at its core an innocent and nice idea. Ignore the garbage that is accumulating and look only at the good side. Don't do or say anything against and do not promote internal criticism. Defend an idea only on what it is meant to represent and not on how it is being represented... and soon enough crowdfunding will die. (As in fact it has been for the past 2 years).

Originally Posted by Mario F.

...warrants closer scrutiny by regulators and legislators...

There's an old saying that seems to fit, that most people seem to have forgotten: "Caveat Emptor - Let the buyer beware." Not to mention the biblical proverb "A fool and his money are soon parted."

People are stupid and gullible. If they throw their money away on something that seems too good to be true, and end up with nothing but an empty wallet, they deserve it.

Originally Posted by Elkvis

People are stupid and gullible. If they throw their money away on something that seems too good to be true, and end up with nothing but an empty wallet, they deserve it.

But while I am particularly open to that idea and it is true of many cases on both indiegogo and Kickstart, there are many other cases in which people have been drawn by both well orchestrated campaigns to raise funds by not deliver a product, or by the irresponsible media coverage of the phenomena that helps promote the idea that this type of funding is the best thing that ever happened to us.

It's not different from many other situations consumers have been facing. An automatic Caveat Emptor risks an even worse result in which we end up blaming the victim. And there's been plenty of failed campaigns in the crowdfunding ecosystem in which consumers have been drawn by false advertising and a modern mass-media profoundly hostile (or dismissive) of consumer rights issues that does not properly report on the risks of crowdfunding, neither they put pressure on services like Kickstart or indiegogo to offer protection mechanisms or governments to regulate and legislate crowdfunding.

Everyone is to blame. And certainly stupid and gullible people too. But only on a case-by-case basis. Because one of the responsibilities of an healthy society is to offer protection to its citizens; including the dumb.