Aarti Shahani writes for NPR‘s All Things Considered blog:
Crowd funding began as a way to support the arts on the Internet. Artists could go online to pitch a new album, for example, in the hope that thousands would give small amounts. But now it’s expanded to entrepreneurs, and the rules aren’t quite as clear.
On Kickstarter, the largest crowd-funding site, a handful of entrepreneurs have raised millions of dollars more than they’d expected, by selling the concept of products they have yet to make. But financial backers have no clear way of getting a refund if the young businesses fail to deliver.
This has emerged as a very real risk. I’ve only backed a few small things on Kickstarter (Kirby Ferguson’s new film, and the Kaffeologie S-Filter) because I’m still a little wary of the process. I don’t think it’s paranoia. Shahani’s article mentions that the Pebble watch missed its first scheduled shipping date, and Ben Brooks notes that the Elevation dock arrived very late, and broke soon after.
These are all very real concerns, and that’s why I have a hard time rolling the dice on a hundred dollars for the chance that a product might ship, and there’s no recourse for the backers if the project fails.