Crowdfunding has certainly enjoyed a bit of time in the sun recently. While the idea has been around for quite some time (think of charity drives - they're essentially a giant crowdfund initiative to fund something with a massive budget), it's only really recently with the rise of social media that they've kicked off as a popular way of raising money.
They're used for many things - the arts, charitable works, startup funds (or top up funds) for profit-driven entities.
As anyone who has used one of the popular crowdfunding websites (Kickstarter or Pozible, for example) knows, usually what is offered in return for the funding is a reward. These rewards usually increase on a sliding scale - the bigger the investment by the user, the bigger return they should see once the funds are raised and used.
And this, I think, is key.
I've been quietly watching a story unfold in the Australian knitting world. Without going into too much detail, people who invested through the crowd fund are being told (by the person who was raising this money) that they weren't investing in a business venture, but an idea. That because of this they have no right to complain that they haven't received their finished product, even when the finished product was being sold to the public at a recent agricultural show. They're being told that they have no recourse to complain to the site that hosted the crowd fund.
Well, I can't speak for those affected, but I can say for sure that I would be pretty peeved if I was in that situation.
It has certainly gotten me thinking about the risks of crowdfunding. As a user investing into someone's idea, you'd have to assume that they'd created a comprehensive plan, had costed everything out and had determined that they were capable of running/producing/doing whatever they're promising. It's worrying that it appears that there are people out there seeking money for ventures without having put the idea through what I would call an appropriate amount of scrutiny.
At the same time, I don't want to hold back from putting money into a crowd fund for a reason or product I believe in... (hah, fencesitter much!)
Does anyone have any ideas on how to handle this sort of thing?