Understanding Kickstarter Backing: Rewards, Risk, and Returns
Kickstarter has become a popular platform for creative projects and companies to raise funds for their ideas. If you back a project on Kickstarter, you are essentially pledging to support a project in exchange for rewards rather than financial returns like you might get from traditional investments. This article will break down what backers can expect, the implications of project failure, and the importance of understanding the risks involved.
Rewards and Pledges
Backers often receive various rewards based on the pledge level they choose. These rewards can range from exclusive products to personalized experiences, all related to the project's theme. However, it is crucial to note that these rewards are not guaranteed. Their delivery depends on the project's successful fulfillment, which can be challenging due to unforeseen issues or logistical problems.
Project Failure and Refunds
If a project fails, typically due to the creators being unable to deliver the promised rewards, backers typically do not receive any refunds. Kickstarter is a crowdfunding platform rather than a store, and supporting a project involves inherent risks. Refunds are not a consideration in case of a failed project, as Kickstarter's primary goal is to promote and support creative endeavors.
Funding Targets and Pledges
Another key aspect of Kickstarter is the funding goal. If a project does not meet its set funding target, it will not receive any funds, and backers will not be charged. This feature ensures that creators receive only what they need to bring their projects to life, reducing the risk for both creators and backers.
Risks Involved
It is essential to understand the potential risks of crowdfunding. Many projects face challenges that can lead to delays or complete failure to deliver. These risks include miscommunication between creators and backers, unexpected obstacles, and logistical issues. It is wise to research the creators and their plans before making a pledge. Due diligence can help you make an informed decision and minimize potential disappointments.
Related Topics and Considerations
While Kickstarter offers numerous benefits, it is important to consider the risks involved. If you contribute to your own Kickstarter campaign to help it get off to a good start, you are not responsible for paying that pledge if the project fails to meet its funding goals. This is similar to any other Kickstarter contributor. Additionally, you should not invest your own money in creating a successful Kickstarter presentation unless you are willing to accept the risks involved in the marketing investment.
Some individuals advocate for Kickstarter to offer shares in companies to backers, similar to angel investing. This would give backers a stake in the success of the project, providing a more balanced approach to risk and reward.
Understanding the rules and expectations of Kickstarter can help you make more informed decisions as a backer. Always weigh the potential rewards against the risks and consider the implications of project success or failure before pledging your support.