The Trouble with Crowdfunding the Next Big Tech Gadget

By n the past several years, crowdfunding has evolved from a weird Internet fad to a critical resource for innovation. Now, Richard Branson and other power players are investing in IndiegogoFacebook recently acquired Oculus VR, the result of a hugely successful Kickstarter campaign; and crowd-equity seems like it’ll be the next frontier—just as soon as the SEC releases the rules pertaining to the practice.But there’s also troubling news emerging from the crowdfunding sphere: The first consumer protection lawsuit was filed against a Kickstarter campaign in early May by Bob Ferguson, the Attorney General of Washington State (where some of the defendant’s campaign’s backers live). Ferguson says his office has seen an increase in crowdfunding-related consumer complaints since the lawsuit was filed.


For product design experts, the lawsuit seems like just the beginning. There are several overly ambitious technology projects on crowdfunding platforms that will soon have to make amends to their disappointed backers, who are already complaining—if not demanding refunds.

“I believe we’re dealing with a ticking time bomb. A high-profile project is going to fall totally flat on one of these platforms and there’s going to be a big, public fallout,” says Simon Enever, founder and designer at the product design company byDefault. Enever raised initial funding for byDefault on Indiegogo.

Don Lehman, founder and designer at More/Real, says he also frequently sees design projects on crowdfunding platforms that are overpromising and in his opinion will never be able to follow through for their backers. His Kickstarter campaign for a touchscreen stylus in 2011 was an early product design success story for the site.
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