First Click: I'd rather buy a watch in an alley than from Indiegogo

May 22nd, 2015


Did you know that almost every Indiegogo campaign collects money even if the project fails to meet its goal? That’s because 95 percent are set up using so-called Flexible Funding. Fixed Funding is the all-or-nothing model you’ll find employed by Kickstarter whereby money is withheld until the project meets its targets. With flexible funding, all the risk is with the consumer.

Refunds for failure to deliver? Ha, you must be joking. You can ask nicely and Indiegogo can suspend the campaign’s account, but when push comes to shove you’ll have to fight the campaign team in a US court of law to get back your money.

That leaves Indiegogo ripe for abuse, especially for gadget shoppers. This isn't new, but cheap sensors and radios coupled with disgruntled industrial engineers have combined to accelerate the glut of crap gadgets heading straight to the mainstream crowdfunding platforms. Anyone that can produce an earnest video that rises to a crescendo at just the right moment can win funding these days.

Take LunoWear for example. Bo wanted a wooden watch but “couldn’t find one that had the style and quality” he was looking for. So he turned to Kickstarter with a project titled “73 Year Old Watchmaker Launches NEWEST Watch With Grandson” featuring a lovely soft-focus video of grandpa Calvin doing lots of craftsman-y things with tweezers, tiny gears, and something that made sparks. Bo and his partner Ryan amassed $424,687 in Kickstarter pledges and even received a coveted Staff Pick award. Everyone felt great supporting this family project until identical-looking watches (for a lot less than $60) were discovered on AliExpress that probably weren’t designed by Bo’s grandfather. Kickstarter abruptly suspended the account and LunoWear received nothing of that half-million dollars. Remember, Kickstarter doesn’t convert pledges into cash contributions until a) the project ends, and b) the project meets its funding goal. The checks and balances worked.

LunoWear is now on Indiegogo as a flexible funding campaign where 1,980 people have already pledged $143,478 in cold hard cash which Bo and Ryan will collect after the campaign ends.

In 2012, Kickstarter tried to convince the world that it wasn’t a store. The $20 million recently raised by the Pebble Time proves that wrong. But if Kickstarter is a store, then Indiegogo is that guy in the alley selling watches sewn into the lining of an open trench coat. Except Indiegogo is riskier because you can't inspect the watches up close before handing over your money.

Update May 26th, 11:39AM: Clarified that Indiegogo campaigns don't get paid until after the campaign ends.

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