Online funding platform Kickstarter changed its policy recently, hoping to deter the growing belief Kickstarter operates under a store-based model. In a blog post entitled “Kickstarter Is Not A Store”, the site detailed changes to its policy, including a Risks and Challenges section for all projects. It also claims to have stricter guidelines for Hardware and Product Design, aiming to decrease ambiguity between the current capabilities of a product and its goal functionalities.
All project creators must now list all foreseen risks and challenges ahead, as well as their solutions to such roadblocks. The post describes how investors should “judge both the creator’s ability to complete their project as promised and whether they feel the creator is being open and honest about the risks and challenges they face”.
As for Hardware and Product Design, creators are no longer permitted to display renderings or simulations of future products, but instead must show the product in its current state. In addition, Hardware and Product Design projects can no longer offer rewards of multiple quantities of the final product. Rewards must instead be either singular quantities or logical kits of related items. The site encourages creators to “under-promise and over-deliver”, while avoiding leading the investors to higher expectations.
These guideline changes apply only to those projects which are developing new products and promise shipments of the final product. Projects which do not offer the product as a reward do not fall under the changes. The reasoning? According to Kickstarter, “they aren’t developing new products that [investors] are expecting in their mailboxes”.
The policy change is aimed to “reinforce that Kickstarter isn’t a traditional retail experience and underline the uniqueness of Kickstarter”. The site exists as a means of communication between creators and the public audience.
An inventive solution to the traditional profit-based funding systems, Kickstarter has become renowned for giving innovators and “creators” the means to get their projects up and running through the pledges of investors and “backers”. By allowing a wider variety of projects, the site allows far greater chances for success. However, this increased success also comes with increased risk, a aspect of the site which has faced criticism as of late.
During the fundraising phase of a project, backers can pledge various amounts of money to fund the product, and upon project completion, receive prizes relative to the amount pledged. Due to the nature of certain projects, creators may fail to meet reward deadlines or the project may fail altogether.
Kickstarter is never responsible for the completion of the project, nor do they guarantee reward delivery. The site’s policy states that all creators are legally responsible for delivering the rewards to backers; if the project should fail, it falls to the duties of the creator to refund backers. Kickstarter hopes the improved policy will clarify any potential risks to investing, without misleading the backers as to the current and future abilities of the projects.
For more information on the policy change, visit kickstarter.com.
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