Fund at your own risk

Those who back crowd-funding projects may not get the items promised by creators, who say it can be tough to deliver on time

In crowd-funding campaigns, project creators sometimes offer products and perks to donors to entice and thank them for their support. The value of the gift usually depends on the amount pledged.

In a successful fund-raiser, the backers would have made their pledges and enough money would be raised to kick-start the project.

While most creators typically deliver on their promises to backers - although some are late - others have not sent out their items after a year.

This issue came into the spotlight after news broke recently of local company Pirate3D halting production of its 3D printer and leaving 60 per cent of its backers in the lurch.

The company had raised US$1.44 million (S$2 million) via crowd-funding platform Kickstarter in 2013. Each supporter paid from US$297 upfront and expected to receive the printer by last year.

Project manager Abel Ang, 33, has not received his printer, despite pledging US$497. Says the Singaporean: "I'm disappointed, but it's also partly my fault. I could have done more research on the company before I backed its product."

It’s very tempting to just ship the product out to meet deadlines because people will get angry if you don’t. (But) if people face problems using your product, they will also get angry. ’’

MR ANDREAS BIRNIK, co-founder of CreoPop,on the challenges of producing crowd-funded items for backers

Another supporter, digital developer Peter Lum, 48, who contributed US$397 and received his printer in January this year, says: "It was late and getting it took much pestering."

He sent the creators e-mail and messages via their Kickstarter page, but did not receive a reply. He tracked down their office number and persuaded them to send him a printer from their existing stock.

"They did, thankfully. But the mood of the transaction was very tense. I also think the printer doesn't work very well. I probably won't support its future projects."

Pirate3D is not the only project creator that has not delivered on promises to its donors.

A scan of crowd-funding websites shows at least two other projects - Chiffon And Lumo, a transparent dock that charges smartphones; as well as Greenchamp Bikes, a child's bicycle made from bamboo - whose items do not seem to have been sent out, despite it being a year after the estimated delivery date stated on their pages.

Their comment sections are filled with angry backers demanding the items, updates or refunds.

The Consumers Association of Singapore (Case) has also received two complaints involving crowdfunding projects this year, in which the backer invested in a project and was supposed to receive a product which was not delivered.

Mr Seah Seng Choon, 62, Case's executive director, says: "It would be difficult for Case to intervene if the creator is not a registered business and/or is not located in Singapore.

"Backers may take legal action against the creator. However, it can be difficult for the backers to recover their funds if the creator is in a different country."

Crowd-funding platforms generally do not take responsibility for the completion of funded projects or the delivery of products.

The Kickstarter website states that it "does not guarantee projects or investigate a creator's ability to complete their project". Indiegogo, another crowd-funding platform, writes on its website: "Indiegogo does not represent that campaign owners will deliver perks... Users use the services at their own risk."

Experts say this means that when it comes to crowd-funding projects, the risks generally lie with the backer. Professor Arcot Desai Narasimhalu, 66, the director of Singapore Management University's Institute of Innovation and Entrepreneurship, says: "There is definitely a chance that the promised product is either of a lower quality, not delivered on time or not delivered at all.

"There is nothing backers can do to avoid the risks. It is like in stock-market investment - the investor always takes the risk."

One creator says he was not prepared for delays in producing promised items to backers.

Singapore-based company CreoPop, which raised US$209,934 from 2,314 backers in the last two years, delivered its product - a 3D-printing pen with futuristic ink - six months late.

Says its co-founder and chief executive officer, Mr Andreas Birnik, 42: "There were so many unexpected delays, from our ink cartridges getting clogged or stuck inside the pens to the various components not fitting together properly.

"We also realised - only after we took some samples on board a flight - that the cartridges can be affected by cabin pressure changes."

These are challenges that have to be overcome in any new product, says the Swede, who is a Singapore permanent resident. "On one hand, it's very tempting to just ship the product out to meet deadlines because people will get angry if you don't. On the other hand, if people face problems using your product, they will also get angry.

"I chose to deliver it late, but get all the bugs fixed first. It is now in more than 1,000 Best Buy stores in the United States and I'm very proud of that."

One of his backers, Mr Darwin Gosal, 34, the director of a start-up company, received his CreoPop on Tuesday, but has not had a chance to use it yet.

Says the Singaporean, who has funded 28 other crowd-funding campaigns: "I didn't mind the wait because I would rather have a product that is of high quality.

"In any case, crowd-funding is different from e-shopping. I supported a campaign two years ago involving an iPhone 4 case that hasn't arrived yet. So I know it's possible that creators might not deliver in the end."

Thankfully, a check with crowdfunding websites suggests that most project creators deliver on their promises.

The creators of a Singapore- America project to produce green pea cookies delivered the items to its backers within two months of the estimated delivery date this year.

Advises Ms Fiona Lee, 23, who started the project with two friends: "Always overestimate the amount of time you require. It is better to give yourself some breathing space rather than make a huge rush of everything and do it badly."

Accountant Tan Yu Hua, 28, backed a Pocket Kitchen craft kit to create miniature food sculptures from polymer clay, which arrived on time in July this year.

She says: "I'm very satisfied with the kit. So far, I've used it to make a tiny cheeseburger that I can hold between two fingers.

"The creator, Ms Jocelyn Teo, also delivered the kit to my address in person, giving it a personal touch."

A version of this article appeared in the print edition of The Sunday Times on November 01, 2015, with the headline 'Fund at your own risk'. Print Edition | Subscribe