Crowd funding: How to limit the risk of getting ripped off
The Kickstarter website has moved crowd funding into mainstream media. There is virtually no news site, newspaper or TV network left out there that has not reported on recent funding success stories. You may have heard about Double Fine Adventure's million Dollar ride that got the ball rolling for some serious game funding on the site, or Pebble, the e-paper watch for iPhone and Android that managed to rake in more than $10 million.
People who pledge a certain amount of money often get something in return. In the case of Double Fine it is a copy of the adventure game that the developers want to produce with the money, and for Pebble, it is one of those iconic watches. Pledges can be retracted for as long as the funding has not ended. Afterwards, the money is only transferred if the funding has reached the desired goal. If that is not the case, backers are not charged a single dime. It gets fuzzy when a project has crossed the funding goal and reached the end of the funding stage. Once the money has been transferred, there is not really any transparency as to what happens with the money from that moment on forward.