Crowdfunding for 3D printing V.2
3D printing is a new and emerging field , and crowdfunding is providing a new source of capital for inventors and start-up companies.
Fortunately thanks to internet crowdfunding, there is a innovative new way to fund 3D printers outside of the control and regulations of banks.
Crowdfunding is a blessing for startup companies and young entrepreneurs that may not have the established credit or capital to back their innovative printers. Thanks to crowdfunding innovative 3D printers can be presented and brought to the public quickly, and crowdfunding can be a source of quick funding that is needed in the innovative field of 3d printers.
However on the other edge of the crowdfunding sword, there is less accountability and far more risk for backers of these crowdfunding projects. The companies that post projects on crowdfunding sites are not required to have any collateral, insurance or bonds to back them in case they fail. The investments from backers are uninsured, and there is little to no recourses available if a project fails completely.
The two main crowdfunding sites in the USA are Kickstarter and Indigogo. Both sites have done a lot in the field of crowdfunding inventions and artist that otherwise would not have access to capital and funding.
However, both sites have their problems.
Within Kickstarter, the 3D printing world has had its share of scams and failures for startup 3D printing companies.
In one recent scandal the ND1 Machine had their funding suspended when the 3d printing community called BS on their promise of a multi material resin printer. The ND1 printer was a pipe dream that the 3D printing community could see would not work in its current iteration. While a multi material resin printer may be feasible in the future, just like current multi material FDM printers, it will have to be developed and prototyped before anyone can feel comfortable backing it.
The Peachy Printer scandal also rocked the crowdfunding world when one of the business partners straight up embezzled the funds for a personal house.
It was clear that the founders of Peachy Printer intended to produce functioning, low cost SLS printers, but lost their funding due to poor management and the outright theft.
The Buccaneer 3D printer was probably the first public scandal for 3D printers. The company has taken the funding from kickstarter, but never provided the printers to the backers. It appears that Buccaneer may have had a prototype, but they never developed the business to produce commercial 3D printers for their backers.
Flaws within Crowdfunding
The biggest flaw within crowdfunding has been accountability. If a company’s project fails, backers have to eat the loss of their financial and emotional support. Currently Kickstarter or Indigogo does not require any sort of bond or insurance for these startup companies. This lack of collateral is attractive to individuals that could not get financing with traditional banking, but it creates more risk for backers.
People are also becoming more skittish with crowdfunding due these public scandals.
Consumers are protected in construction projects and investments by bonds and insurance, so I do not see why companies asking for public funding are not required to do so. Mabey kickstarter can give incentives like page visibility and reduced transaction fees to companies that are bonded or insured. Kickstarter themselves should provide access to a bond or insurance agency for its projects to use, or require that for all other future projects.
Another issue with crowded funding has been providing backers with the products they were funding.
It is one thing to have a working prototype in your garage, but commercial production has been the Achilles heel of many projects. Many projects have failed because they did not line up the logistics and production capacity needed for thousands of printers. Others have failed because they did not anticipate their product being so popular. Backers lose faith quickly if a project cannot produce the printers promised.
Crowdfunding can help this by requiring that projects have a commercial production plan in place. This should be freely viewable and transparent, and open to public comment. Crowdfunding should also require that any 3D printer company have the industrial production plans in place before a printer is funded. This will give backers more assurances that they will actually see the 3D printer they back.
Crowdfunding can also put a cap or level on the numbers of backers a company can accept. If a company wants more backers, they should prove they can support the increase in products demand.
Crowdfunding can also be helped by policing the projects they host better. It is great that a working prototype is required for a Kickstarter project, but more needs to be done.
The Olo printer is prime example. It’s one thing to have an innovative 3D printer, it’s another to sell one that will not technically work. While the crowd does help shut down printers like the ND1, there is not enough done to protect backers from snake oil printers from getting to the public in the first place.
Crowdfunding sites should have review panels in place to examine projects before they go public. This can be crowdsorced as well, as the public can look at a project and evaluate it before it goes life.
If crowdfunding would give projects a 30 day review time before a project goes live, the public can provide feedback to the project, and sort out the shady projects from ligament.
Outline for Crowdfunding 2.0
The current platforms of crowdfunding are off to a good start, but more needs to be done to insure that inventors and artist can receive crowdsource funding in the future. To improve crowdfunding I recommend the following.
- Any project has a working prototype in place, supported by raw video and outside witness affidavits.
- Any project have insurance, bond or other collateral in place equal to or greater than amount requested for the project.
- Quarterly reports on progress, including video and public documents.
- Commercial production plan in place at the start of the project, with a semi-annual or annual updates.
- As a term and conditions of the site, the project is required to satisfy the backers before any commercial operations.
- An independent board within the crowdfunding platform that evaluates the technical viability of the projects before they post it.
DISCLAIMER: This is written as a critique of crowdfunding. 3D-PT is not affiliated in anyway with Kickstarter or Indigogo. Please evaluate all donations into crowdfunded hardware carefully.
Nice article, short summary
I like the nice and informative tips and pointers. I would like to have a nice set up so this is right on time.
O-NOOooo! I have backed a 3D printer company and now am very worried.It had great pictures and videos on the site. I was over excited about it and went in with blinders on. I went back and re-read the terms and realize I missed a BIG part of it. I remember reading “we get our money back” -but that is-, “if the project isn’t fully funded.” I automatically thought that if a project gets funded that no problems would arise. THANK YOU for this post and the videos! That first video explained it perfect to me!! That is some major money people have lost! I hope I don’t become one of them!
This thought process is a step in the right direction. I have actually been very hesitant to back any 3D printers via crowd funding due to all of the negative stories I have heard. Knowing that a 3D printer project I see on KickStarter has been examined and is at least technologically feasible would go a long ways to easing my mind and my purse strings.
I’ve backed a few 3d printing related kickstarters that were successful. I’ve also backed, and cancelled pledges for other campaigns. I do research to determine if I really think they’ll follow through. Have they had previous campaigns? What does their website say about them as a company? What does my gut feel (to good to be true?)