Future Kickstarter/crowd funding - Food for thought


The Silverback

Recommended Posts

I'm sure that at this stage, everyone is aware of what has happened with oculus rift selling out to facebook [which makes it even worse] so I wont go into detail. I just wanted to put it out there that I will never be supporting any projects on Kickstarter [i have been in contact with them about changing their system to protect backers and their responses and attitude were shocking - they don't care as long as they make their money] or any other crowd funding projects where funders aren't protected from being used as free venture capital for greedy companies. If hinterland is looking at crowd funding a new project or a sequel I think it should be kept in mind that I am not the only person who feels this way and wants legal protection in place before they are willing to donate again. Of course I am not suggesting that hinterland would sell out but it is better to be safe than sorry - as the saying goes, Fool me once, shame on you. Fool me twice, shame on me.

Link to comment
Share on other sites

  • Hinterland

Thanks for your thoughts!

I think it's clear that crowdfunding platforms like Kickstarter are not exchanging equity for the pledges made. Therefore, there is no fair expectation on the part of the backers that they should be remunerated in the event that a product is sold to another company (as happened between Oculus and Facebook).

Having said that, Hinterland has no intention of selling to anyone. In fact, we had many opportunities to take money from traditional investors and publishers, who would have wanted a share of equity in the company and/or control of the project. Since we all left the mainstream games industry so that we could work on something as independents, it's never made sense for us to do this. Therefore we've raised money through sources that don't require us sacrificing our independence, or ownership in our work, to a third-party. Part of that money has come from Kickstarter.

We're extremely grateful to our backers for choosing to support us in the creation of The Long Dark. And I can empathize (not sympathize, since I didn't back Oculus) with the people who chose to back Oculus and now feel that they have been slighted by not being able to participate in the financial benefit of this arrangement, but that is empathy and has nothing to do with what is legally or morally right. In this case, Oculus VR is perfectly within their rights, and the backers have no fair claim on the Oculus Rift beyond what they received in exchange for backing the project -- in other words, the DK1 dev kits. They were not buying shares in Oculus.

For what it's worth, there are new equity-based crowfunding platforms out there which have the kind of arrangement you're looking for -- where the people who put in money get equity in the endeavour. In other words, they are *investors*. Kickstarter backers are not investors. They are patrons of the arts. Kickstarter was not "free venture capital" for Oculus -- it was patronage money donated by people who really wanted to get their hands on the early dev kits.

I for one hope that Kickstarter never adopts the equity crowdfunding model. There are many other avenues for people to invest money in companies if that's what they wish to do. Kickstarter should be about building community around a specific project and giving them special insight, due to their support, into the process of how the thing is made, and involving them in that process where possible.

We're hope our backers will be satisfied with what they get from us in exchange for what they have all given us, and you will all be part of the founding story of The Long Dark, but nobody has claim on our work or on the company we are building for now and for the future. We are 100% independent, perhaps fiercely so, and intend to remain that way.

Link to comment
Share on other sites

I acknowledge that kickstarter and other crowdfunding platforms are set up in such a way that backers have no legal right to a share of the profits in the case of a sell out such as oculus rift and I doubt that this was an expectation of any of the backers when they chose to fund the project. My point is that the oculus rift would not have existed as a company nor would they have been in a situation to make 2 Billion had they not received what is essentially a 2.5 million interest and risk free loan from the backers [not to mention their support, pushing developers to adopt the tech into their game and showing that there was a market for the product]. If backers had been aware that they would effectively be used as bait to entice bigger venture capital firms, I strongly doubt that any would have given any money or support to the project.

To take the long dark as an example, when I backed the project I did so because I wanted to play the game and to support an independent company so that they didn't have to capitulate to a faceless corporation that would enforce decisions based solely on profit and not based on what would be best for customers. I didn't back it with any expectation of receiving a share of any profits and I don't want hinterland to do this for free - I think it's only appropriate and fair that they are rewarded financially for everything that is put into making the game.

I am not suggesting that all crowdfunding should be based on an equity crowdfunding model but there needs to be protection put in place that stops backers being used as free venture capital. Crowdfunding has grown exponentially in the last few years and corporations are scrambling to take advantage of it [http]. If backers are not protected from being exploited then crowdfunding as we know it will die and future companies like hinterland will never come to be.

Link to comment
Share on other sites

From being used as free venture capital to entice bigger venture capital firms or corporations [like facebook].

why would you need protection from something that's not against the law.

Everyone who donates to a project knows what they are giving / getting. Every business has the right to do what's in their best interest, and in the best interest of their equity holders.

There is no reason for KS to require projects to never-ever sell. That's not how free markets work.

Link to comment
Share on other sites

Wouldn't you know, I went to post a long reply but I had been logged out and have to rewrite it so this time it will be shorter.

You should bear in mind that just because a law does not currently exist prohibiting something specific does not mean that people don't need protection from it. To assert otherwise would be ridiculous as if this was the case then there would never be any new laws to protect people from new developments. Also, to be pedantic about it, every business does not have the right to do "whatever" is in their "best interest" as this can [often] be against the law [i.e. monopolies, price fixing, insider trading, slave labour, destruction of natural resources, the use of toxic/hazardous materials, etc, etc] and rightly so.

You need to read back over what I have written as you clearly have not understood it. Not once have I said that what kickstarter/facebook/oculus have done is illegal [that would be a completely different conversation], not once have I said that kickstarter [or other crowdfunding platforms] need to require projects to "never-ever sell" and I am more than familiar with how free markets and capitalism work. If you want to continue raising objections/counterpoints to things that I haven't said [or even suggested] then you might as well just have the conversation with yourself [without putting too fine a point on it :|].

I did not start this thread to debate over the specifics of what happened or to engage in a confrontation but as a courtesy to Hinterland, to let them know that many people will not donate to future crowdfunding projects without protection from being used as free venture capital to entice bigger venture capital firms because I am aware that there are many people who haven't yet grasped the complexity of the situation and the implications, which will have repercussions for years to come. In the future people will reference this sale as [one of?] the turning point that changed crowdfunding forever and while you might not see it now, just remember where you heard it first. :lol:

Link to comment
Share on other sites

It obviously would not be in the company's/shareholders best interest to break current law... I didn't say "whatever", as you cast stones about not understanding what was written. 

 

It would be a sad state of affairs to have any legal action (or protection) taken on croudsourcing options in the private sector, where private citizens can donate or not donate as they see fit. Use this as a learing experience to research and ask future projects about thier aspirations, goals, and willingness to sell.

 

You may want the government to step in and nanny, but I think the vast majority of people who fund would disagree. 

 

Me personally, I understand the agreements I get into, and don't expect anyone to protect me but myself.   

 

Personal responsibility.  I recommend it.

 

Link to comment
Share on other sites

Thanks for your thoughts!

For what it's worth, there are new equity-based crowfunding platforms out there which have the kind of arrangement you're looking for -- where the people who put in money get equity in the endeavour. In other words, they are *investors*. Kickstarter backers are not investors. They are patrons of the arts. Kickstarter was not "free venture capital" for Oculus -- it was patronage money donated by people who really wanted to get their hands on the early dev kits.

I for one hope that Kickstarter never adopts the equity crowdfunding model. There are many other avenues for people to invest money in companies if that's what they wish to do. Kickstarter should be about building community around a specific project and giving them special insight, due to their support, into the process of how the thing is made, and involving them in that process where possible.

This... Kickstarter is not equity based and people that use it are not expected to trade a piece of their company like a publicly traded company. They really do not have to give those that donate anything for their money but I am sure most companies (even more so in games) understand that they will get much more attention if they toss in access to the product when it is ready.

Link to comment
Share on other sites

To take the long dark as an example, when I backed the project I did so because I wanted to play the game and to support an independent company so that they didn't have to capitulate to a faceless corporation that would enforce decisions based solely on profit and not based on what would be best for customers. I didn't back it with any expectation of receiving a share of any profits and I don't want hinterland to do this for free - I think it's only appropriate and fair that they are rewarded financially for everything that is put into making the game.

I found this paragraph interesting as it seems to go against everything else you have said. How is donating to Hinterland any different than Oculus? Oculus has worked hard creating a product and they needed funding to further develop it. I think a major difference in the two is that Hinterland has the capacity to finish their product and bring it to market without worrying about a major label ripping it and killing their business. Oculus does not have this same luxury, with all of the hype that this product has gotten a few other major tech companies have started producing similar items. A company like Sony or Samsung could steam roll Oculus and take the majority market share in no time at all, killing Oculus. Oculus understands they cannot compete with these companies and found themselves a company that could give them a fighting chance.

Link to comment
Share on other sites

It obviously would not be in the company's/shareholders best interest to break current law... I didn't say "whatever", as you cast stones about not understanding what was written. 

 

It would be a sad state of affairs to have any legal action (or protection) taken on croudsourcing options in the private sector, where private citizens can donate or not donate as they see fit. Use this as a learing experience to research and ask future projects about thier aspirations, goals, and willingness to sell.

 

You may want the government to step in and nanny, but I think the vast majority of people who fund would disagree. 

 

Me personally, I understand the agreements I get into, and don't expect anyone to protect me but myself.   

 

Personal responsibility.  I recommend it.

 

This... adding a legal element to crowdsourcing would ruin it. There are a lot of people on kickstarter that are one or two people that had a cool idea and want to see if they can make something of it. Last thing we need is a bunch of lawyers getting involved making these people and those that donate scared to join in for fear of litigation. It would greatly increase overhead (as legal protection would become a requirement) and reduce the flow of people willing to donate.

Link to comment
Share on other sites

  • 2 weeks later...

I think you misunderstand what Kickstarter is about. Kickstarter is to kickstart a project not to fund it to completion. From a few dollars upwards. I have three Kickstarter projects to my name Elite Dangerous, Satellite Reign and The Long Dark, though I came through the Paypal sites after the Kickstarters' had seized. You could say I don't necessarily keep my ear to the ground, so tend to miss the initial Kickstarter. I have paid the minimum to get a digital copy of the games in question. My penny in the pot is to help show interest in these projects and help the companies get the necessary backing from other sources. I am fully aware that may not happen - secure funding and the money I put in the pot may be lost.

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

Guest
This topic is now closed to further replies.