17 December 2018
FwdForce launched a new crowdfunding model 'challenge', one of which is about inventing a foldable 3D printer. Photo: Xinhua
FwdForce launched a new crowdfunding model 'challenge', one of which is about inventing a foldable 3D printer. Photo: Xinhua

Why crowdfunding backers often don’t have good stories to tell

I have some friends who enjoy seeking interesting tech investments via crowdfunding platforms. However, their experience has not always been good.

In some cases, the investors turned out very disappointed as the projects they backed failed to deliver the product on time or even get cancelled.

We have seen many failures in recent times. In one case, Shenzhen-based firm Wicoz successfully raised funds last year, via the Kickstarter crowdfunding platform, for a smart baby-formula maker. However, the product is yet to come out.

Some backers say they feel like fools when they see shoddy products after a long wait. They can’t do anything but accept the fact that they made the wrong decisions.   

I believe all this offers a lesson for crowdfunding platforms: they must ensure better project success rate and offer comfort to the financial backers.

FwdForce did a nice try recently, as it launched a new crowdfunding model “challenge”.

In one challenge, the platform called on contenders to make a portable 3D printer that can be folded, put in backpack in two minutes, weighs less than 14 pounds and costs less than US$2,500.

Contenders can upload their planned solutions for making such a product. The platform will then select the best plans, allowing them to start pitching for funds.

In the next stage, investors may give their commitments to back the project, but the money will not be immediately transferred to the producer.

The investors will be able to vote on two or three best proposals and the chosen producers will get part of the money to make a sample. The crowdfunding platform will invite a third party to evaluate those samples and identify the best one.

The winner will get funding for volume production of the item. The more money one commits to invest in a project, the more powerful their votes will be.

I believe such model can improve the quality of the products.

But will such “challenge” mode limit the number of projects on the platform?

Or will the platform be able to effectively supervise all the “challenges” even when multiple projects are ongoing at the same time?

The whole issue surely calls for more discussions.

This article appeared in the Hong Kong Economic Journal on April 21.

Translation by Myssie You

[Chinese version 中文版]

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Director at Spring Capital

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