I woke up thinking about this because before I went to bed last night I watched last night’s episode of Rock Center with Brian Williams. They had a piece on our portfolio company Kickstarter. The piece itself was pretty good. But at the end, Brian Williams discussed it with the Kate Snow (who did the piece), and he said something like “so this is like the guy on the street asking for a handout?”.
[I saw this Rock Center piece as well, and I thought the conclusion was worse because Kate agreed or said that there are nothing to enforce that someone who raised money to do “x” has to do it. I disagree. First of all, it seems like some of the most successful projects are “I can’t make this unless you want it” projects. When people support those projects they’re saying two things. 1) I would like one or more of these items. (A sale!) 2) I’m willing to take the low risk that enough other people will like this that I’m in early. (the risk is low because if it doesn’t fund you don’t get charged). And since you’ve been “promised” a reward in most cases, they have to make the item in order to at least fulfill the rewards. So there is some “insurance” in the social contract. I’m not sure if there is any within the kickstarter agreement.]
Source: A VC