6 Kickstarter nightmares, and how to prevent them

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4. Problem: You need more money

This problem is similar to the previous one: What if you met your goal and collected your money, but you burn through it too quickly or otherwise find out you need more funds to complete your project?

The most common solution here is the same as in Problem 3. Because you can’t ask for more money from Kickstarter, you may turn to private funding sources to add to the coffers. Cheryl Furjanic and Will Sweeney did just that after raising $50,000 for a Greg Louganis documentary from Kickstarter. The initial investment was enough to get the film off the ground, but not enough to finish. The duo is using its Kickstarter page to point backers to additional fundraising opportunities, encouraging them to host fundraising parties and connect them with donors.

Some funding for this video game project turned out to be phony, requiring independent financing efforts.

5. Problem: You’re running late

If your project is behind schedule but it’s going to be finished eventually, the best thing you can do is to simply let people know. This schedule slippage can happen for any number of reasons. If, for example, you’re developing a mobile accessory, then the fact that Apple changed the iPhone's connector will throw you off schedule. Generally backers are understanding about delays…as long as you explain yourself in detail.

If you have a delay, update your Kickstarter page to explain why and, crucially, how lengthy you expect the delay to be. You simply cannot provide too much information to backers, who begin to get nervous the day after your Estimated Delivery Date has passed. That date, by the way, is now required on all projects. Updates on a near-daily basis aren’t a bad idea if you want to keep your inbox from overflowing with hate mail and legal threats.

Did Crypteks take the money and run? No one knows, but future funders may be increasingly gun-shy.

6. Problem: Your project didn’t work out

You don’t need to search for long to find tales of Kickstarter backers upset that they made funding donations and never received their rewards, or even any information about what went wrong.

This isn’t entirely unexpected. Kickstarter may require an Estimated Delivery Date on all projects, but these are still estimates, and there’s no enforcement of or consequences for missing that date. (Kickstarter says it is the “creator's responsibility to complete their project,” but also, “Kickstarter does not guarantee projects or investigate a creator's ability to complete their project.”) As a result, backers are becoming increasingly nervous about funding projects if they aren’t dead-certain the projects are going to pan out eventually.

As an entrepreneur, it’s your job to overcome these concerns, but what if, despite your best intentions, the proposal just isn’t going to make it? What if the technology’s not mature enough to do what you expected? Do you have a duty to release a Kickstarter-backed movie if it stinks? Technically, yes: Kickstarter’s Terms of Use require you to release your product or refund backers’ money.

If your project is one of the (many) that don't pan out, the best advice is to pull the plug as soon as you can. Refund whatever portion of the backers’ money you haven’t spent, perhaps with a make-good apology reward for their trouble. (Imagine a bumper sticker: “I invested in Bob’s Widgets and all I got was this lousy sticker.”) The last thing you want is to be sued by hundreds of people for $50 each. In reality, reports of refunds are rare. If you actually offer one, you’ll be in a very tiny minority.

If you finished building it, but your project isn't viable or the product doesn’t work, should you ship it? Ask your backers if they still want your expensive paperweight. As with most things, clear and copious communication with your backers goes an awfully long way to smoothing over bad feelings. Most Kickstarter backers know that nothing is guaranteed, but they absolutely despise radio silence.

Kevin Murray, a frequent Kickstarter backer, puts it this way: “For me, the lack of truthfulness and transparency is what leaves a bad taste. Share the struggle, ask for advice, and an investor may be understanding. Go dark, and people will believe the worst.”

Editor's note: This story has been updated to include Kickstarter's statistics about the number of projects that fail.

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