Kickstarter has published a response to the collapse of one of its record-breaking crowdfunded projects, with the company giving its users a summary of how it has handled startup Torquing Group’s announcement that it is being forced to dissolve after failing to launch the Zano drone as promised.
The Zano drone became Europe’s most backed Kickstarter project ever, raking in £2.3 million ($3.4 million). However, earlier this month its creator Torquing Group announced the company had “made the difficult decision to pursue a creditors’ voluntary liquidation,” after only 600 of over 12,000 drones had been shipped out to backers. Now Kickstarter has made a statement in regards to the startup’s failure to provide its backers with the drones they have paid for, releasing the following statement to backers on Monday:
“We learned the news of the Zano bankruptcy the same way that you did—through a bare-bones project update. We e-mailed the creators as recently as two weeks ago to encourage them to be more communicative with their backers, but received only a cursory response.
“You deserve more than that, and we are committed to helping backers get to the bottom of what happened here.
“Today we sent an e-mail to the Zano team informing them of their obligations to backers and asking them to share an open and transparent update on what happened with the project. We have asked them to post this update by Monday, November 30.
“If they do not adequately brief backers by that time, Kickstarter will independently pursue an inquiry into the Zano project. Should this occur, we will share those findings with you, the backers, once completed.”
When a Kickstarter project is funded, Kickstarter takes a 5% cut of the amount of money that has been raised, along with a 3% cut for payment processing fees. This means that Kickstarter would have earned $272, 000 from the Zano project, or $170,000 if you only take into account its cut outside of the processing fees. Considering the large amount of money that has gone into Kickstarter’s pockets, then, you’d expect a more decisive email to backers of the failed project than “we emailed Torquing Group a few days following their announcement that their project has failed, and will only launch an internal inquiry if they do not provide backers with an update by the end of the month.”
This is one of Kickstarter’s most successful projects, and the crowdfunding site’s disappointing response to its collapse is emblematic of the variety of risks backers face when investing in a project. Kickstarter has already absolved itself of any responsibility when it comes to failed projects, with its terms of service ensuring that the company cannot be held liable in situations such as the Torquing Group’s collapse. While this is understandable, it would be expected that Kickstarter would make more of an effort in ensuring that companies who use the site to seek funding do not run off with their backers’ money, and unfortunate situations such as this one highlight Kickstarter’s lackluster approach to ensuring the safety of investors’ money.
Hopefully Kickstarter’s investigation will be a thorough one, and that it will not continue to be limited to a series of email exchanges between the site and a company that has squandered millions of dollars of its backers’ money.
