It’s not easy being a crowdfunding tiddler in a pond where sharks like Kickstarter and Indiegogo are known to swim. Which doubtless explains why a group of homegrown U.K. crowdfunding sites have banded together to launch a self-regulating trade body — called the UK Crowdfunding Association (UKCFA).
The 12 founder members are all relatively small and specialist, counting the likes of startup seed funding platform Seedrs and video games funding platform Gambitious among their number — which suggests the initiative is more about trying to attract attention, and grow some lobbying muscle (they will be “working with policymakers to help develop the right frameworks for crowdfunding”), rather than trying to achieve the impossible: impose order on the unrestricted Wild West of crowdfunding.
While neither Kickstarter nor Indiegogo were founded in the U.K., Kickstarter added U.K.-based projects to its platform last October and Indiegogo launched a U.K. site last December. So the UKCFA situation brings to mind the global daily deals trade association, launched last year, that still doesn’t count Groupon or LivingSocial among its members. Well meaning, but — to put it charitably — risking irrelevance.
Were Kickstarter and Indiegogo even approached to join UKCFA? “No, neither have been approached so far but it is early days,” a spokesman told TechCrunch. “At present the UKCFA is representing only UK-based platforms. That said we intend to liaise with other associations and companies in the EU and globally as each regulatory zone presents its own challenges for this sector.”
It’s true that never has the phrase ‘buyer beware’ been more appropriate than in this era of individuals donating money to other people they probably don’t know and likely won’t ever meet — just because those strangers asked nicely. That crowdfunding project you backed to make a sassy new TV series about your favourite video games? Don’t be surprised if they actually spend your cash on beer & pretzels. Them’s the breaks.
UKCFA isn’t able to help with that. It can’t make platforms force project creators to do what they claimed they would with your hard-earned cash. The only order it can impose is on the platform businesses themselves — and only 12 small U.K.-based platforms at that.
It has come up with a code of conduct for members to ensure a minimum amount of sawdust on the floor of this little Wild West bar. This consists of 10 principles to which UKCFA members have to adhere to remain a member (or be run outta
town UKCFA). Complying members get to display a badge on their website to signal they are compliant.
Aside from the limitations of its ‘small fish’ membership, the code sets a quavering tone from the get go — including a provision to ensure data can still be accessed in the event that members “cease to operate”. In short, don’t expect Groupon and its ilk to be getting down off their horses any time soon to kick the tyres of this narrow wagon. (Not unless UKCFA can make friends and influence the politicians in Westminister to start legislating in ways that help the little local guys.)
UKCFA’s code of conduct isn’t without merit. It does include the provision of a “cooling off period” for investors/donors which makes sense, and sensible stipulations that invested money is kept separate from platform businesses’ own funds. It also talks about transparency and hiring “competent, professional, honest people”, and having decent IT systems and so on. But, while hard to object to, these are general principles that could apply to any digital business.
So, while well meaning, a lot of this is really fiddling round the margins. What UKCFA can’t ensure is that donors and investors get whatever it is they have pledged money for — as it notes elsewhere on its website: “Your money is at risk, and there are never any guarantees that you will get the returns or rewards indicated.” That means crowdfunding will necessarily remain a consumer wilderness where good-will all too often falls prey to opportunistic sharking. And caveat emptor is the only code of conduct in town.
In any case, UKCFA is more about the little guys trying to make themselves look more frightening to the sharks in their own back yard.
The full 12 founding members of UKCFA are: