For entrepreneurs, artists and people with an idea burning their way out of their souls, crowdfunding is a way of turning dreams into reality. For backers, the campaigns are a way to be tastemakers, to be on the cutting edge of what is new and cool and to get the newest gadgets before they’re available in shops.
FwdForce is a new crowdfunding platform that has examined crowdfunding to see how it works — and doesn’t work. The company, which came out of private beta this week, believes it found a different model that will make raising money from the crowd a safer and more transparent experience for everyone involved.
But I have my doubts about whether the solution they offer is an effective one.
FwdForce wants to involve users in the process much earlier and add a layer of accountability along the way. It lets anybody submit a pitch for a product, then it establishes checks and balances for the prototyping and production process. It says its model will make things more accountable for the backers.
“Current crowdfunding platforms fail to bring viable products to market,” said Moshe Baum, co-founder and CEO of FwdForce. “We’re looking to shake up the space with our new model that will dramatically increase the products that go to market.”
How FwdForce works
The platform turns the crowdfunding model on its head by introducing the concept of challenges. A challenge is essentially an idea for a product that someone believes should exist and a crowdfunding campaign based around it.
It’s a valiant effort, and not actually a bad idea — but in my opinion, the company is failing to accomplish its goals; not because the platform is bad, but because they misunderstand how people use crowdfunding.
To participate in a challenge, companies submit concepts. The project backers vote on a shortlist of concepts. The winning concepts receive funding to prototype; from there, the prototypes must be submitted for testing before a deadline. The prototypes are tested in a third-party lab, after which a winner is declared and the concept advances to the next stage.
Projects on the platform at the moment include smarter bicycle locks, portable 3D printers, drones and wireless earbuds. It’s an interesting selection; all of these projects have been tried on other crowdfunding platforms with significant and very public failures in the past, but FwdForce believes that by applying its logic to the proceedings, its campaigns will fare better.
“We do not consider ourselves a crowdfunding platform,” Baum emphasizes, and instead refers to what they are doing as “a crowd-powered innovation platform.”
A successful project would go through a series of steps in order to bring a product to fruition, following a process that is rather different than most current crowdfunding sites:
- Someone has an awesome idea of something they think ought to exist. This could be an unrelated party or one of the companies planning to submit a proposed solution.
- They post the idea to FwdForce, with a number of criteria for what constitutes a success. If required, FwdForce can help define the boundaries of the project and the criteria for success.
- The challenge is then opened for funding, and guests to the site can support it by funding it. This gives them voting rights for solutions as well as rewards in the form of future discounts.
- If the challenge goal is reached, the backers are invited to vote on the contenders. Up to five winners are selected; they receive a proportion of the fundraised money to build a prototype.
- Once completed, the prototypes and accompanying documentation are judged and tested by an independent lab. The lab determines whether the prototypes fulfill the criteria for success and are evaluated for production viability, as well as a few other measures.
- The testing lab presents their findings and suggestions to FwdForce. If more than one prototype meets the criteria, the vote goes back to the crowd to pick the winner.
- The winner gets a portion of the money to produce/deliver the first batch.
- FwdForce needs proof of QA on the first batch before releasing the remainder of the money.
- Backers receive vouchers that allow them to claim their discounts on the final products.
Of course, things could go wrong in a few of these steps, and FwdForce has plans to deal with those eventualities.
For example, if none of the prototypes pass muster, the remaining money is refunded. Later in the process, if the product fails to pass the QA criteria for delivery, the second team in line gets a shot.
“We have remaining funds to either provide a refund or allow the second-in-line challenger to try production,” says Baum. “We want to provide the user with the best resources and guidance to make sure that they have successful final production,” Baum said, confirming that “We do not guarantee delivery.”
If the plan fails at some point along the way, the remainder of the money would be refunded to the user with two caveats: the company isn’t planning to refund the 6 percent fees it charges to run the campaign, nor would it offer refunds on the 3 percent processing fee.
FwdForce raises the right questions…
Backers invest their money in crowdfunding campaigns because they buy into the dream.
Crucially, what the campaigns are missing is heart.
… but offers the wrong answers
Take a campaign like the one for a road-legal electric motorbike that fits into a shippable case. Extremely interesting idea, but it immediately raises a barrage of questions that the campaign is unable to rebut on its relatively sparse information page.
In my opinion, it’s unlikely that $30,000 is enough to build a functional prototype that de-risks the project to the point that one can be certain of delivery; especially failing to consider that one of the requirements is that the bike is “road legal” without specifying in which jurisdictions.
Or take the project that, as I am writing this, has the most money pledged to it. This one is trying to create a non-lethal self-defense weapon that has to be legal in all 50 states and has a $2,500 prototyping budget. The design and development of this is unlikely to happen for $2,500. Weapons — even non-lethal ones — are complicated and require extensive testing. Let’s not even talk about the legal costs and challenges to bring a product like this to market.
The fatal problem, I believe, is that FwdForce is all about ideas, which misses the point of why people care about crowdfunding. Backers invest their money in crowdfunding campaigns because they buy into the dream of the people who put the campaign together.
At the stage of development where FwdForce’s crowdfunding campaigns are happening, you cannot expect to find the level of passion you see from projects like the Coolest Cooler, Exploding Kittens or Pono Music.
These projects are all in the top 10 most-funded projects on Kickstarter. They didn’t succeed because they are great ideas. In fact, I would suggest that the ideas behind all three of them are profoundly daft. The point, however, is that none of these ideas would have raised much money at the ideas stage.
So what was it? What made people invest in these incredibly popular Kickstarter campaigns? Maybe they were buying into the dream. Or perhaps they loved the cult of personality, the vision or the execution… Either way, none of what makes a customer reach for their wallet is present in a FwdForce campaign.
The corollary is that I don’t believe the platform will ever see a multi-million-dollar fundraiser; it simply won’t experience the levels of success that Kickstarter’s elite have seen.
FwdForce raises some fantastic questions around who ought to run crowdfunding campaigns, what they are for and how they work. The crowdfunding community should be grateful for that, and the discussion ought to continue from here.
Nonetheless, the company hasn’t presented the answers required in order to solve the challenges at hand, and I’m not convinced the crowdfunding landscape is noticeably better now that the platform is live.