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Get the skinny on crowdfunding before you invest

NEED TO KNOW
  • Crowdfunding is popular... but is it safe?
  • Expert Jason Cooper gives us the do's and don'ts
Get the skinny on crowdfunding before you invest

The dos and don'ts of crowdfunding

The dos and don'ts of crowdfunding

Crowdfunding seems like a simple process: Make a post about your project, explain your idea and see how many people believe in it enough to put up a few dollars. It's exciting for a host of reasons, the most focal being that it allows products to see the light of day that might normally never be produced.

But sometimes, what sounds too good to be true actually is. Kickstarter projects often get funded, but never come to fruition or hit other bumps along the way. Or in the case of Kobe Red, a Kickstarter aimed at producing the most delicious beef jerky your taste buds could ever experience, the entire thing was a scam ... and it was yanked just minutes before the creators made $120K from its willing supporters.

The question is: How do we know when it's a good idea to fund a project, and that's it's actually going to result in the real deal?

Jason Cooper, one of three people behind the upcoming documentary Kickstarted, says that the key is to make sure you understand the reality of the project being pitched, as opposed to getting worked up and hurling your wallet at it without thinking it through.

"I think many project creators are not prepared for their success," Cooper says. "Getting all this money can potentially be a bad thing. People aren't always ready to follow up."

All the more reason to get the skinny before you invest. But how do you know what's the difference between a genuine project and a total fake out?

READ MORE: Does crowdfunded book condone rape?

According to Cooper, it's a sound idea to do some research before you fork over your credit card details. He says that its important to know about the creator's reputation, whether or not they have backed other projects and participated in the crowdfunding community, and if they have a presence on social media that is genuine.

"In the case of Kobe Red, they didn't have any personal identities associated with the project," Cooper told HLN. "A sincere creator will have no problem showing their face, making a video or encouraging the backers to get to know them better."

Cooper helped to uncover the Kobe Beef Kickstarter by reaching out to its creators in hopes of including them in their documentary. As information started to pile up and emails from backers started coming in, Cooper suspected that the project might not be real. As a crowdfunding supporter, he feels that despite the fact that the project came close to being funded, the system worked the way that it should.

"Kickstarter does not comment on suspended projects," Cooper says. "But I think the Kobe Beef thing was an excellent example of crowdfunding working the way it should."

Cooper's own Kickstarter to fund his documentary about crowdfunding is more than halfway to its goal.

 

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