When Is Crowdfunding Failure Fraud?

Is there a thin line between failure and fraud?

Some crowdfunding donors are starting to get angry that crowdfunders are taking their cash and not delivering on their promises.

However, Professor Ethan Mollick of the Wharton School found that:

  • 9% of Kickstarter projects failed to deliver rewards;
  • 8% of dollars pledged went to failed projects;
  • 7% of backers failed to receive their chosen reward; and
  • 65% of backers agreed or strongly agreed with the statement that “the reward was delivered on time.”

That’s pretty poor performance by any measure.

However, he concluded that “there does not seem to be a systematic problem associated with failure (or fraud) on Kickstarter.”

What do you think?



About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
This entry was posted in accredited investor, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, Film, fine, fraud, Funding Portals, Investments, Jobs, Legislative Intent, SEC, Small Business, technology, unfair and deceptive practice, VC, Venture Capital, Wall Street and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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