How to Minimize Risk When Crowdfunding on Kickstarter

To date, more than $680 million has been raised on Kickstarter, as crowdfunding becomes an increasingly viable option for startups to raise much-needed funds without the help of VCs, angels or banks. For a young, bootstrapping startup, crowdfunding is often seen as fast money that will help you build out the product or app you and your team have always dreamed about. Whether or not a project ultimately reaches its funding goals, it’s still relatively quick and easy to post your pitch and see what happens. However, amid all of the hype and excitement surrounding crowdfunding, some of the less glamorous (but extremely important) aspects of running a business often go overlooked — particularly taxes and liability. Liability Issues With Crowdfunding When you’re raising money from any source, it’s serious business. And while a Kickstarter project may not entail the mounds of paperwork and contracts associated with commercial lenders, project creators are still entering some kind of contract — in this case, it’s with hundreds or thousands of people. When crowdfunding turns into a platform for taking pre-orders for a yet-to-be-finished product, there are inevitable risks. We’ve all heard stories about high-profile delivery delays like the Pebble smart watch, but they’re hardly an anomaly. A report by CNN Money found […]

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