6. Crowdfunding Scam
People think of crowdfunding as the newest way for inventors and entrepreneurs to get their ideas to market.
Actually, however, it’s just the latest twist on a trend that’s been around for years. Artists like Mozart and Botticelli had “patrons” who helped cover their expenses so the artists could focus on their craft.
Crowdfunding operates on the same concept: inventors and artists can raise money without giving away ownership, and investors have the excitement of being in on the beginning of something important.
And they’re typically rewarded with things like prototypes, first editions, samples, etc. The downside is that the easy accessibility of sites like Kickstarter is proving irresistible to scam artists.
It’s pretty easy to come up with an idea, set up a campaign, post fake updates about the progress of a project, etc. If they can ward off suspicions until the campaign’s end date, scammers can take their investors’ money and run.
Despite a few scams, most projects on Kickstarter and similar sites are legitimate. However, you need to do the same research you would for a more traditional investment. Do your own search for the name of the company, the individuals behind the company, etc. If it looks legitimate, go ahead and invest the minimum amount.
A lot of projects have message boards for investors, so once you’ve invested the minimum, you can poke around and see what other investors are saying before investing more.