Stack of Canadian money for illustrative purposes.selensergen/Getty Images/iStockphoto
A woman waves a tiny device in front of several food items. Within seconds, detailed information, going well beyond what's on the label, has appeared on her smartphone. She's discovered a potentially dangerous food dye in a corn chip and gluten in a chocolate truffle.
The short video, which seems more science fiction than reality, was a part of a crowdfunding campaign to finance production of a device called the TellSpec. At its end, the creators tell viewers they're ready to start manufacturing. For early supporters the device was priced at $150.
The campaign was a resounding success, raising nearly $400,000 from 1,765 supporters. Nine months after they were due to start receiving their TellSpecs, manufacturing has yet to begin.
"We have a beta working prototype, it's not as small as we want it," says Isabel Hoffmann, TellSpec's co-founder and CEO.
TellSpec isn't alone. A significant percentage of successfully funded technology products on popular crowdfunding websites fail to get delivered on schedule.
A look at the 10 most-funded technology products on each of the two most popular crowdfunding websites, Kickstarter and Indiegogo, with shipping deadlines before February 2015, found that only one was delivered on time. Of the 19 other projects, three suffered from minor delays.
A 2013 study by Ethan Mollick, a professor at University of Pennsylvania's Wharton business school, logged similar results, finding that more than 75 per cent of successfully funded U.S.-based technology products on Kickstarter were delayed.
Reasons for the setbacks are as diverse as the products themselves, but overly ambitious goals, inexperience, customs issues and disputes between campaign creators often play a prominent role.
"When you create disruptive technologies, you go through things that no one else has ever gone through before," Ms. Hoffmann says.
Changes to her product's optical design were more complicated than expected and the decision, made last spring, to switch the underlying technology from a laser-based Ramen spectrometer to a near infrared-based system also stunted progress.
For some backers the waits are not worth it.
Alexander Chan contributed to a Kickstarter campaign titled "Frank Anthony: Shorts That Don't Get Wet." While the shorts were originally scheduled to ship in June, Mr. Chan says he didn't get his pair until January. When they did arrive, he claims they "were very shoddy; not only were the shorts poorly sewn, it did not look anything similar to what was presented."
The Vancouver resident says he's backed crowdfunding campaigns before, but never had an experience like that.
Other backers have similar complaints. Of the more than 1,000 comments on the Frank Anthony Kickstarter page, the majority are negative.
Franco Shaw, the 19-year-old entrepreneur behind the nanotechnology shorts, admits his timelines were unrealistic, but he stands behind the product. "We were never under the impression that we were going to sell that many shorts," he says. "Our goal was $10,000 and we multiplied that by 10."
The increased orders caused delays with overseas suppliers and struggles with importing the shorts into Canada. Mr. Shaw says that by the time the shorts arrived in Toronto, in October, a falling-out with a business partner led to the company's bank account being frozen – leaving him without the money to start shipping to backers.
That just made things worse. "Our backers were already upset. We often told our backers false information to try and relieve some of the stress that was coming from our Kickstarter comments and to buy us some time."
It's something he now says he regrets. He adds that a large number of first-time supporters also helped fuel the negative backlash. "There were a lot of people that didn't know that Kickstarter isn't like Amazon. You're literally creating that product after the Kickstarter campaign."
He says these issues are largely to blame for the complaints the campaign has received, especially the criticisms of his product. While he disagrees that the shorts are low quality, he admits they do hold water, despite the campaign's name, while maintaining he only claimed the shorts were fast-drying.
Mr. Shaw remains determined to try to turn Frank Anthony into a swimwear brand.
Justin Kazmark, who handles public relations for Kickstarter, says the site isn't a store and that delays are an inherent part of any creative project.
Because "Kickstarter is inherently transparent," he wrote in an email, "you get to see the project come to life from the very earliest stages, which can be awesome and educational for aspiring creators."
But that means delays are more visible.
He also points to the warning that appears before contributors back a campaign, which states that there are no guarantees and that the site doesn't investigate whether creators are capable of achieving their goals.
In an e-mailed statement, an Indiegogo spokesperson wrote: "Indiegogo has a stringent trust and safety procedure that includes a dedicated team of experts, automated algorithms and other procedures."
Part of the problem for some crowdfunding campaigns is consumer expectations.
"Sites like Indiegogo don't do a great job of articulating that you're not actually ordering a product, you're not pre-ordering a product," says Marc Nicholas, the CTO of Wimoto Technologies. His company raised more than $100,000 on Indiegogo to produce a line of small wireless sensors.
The products were scheduled to be delivered in the fall of 2013. According to Mr. Nicholas, shipping of some of the devices started on Feb. 6 of this year, but there is no mention of it on the Wimoto blog or Facebook page, and in a follow-up request for confirmation, he did not respond.
Injuries from a car accident had sidelined him for a time. The company also faced more regulatory challenges than it expected and delays that came from dealing with international subcontractors.
"There was a level of project management I didn't expect," he says. "We made things a lot more complicated than we could have."
For Mr. Nicholas, getting it right was more important than shipping a product that failed to live up to expectations. "We want to ship the best product that we can," he says. "We felt very strongly that we didn't want to skimp on functionality."
His crowdfunding campaign raising more than five times its goal, and as a result "people expect more," he explains. "There's a lot more pressure to perform."
Even though the campaign was more successful than intended, Wimoto Technologies didn't even break even.
"It's going to cost probably three time what you expect," he says. "You're going to have to have another source of capital or skimp on the product."
Ms. Hoffmann raised money for TellSpec from other sources, and she says another big challenge she faced has been "raising money for a company in Canada, in a Canadian environment that is risk-averse."
Ms. Hoffmann is still not sure when the TellSpec will be delivered, though she says a manufacturer has been selected and she's optimistic the final stage of preparations will begin soon.
Data needs to be gathered for food items before they can be scanned, so the TellSpec will initially be limited to items such as fruits, bread and crackers. Ms. Hoffmann says she doesn't have the proper laboratory facilities to gather data on the likes of meat and fish.
It can detect "gluten, eggs and milk, plus calories, fats, proteins and carbohydrates." She says the product is particularly good at differentiating between different types of sugars.
TellSpec's page on Indiegogo did include a small disclaimer that "in the video, the device shown is a 3-D model." A similar warning was added to the video after the campaign started. "We did a lot of things wrong," she says. "I don't think we were trying to mislead people."
She says she didn't realize how much work the hardware would take, focusing instead on how much progress had be made on the algorithm behind the technology. She says she now wishes she could take the original video down.
"It's unfortunate people think that we were misleading them. I can see why someone that doesn't understand enough about the technology and the difficulties would say 'you're misleading me.'"
She says she has given refunds, though she says fewer than 5 per cent of the backers have asked for one.
Ms. Hoffmann's co-founder and the company's former CTO, Stephen Watson – a mathematics professor at York University – has since left the company. He refused to comment, other than to say he'd been advised by his lawyers not to speak about TellSpec. Ms. Hoffmann says she's signed an agreement with Mr. Watson to not talk about his time with the company.
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