Finance and technology are two completely different industries.  Yes, there are plenty of people who thoroughly understand both, but knowledge of one does not beget knowledge of the other. This is a lesson that over 1,100 backers of a Kickstarter game development project called Star Command are learning the hard way.

On paper, Star Command impresses.  The game is an outer space version of The Sims that allows users to build a spacecraft, manage their crew, “explore the universe,” and “engage in epic battles.”

Star Command’s team at Warballoon posted the project to Kickstarter in the early fall of 2011. By October 6th, they blew past their $20,000 goal with a total of $36,967 pledged by 1,167 people.  In exchange for financial assistance, backers were provided MP3 downloads, in-game exclusives, personalized characters, phone backgrounds, stickers, pins, shirts, and even a cameo in the game’s credits. The “deliverable date” for these items, at the latest, was listed as December 2011. Now, six months after the funding goal was reached and four months after the latest deliverable date, the game still hasn’t been released.

So, what went wrong?

Amidst mobs of angry backers, Star Command’s development team did something quite honorable. They posted an update to their Kickstarter site explaining exactly where the money went. Here’s a summary.

Of the approximately $37k in pledges, $2k went uncollected, $2k went to both Kickstarter and Amazon, and $10k went to fund the prizes they offered. Now they’re down to $22k–still more than their original goal. From here they spent the following:

Music – $6,000
Attorneys, startup fees, CPA – $4000
Poster art – $2000
iPads – $1000
PAX East – $3000

TOTAL: $16,000

To the government, the remaining $6k is considered income, so Star Command only actually saw about $4k of it.  In short, the $37k that Star Command collected on Kickstater whittled down to only $4k in almost an instant.

Penny Arcade said, “Very few teams asking for money via Kickstarter have extensive, or even moderate, knowledge of business, taxes, or organizing the game development process in the long term.”

Game developers, like most people behind projects on Kickstarter, are passionate about what they do, build, and create. Unfortunately, passion does not equate to business knowledge. As Penny Arcade says in the same piece, “The odds of a two-man team with a game prototype understanding how to use their windfall efficiently while delivering a good game are not high, no matter how good the video on the site may look.”

Star Command isn’t the rule. Thousands of Kickstarter projects will set a funding goal, hit their mark, deliver their rewards, and complete their project. The point is that, inescapably, some projects will fail.

In addition, Kickstarter projects are in no way guaranteed. Here’s the fulfillment policy:

It is the responsibility of the project creator to fulfill the promises of their project. Kickstarter reviews projects to ensure they do not violate the Project Guidelines, however Kickstarter does not investigate a creator’s ability to complete their project.

At the end of the day, Kickstarter requires users to employ their own “internet street smarts.” No matter how much a project looks, sounds, or feels like a “sure thing,” I assure you that it is not. So, before you end up like the 1,100 Star Command backers, do your homework.  Ask questions, push for business plans, and drill into business knowledge.  The creators may know more about their project than they do about themselves, but that doesn’t mean they know how to run a business.

[image via stargroup1]