Why Honesty Matters in Crowdfunding

In 2021, Rock2More x STARESSO launched their innovative capsule-style frother and portable espresso maker combo on Kickstarter. Shortly after launching, they discovered that a different company, Coffeejack, had launched the almost same espresso maker a year before and collected 1,327,955 GBP from backers. What’s worse, Coffeejack had failed to deliver any products to 11,178 backers who had spent their hard-earned money to support this campaign. 

This stunt didn’t just leave the Coffeejack backers furious that they had been ripped off. It also forced potential Rock2More x STARESSO backers to start questioning the legitimacy of what seemed to be a copycat product. In reality, the STARESSO espresso maker had hit the market long before Coffeejack, they simply arrived at Kickstarter long after Coffeejack had already defrauded backers.

How the STARESSO portable espresso maker was born

By 2014, Raymond Lee, the founder of ROCK2MORE had developed and launched the STARESSO espresso maker on STARESSO’s website. This was the first portable espresso maker with a hydraulic system. Later in 2016, Raymond Lee upgraded the product and won the Red-dot design award 2016, then started to sell the 2nd generation on Amazon.

A few years later, Raymond Lee and his team decided to launch a Kickstarter campaign for the ROCK2MORE capsule frother and STARESSO espresso maker combo. Their excitement turned into horror when the Kickstarter community started questioning why their espresso maker resembled Coffeejack’s espresso maker. Upon further research, people discovered that in addition to copying STARESSO’s design, Coffeejack had made off with the money they raised from backers. Two years later, Coffeejack still hasn’t delivered any of the products they promised their backers.

Based on ROCK2MORE and Coffeejack’s videos on Kickstarter, it is evidently clear that their working theory is very similar. The only difference is that Coffeejack never made a finished product and has not shipped to their backers yet, even two years later. Further study of Coffeejack’s campaign reveals that Jellop, the crowdfunding marketing agency, was behind the promotion of their product. This advertising agency is known for advertising campaigns on Facebook and Google. Based on the crowdfunding agencies’ information on their websites,the cost of their service, the Ads cost, and platform fees will be around 40% of the raised amount. For this reason, it’s hard not to question why Coffeejack can pay for such high amount for marketing while not making products at all.

What’s even more suspicious is the fact that the creator of Coffeejack – a company known as HRIBARCAIN, is only known for making and selling pens and pencils. They have no proven experience in the coffee industry. On the other hand, Raymond Lee, a SCA certificated barista and the founder of ROCK2MORE and STARESSO, had worked in the coffee industry for almost 20 years before launching the ROCK2MORE x STARESSO combo. Raymond Lee then went on to win the Red-Dot design award 2016 for his portable espresso maker, IF design award 2018 and Red-dot design award 2021 for relevant products.

Consequences of dishonest crowdfunding

The fact that Coffeejack still hasn’t delivered their product to the backers that supported it, two whole years later, makes an already bad situation even worse. While this kind of dishonest campaign usually has negative results for the team leading the campaign, it can also affect other brands, such as ROCK2MORE and STARESSO in this situation. While dishonest crowdfunding, or fraudfunding, might seem like an effective get-rich-quick scheme, it can do disproportionate damage to the company behind it as well as their stakeholders. 

Legal implications

It’s downright illegal to defraud people of their money – there are no ands, buts and ifs about it. This is a punishable crime, and the punishment could turn out to cost you more money than what you think you’ll earn through a fake crowdfunding campaign. In fact, in September 2021, SEC took on their first case involving crowdfunding and charged Robert Shumake and associates Nicole Birch and Willard Jackson for fraudulent and unregistered crowdfunding offerings. SEC also charged the funding portal – 420 Real Estate – for publishing the offerings on the platform. The SEC penalized the offenders by seeking disgorgement, pre-judgement interest, penalties, permanent injunctions, and officer and director bars. 

Companies that defraud crowdfunding communities now risk more than a slap on the wrist. By setting up a dishonest crowdfunding campaign you risk having to spend all the money you raise from backers – and more – paying for a crime that you committed knowingly. 

Skeptical backers

When you defraud backers, you’re basically stealing their money from under their noses. This leaves communities on crowdfunding platforms like Kickstarter and Indiegogo jaded about the whole concept of crowdfunding. Once a backer has had their money stolen by a project they put their trust in, they’re unlikely to support a campaign from a stranger again. Having a whole community of potential backers who are skeptical about any campaign they come across demolishes the value of crowdfunding platforms built on trust. In turn, a widespread lack of trust makes it harder for future companies to get any support for their legitimate crowdfunding campaigns.

Ruined reputations

When Coffeejack took off with money from backers, they didn’t just ruin their own reputation. They also brought the reputation of ROCK2MORE x STARESSO, the original designers of the portable espresso maker, into question. Despite having fulfilled the Golden Cup standard and won the Red Dot award, ROCK2MORE had to work hard to gain trust from the crowdfunding community.

How ROCK2MORE earned trust with an honest approach

As soon as ROCK2MORE launched their ROCK2MORE x STARESSO combo on Kickstarter, they started getting comments asking why their espresso maker seemed so similar to Coffeejack. Many of these comments pointed out the fact that Coffeejack had collected money from the community but never delivered any rewards to their backers. In fact, one backer went as far as saying, “the espresso maker is cool, but it looks like Coffeejack which was launched on Kickstarter years ago, though Coffeejack never shipped any rewards. Is your espresso maker just a copied idea from Coffeejack?”

ROCK2MORE responded to the above backer, expressing empathy to backers that had trusted Coffeejack and explaining their concept and the timeline of their product. In response, the backer said, “After researching, I believe that you are the original creator. I am eager to receive my award from you!”

 In a commitment to honesty, Raymond Lee and his team always vowed to do things differently.  Even when they were a very small start-up launching their 2nd generation of STARESSO in 2016, they discovered that the screw-on top was too big. This made it difficult for customers to open their espresso makers. Determined to do right by their customers, Raymond Lee and his team decided to send replacement parts to customers all over the world. Despite this decision costing them over $100,000 they were committed to making up for their mistake with the customers who had put their trust in the STARESSO.

At the same time, in 2016, Raymond received the IDEA award notice from IDSA, but he didn’t have enough money to pay for the award equity after paying to ship all those replacement parts. Raymond Lee believes that the trust of users is more important than any design award, and more important than advertisements. 

As you can see, launching a dishonest crowdfunding campaign might be much more costly than one would imagine. Ultimately, an honest team will continue to generate sales and win loyal clients long after they’ve reached their goal of innovation. On the other hand, dishonest crowdfunding generates a host of problems hurting backers and innovation. 

Curious to learn more about these companies? Check out the Kickstarter campaign from ROCK2MORE or visit their official website.

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