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My Experience With KickFurther, an Online Investment Platform

Update: On the same day I posted this article, two more businesses I backed successfully closed their offers by paying off the rest of the money ahead of the schedule. Now my lifetime profit is $67.00, and it brings it to a profit of 12.4% annual interest rate. I will soon update the screenshot I posted below in the post.

I am sure many of you want to invest but not many feel comfortable dealing with stocks, financial products and other complicated stuff produced by the modern complicated economy. But how about investing into small businesses where the game rules are more simple and clear? How about instead of purring money into impersonal corporations who won’t even notice your small contribution help very specific people running very understandable businesses where each dollar matters?

This is exactly what Kickfurther does – it connects small investors with small businesses.

Kickfurther: What Is It?

In a nutshell, Kickfurther is an online platform for crowdfunding inventory.

I like to compare Kickfurther with Kickstarter.

Kickfurther is like Kickstarter, but instead of a product you get real money! Click To Tweet

It is true. Many people love Kickstarter. They like to invest into new cool products… only to receive often half-baked goods after months of waiting.

Me too, I like to support cool companies making cool stuff – but the thing is I do need that much of the stuff they make. I would prefer to get hard solid cash.

And that’s why when I heard about Kickfurther, I got so excited. Being able to connect with small businesses and be a part of their success, this is what I like a lot 🙂 Also, an ability to play with online investing playing simple rules – oh I have been wanting to do it for so long. So I jumped on the opportunity and started investing.

BTW, if you want to try it, you can use my affiliate link to get a $5 credit for your first partnership.

How Kickfurther Works

On Kickfurther, businesses ask backers to fund their inventory in exchange for a consigned rate. If the funding goal is met, Kickfurther buys the inventory and provides it to the business. The business then sells it, making payouts to the backers monthly depending on the inventory sold.

Live Offers

On the main page of Kickfurther, you can see the current live orders that are in the process of being funded.

Kickfurther: Main Page with Live Offers

The main page presents a summary of each offer:

  • a name of a company;
  • the pledged amount;
  • the amount that has been funded;
  • how many days the offer will be available;
  • the offer term in months;
  • the interest rate (return).

If an offer is not funded after the specified period, it will be cancelled and the backers who contributed up to that point will not be charged. Keep in mind that Kickfurther can prolongate the funding period.

There are two numbers from the summary that are important for you as a backer: the offer term and the return.

The offer term means the period during which a business will pay back the full amount. The return means the interest a business will pay to the backers.

The shorter the offer term and the higher the return, the better is the investment deal.

Main Page of The Offer

If you click on the offer, you get to the main page of the offer where you can see the third important number of the offer: Percentage sold for return.

Kickfurther: Offer Main Page

As Kickfurther explains it:

PSR is Percentage Sold For Return. This is a percentage of the inventory that that needs to be sold for all partners to earn back their principal and return.

So, the smaller this number, the better is the investment deal. A high PSR makes the investment riskier. What if the inventory won’t sell well? Then the company will have a hard time fulfilling the contract.

The main page of the offer also gives you some other important information: You can learn about more details about the offer, the product, and the company. Also, you can see there the offer timeline, an approximate schedule of the payouts, and the comment section where you can the business questions.

On the right side, you can see credibility metrics: links to the company’s e-commerce, reviews, sale statistics, etc.

Once you study all the information and ready to contribute, you simply press the Contribute button and follow the flow.

You won’t be charged right away; the charge happens when the offer gets fully funded.

After the offer is funded, you simply wait for the payouts coming in. Very passive!

As a backer, you will also get an access to the internal offer page, On that page, you can see the payout schedule, the updates posted by the company, the list of transactions, and the comment section where you can ask questions. These questions will be visible only to the offer backers and the business.

Payouts: How It Works

Now, the payouts.

Payouts are based on the amount of inventory sold. Keep in mind that the contract is designed as a consignment contract. The payout timeline is only an estimate, so there is late payment penalty.

When a payout happens, you get an email notification. Also, you can check the payout status on the main page of the offer.

To show you how it looks in the reality, I took one of the contracts I participated in which is still in progress.

Kickfurther: Payouts

You can see a payout schedule on the left that gives you an idea when to expect a payout and a graph on the top that show the actual payout dates and how well they are aligned with the schedule.

The business may decide to pay off the full amount ahead of the schedule. It happened to me a few times.

My Investments

Now I will tell you a bit about my investments.

I started investing in June 2015 which was 6 months ago. So far I have invested $1,084 and got $37 in profit. The profit includes only the money that came from fully paid offers and does include the payouts from the offers that are not finished yet.

Kickfurther: My Totals

$37 may look to you like a laughable number. However, if we re-calculate it as an annual profit, it would be about 6.8%. Not bad comparing the minuscule bank interest rates of 1-1.5% a year and less.

I am sure that my return could have been bigger, but at some point I stopped investing “fresh” money and just re-invested the partial payments received from the active offers.

I have invested in 22 businesses, and so far 3 have paid back the full amount, one got cancelled, and two have been a flop.

Yes, this is the catch – these investments are risky, because the businesses may not be able to fulfil their obligations.

So far in my portfolio only two projects turned out to be bad apples. Technically speaking I have not lost my money yet, but the guys have paid almost nothing and are behind their schedules for about 2 months.

This is a big topic to talk about. For example, one of them, Max Axe Guitar, was quite a hell of a person to deal with. I finally wrote about my experience dealing with it – you can read it here.

How Kickfurther Deals With Failing Contracts

Since I mentioned that I have two failing businesses in my portfolio, it would be very pertinent to write about how Kickfurther deals with such contracts.

First of all, the backers have a few options to use to express their lack of trust to the business:

  1. post a comment on the offer main page – let the business and the other backers know what you think;
  2. notify Kickfuther that an offer is underperforming – this sends a notification to the Kickfurther’s staff about your concern, and they will try to contact the business to get an update;
  3. cast a no-confidence vote – this will remove your pledge of support to the business; if more that 50% of the backers select this option the contract gets cancelled.

The comment option is always available, but the other two (these are buttons) appear only when the business is triggered as “troubled”. This happens when one of the following conditions appear:

  • a business pays 50% or less of what they estimated as a payout;
  • a business does not provide a payout or update within two weeks of the expected date;
  • the offer has exceeded the total estimated selling term.

Contract Is Cancelled – What’s Next?

Here is what Kickfurther says about it:

If over 50% of backers (weighted by % ownership in the offer) pick to vote “no confidence” cancelling the contract, Kickfurther will inform the brand that their consignment contract is cancelled. Once this occurs, the business has 30 days to organize and either prepare the inventory for delivery to us or to exercise their right to buy the balance of the inventory at the option price. After the 30 days expire, the business has 5 days to either deliver the inventory or the money.

You can read about it in a blog post by Kickfurther: When Inventory Does Not Sell: The Cancellation Process in a Nutshell.

I have experienced it twice already; read about it in my post about “bad apples” in my Kickfurther portfolio.

Kickfurther is Transparent With Backers

I also have to say that Kickfurther is quite transparent with the backers. The platform has a dedicated subreddit GetGrowing where the CEO posts regular updates on the troubled businesses (there have been several of them) and where the backers ask questions and post propositions.

Reading these Reddit threads, I learned that Kickfurther has a very involved legal advisor and they are  working with KHLaw, a very reputable law firm.

How To Do a Due Diligence Before Backing an Offer

I am still a newbie because 22 backed projects represent such a small amount comparing to some other backers who made 50 and more investments.

My due diligence is probably a bit too simplistic.

What I have on my checklist:

  • I look at the e-commerce of the business if available;  I look at how professional it looks, its ranking in Google, the availability of the products;
  • I read the reviews of the products; if the reviews are not very good, it is a red flag for me;
  • I Google search the business name to find out if it has had any troubles in the past;
  • if a business says it sells on some other e-commerce platform, I check the said platform to find out how popular it is;
  • if a business has done other Kickfurther campaigns in the past this is a green light for me; I look at the campaign metrics to see how they executed, and if the payouts were paid back in time, I back the new offer.

But still, the due diligence cannot predict with 100% accuracy how a business will perform this time.

So, my main rule is to invest a little bit but often.

I back a variety of businesses with small sums ranging from $30 to $100. Because of that, I would not loose too much in the case of failure of one or two projects.

 

So, if you decided to give it a try, you can use my affiliate link to sign up and get $5 for your first backing!

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