Crowdfunding with escrow: creators only get paid after delivery – and if consumer is happy

NOTE: Pre-orders are not open right now. Subscribe via email to get notified when pre-orders are open (and get $5 discount).

Basically a kind of pre-order platform. Details:

  • Your customers are still charged upfront. But, the funds are held in escrow.
  • You, the creator, must deliver project first.
  • You, the creator, only receive funds after the customer has received the order and are happy enough that they do not want a refund.

Who is this for?

We are looking for pre-orders from creators who value the extra trust this platform will give consumers.

This is not intended for backers/consumers. Although your feedback on this project is welcome anyway.

Why would your customers like this over Kickstarter?

The number one complaint with crowdfunding platforms like Kickstarter are scams that take money but then never deliver the product.

Since the funds are in escrow, your potential customers will have higher trust in your project, giving you a higher conversion rate.

Why would creators like you use this?

This is perhaps the more interesting question. Since it’s worse for your cash flow for the funds to be held in escrow until product delivery.

The most important reason is you will get a higher conversion rate because there’s more trust.

This new platform is designed specifically for new business ventures, whereas Kickstarter started off focusing on creative, non-commercial projects. Indeed, today, Kickstarter is mainly about games.

New businesses have significantly different requirements than Kickstarter:

  • Do not need hundreds or thousands of backers. Just ~10-40 is sufficient, to prove demand.
  • Do not need millions in upfront funding. Just $1000+ would be great.
  • Do not need upfront payment. Just real purchase intent is enough.
  • Just having proof of demand is already a huge step in the right direction, and would help greatly with things like getting investors, social proof.

Why wouldn’t creators just selfhost their own website/brand?

It’s a reasonable question. I’ve thought of doing this myself. Several things:

  • Conversion rates are significantly higher on a trusted third-party domain like Kickstarter or PreorderBlitz.com
  • There is no easy way to implement a generalized escrow service with a self-hosting website. How do people trust that it’s not a scam??

What exactly is the product we’re offering?

We want to charge $25/month for a platform called “PreorderBlitz” like Kickstarter where creators can create their own product page, hosted on the “PreorderBlitz.com” domain, and collect pre-orders. The crucial differentiator being that the funds are held in escrow until customer is happy.

How many pre-orders do we need?

We are looking for 40 creators to each commit $25 upfront, for a total of $1000. These creators will receive early access and beta-testing privileges.

NOTE: Pre-orders are not open right now. Subscribe via email to get notified when pre-orders are open (and get $5 discount).

Who are we?

Let me quickly introduce ourselves so that you know you’re not giving it to random people on the internet.

The product we’re proposing is “PreorderBlitz.com”.

I’m Alex. I’m an alumni of CMU’s School of Computer Science. I founded ProgrammerHat.com which is software company with many existing Shopify apps, Jira plugins, Chrome extensions, and SaaS products.

Conclusion

The idea is still in flux and we are open to feedback. It’s possible there is an even better version of this idea. Email me here: hello@programmerhat.com