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Video: Drone Firm Raises Millions via Kickstarter, Then Rage Quits

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Kickstarter projects and their woes are the subject of more than one website. While most focus on Kickstarter projects that fail to launch, there is another aspect of Kickstarter which doesn’t get enough attention and probably should: the projects which get funded and then never deliver a product. In this instance, the product is a drone.

Kickstarter backers never go into these things with the idea that they won’t get their promised reward. They’re not there to make a donation. They’re there to be the first to have a cool new piece of tech that’s being built out or a game that’s being developed.

A British firm called Torquing Group promised backers a new palm-sized drone called Zano, which would be:

an ultra-portable, personal aerial photography and HD video capture platform, Small enough to fit in the palm of your hand and intelligent enough to fly all by itself! ZANO connects directly to your smart device (iOS or Android) via onboard WiFi and enables you to instantly begin capturing and sharing moments like never before.

https://youtu.be/hgkbhjXTbOE

The idea proved quite popular, and the company found itself raising $3.4 million. You read that right: more than three million dollars for a product which did not demonstrably yet exist, although a prototype drone had been built. But one must surely understand there is a difference between prototyping and mass production. There were a variety of rewards, the top one being for around $800:

You will receive 4 x First Edition ZANOs. Your choice of Black/White and 4 x Charging Cables. You will also receive FREE capability software updates for 12 months after public launch.

97 people funded at this level. Interest in consumer drone technology is at an all-time high. It seems the hobby is fast replacing remote control airplanes and cars for nerdy outdoorsmen, and several firms are vying for a wide open market. It’s growing at such a pace that US-based firms recently saw fit to get ahead of regulators and install certain pseudo-optional airspace controls to keep drone operators out of trouble.

Also read: Consumer Drones Outfitted With Geofences Around Restricted Air Space

The funding campaign ended in January. In May, the company said they’d be shipping their first drones by July. This never happened at the scale promised, though as of November, they’ve shipped 600 out of 15,000 orders. However, that’s not all, folks. A few weeks back, the CEO suddenly left the company, reportedly citing “personal health issues and irreconcilable differences.”

Now, the company is not shipping anything and has instead decided to utilize a British law which allows them to pay back little, if anything, in cases like this.

Having explored all options known to us, and after seeking professional advice, we have made the difficult decision to pursue a creditors’ voluntary liquidation. All creditors will be contacted by an insolvency practitioner next week. […] We are greatly disappointed with the outcome of the Zano project and we would like to take this opportunity to thank everyone who has supported us during this difficult period, especially our loyal employees whose commitment has exceeded all expectations.

Ultimately, Kickstarter is by design not liable for defaults such as this. In the case of the Zano, they say they knew as little as anybody and apologized profusely. They had previously told Ars Technica:

The short version is that Kickstarter is a home for creative projects and a new way for people to work together to make things. It’s not a store. Creating something new can of course involve unexpected obstacles. We encourage project creators to be transparent with backers about any problems they run into on the way to completing their projects.

In a statement to backers of the project, Kickstarter reportedly said:

We learned the news of the Zano bankruptcy the same way that you did. […] We e-mailed the creators as recently as two weeks ago to encourage them to be more communicative with their backers, but received only a cursory response. […] [W]e sent an e-mail to the Zano team informing them of their obligations to backers and asking them to share an open and transparent update on what happened with the project. […] If they do not adequately brief backers by that time, Kickstarter will independently pursue an inquiry into the Zano project. Should this occur, we will share those findings with you, the backers, once completed.

Featured image from Kickstarter/Zano.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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5 stars on average, based on 2 rated postsP. H. Madore has covered the cryptocurrency beat over the course of hundreds of articles for Hacked's sister site, CryptoCoinsNews, as well as some of her competitors. He is a major contributing developer to the Woodcoin project, and has made technical contributions on a number of other cryptocurrency projects. In spare time, he recently began a more personalized, weekly newsletter at http://ico.phm.link




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4 Comments

4 Comments

  1. pmj1979

    November 25, 2015 at 10:41 pm

    “…Kickstarter is a home for creative projects… It’s not a store.”
    Kickstarter is a store in every way except the in the description given by kickstarter themselves.
    Many projects are created by established businesses on their 4th or 5th project. To kickstart another project is fine but if you offer it as a pre-order service as many seem to do, that makes it a store. You are ordering something from the seller, they just haven’t made it yet.

    Kickstarter need to take responsibility for the millions that people have lost on thousands of failed projects or at least make the project owner responsible They would be less likely to create unachievable goals for themselves if they had to plan for failure.

    I have backed projects with no want of a reward, I have backed projects expecting the reward offered and it has never shown up. Kickstarter should realise they are making a bad name for themselves and people are losing money because of them and their irresponsible project creators.

  2. P. H. Madore

    November 30, 2015 at 9:16 pm

    You don’t think it dis-incentivizes other companies to perform? There’s no repercussions for taking in $3 million and not delivering — shoot, we have nothing to fear if we just want $1 million. We’ll make something up. Someone will fall for it. You see where I’m going with this? I think that’s why Kickstarter went out of their way to address the community, they fear this, that I’m describing. Too many articles like this one and the backers will trickle away to a platform that looks after them.

    • John Scott-Harley

      December 18, 2015 at 6:47 pm

      Quite where’s the money gone? Zano may think they’re off the hook but they ain’t. If its proven that they have used those funds for anything else they’ll be in deep do do

  3. Optimist911

    December 2, 2015 at 12:07 pm

    So what was the source of the fail? A few technical details would seem to be in order.

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Analysis

How You Could Profit From The Fairfax County Investment In Morgan Creek Digital

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Morgan Creek Digital recently scored what it says is probably the first investment in the known crypto asset universe from a U.S. pension fund.

Two pension plans in Fairfax County, Virginia are anchor investors in a new $40 million venture-capital fund, according to a statement from the company. Other investors include an insurance company, a university endowment and a private foundation, said Morgan Creek Digital founder Anthony Pompliano, who declined to provide further details.

Fairfax County Retirement Systems manages three separate defined benefit plans, two of which invested in the Morgan Creek Digital fund, said Pompliano. Katherine Molnar, chief investment officer of one of the funds said in a statement that blockchain technology is an “emerging opportunity” that offers an “attractive asymmetric return profile.’’

Morgan Creek Digital, which is an affiliate of the investment manager Morgan Creek Capital Management LLC, exceeded its original target of $25 million for the fund. Its pitch: all traditional assets will eventually be represented by digital tokens, while the influx of intellectual capital into digital assets will create positive returns. It also argues that cryptocurrencies are not correlated to traditional assets, giving investors unique exposures.

The fund created by Morgan Creek Digital in New York is investing in cryptocurrency giant Coinbase, which was recently valued at $8 billion, and several lesser-known startups, including Blockfi, RealBlocks, TrustToken, Harbor, Open Finance Network, CityBlock Capital, Namebase, Good Money and Digital Assets Data.
As much as $4 million of the investment could eventually be used to purchase cryptocurrency directly, though that has not happened yet.

This sort of development is crucial for the digital asset markets to evolve. Let’s take a closer look at Morgan Creek Digital’s other blockchain companies, and see if there might be equity or token opportunities.

CityBlock Capital

CityBlock Capital offered a digital security token sale on the SharesPost platform, representing perhaps the lowest-barrier investment opportunity for someone looking to tag onto the Fairfax County investment in Morgan Creek Digital.

CityBlock’s NYCQ Blockchain Infrastructure Fund invests in companies building blockchain-based capital markets infrastructure. From the instantaneous settlement of trades, elimination of intermediaries, and the reduction of fraud, the fund’s portfolio companies include clearing houses, exchanges, depositories, makers of market aggregation tools, securities services firms, data analytics, smart contract auditors, and issuance platforms. Its focus is early-stage firms, with ten percent of its funds going to late-stage companies.

CityBlock’s digital tokens are designed to represent ownership interests in the fund. Investors will be able to buy and sell these assets on SharesPost’s Alternative Trading System (ATS), which is registered with the U.S. Securities and Exchange Commission.

TrustToken

If you’re looking for a stablecoin, this Morgan Creek Digital-backed option might be a nice tool to escape crypto-volatility. TrustToken’s first token is TrueUSD, a stablecoin redeemable one-to-one for U.S. dollars. Over its initial four months of trading, the coin’s market increased to $85 million as investors look for stability in the unstable world of crypto. The token has a $61 million hard cap on the token allocated over three tranches of $0.12, $0.14 and $0.16 per trust token.

In the TrueUSD system, dollars are kept in the escrow accounts of multiple trust companies, not a bank account. Those accounts verified by an independent third party that issues monthly reports on the funds held in collateral.

Blockfi

In need of liquidity and have a lot of crypto you could put up as collateral? Blockfi is now operating in the US, and could be the business solution you need. BlockFi is a New York-based secured non-bank lender of  USD loans to cryptoasset owners who collateralize the loan with cryptoassets. Blockfi iquidity is available to both individuals and institutions. Client Bitcoin and Ether is held with a registered custodian. Loans are issued in USD to their bank account.

BlockFi currently operates in 35 US States, lending to retail investors and companies. It raised approximately $1.5 million in seed funding earlier this year from ConsenSys Ventures, SoFI and Kenetic Capital, followed by Galaxy Digital Ventures investment of $52.5 million. $50 million, the lion’s share of the capital, will be used to loan to BlockFi’s customers. The remaining $2.5 million represents an equity investment in the company from Galaxy and earlier backers.

Namebase

Namebase offers probably the most unique idea in which Morgan Creek Digital invests. This platform enables the registration of top-level domains on the Handshake blockchain. As a fork of Bitcoin, Handshake allows users to register domain names. Registration records are maintained by a decentralized network of nodes. Handshake is compatible with the existing domain name system. It is easily integrated with mainstream browsers.

Handshake uses the Bitcoin software with some extra transaction types allowing users to bid on names on-chain. Handshake forked everything about the Bitcoin node software while not forking the UTXO set, like in the case of Zcash. The Handshake project plans to distribute 70% of the coin supply to open source developers, projects, and non-profits without any contractual expectation of work.

Bakkt

The Bakkt Bitcoin Daily Future is a physically delivered daily futures contract on Bitcoin traded in BTC/USD. It’s still subject to regulatory approval, but ICE plans for them to be traded on its electronic trading platform which is regulated by the CFTC. ICE Clearing US, the main counterparty for all ICE cleared forex futures trades, will clear and guarantee all trades, to be settled in physically delivered Bitcoin “in the regulated Bakkt Warehouse.”

Bakkt raised $18.2 million to develop a global digital assets platform and a bitcoin futures product. Owned by Intercontinental Exchange (ICE), which in turn is owned by the New York Stock Exchange (NYSE), Bakkt’s investors include Boston Consulting Group, Galaxy Digital, Goldfinch Partners, ICE, M12 (Microsoft’s VC fund), Pantera Capital and Protocol Ventures.

Digital Assets Data

This financial technology and data company build enterprise-grade software and data feeds for crypto hedge funds and other market participants. The companies data, information and transparency tools will be applied to crypto assets, including currencies, platforms, applications, side chains, security tokens, and initial coin offers (ICOs) through subscription services offered to hedge funds and other institutional investors.

Harbor

While companies like Polymath stole much of security token show in early 2018, Harbor’s blockchain-based platform and compliance protocol has also been built to transform private securities like commercial real estate offerings an investment funds into more liquid forms of private investment.

This institutional-grade onramp for issuers and investors is an end-to-end service. Investor on-boarding to the platform encompasses KYC, AML, accreditation and tax forms, signing of documents, funding, and other tasks. The Harbor compliance protocol manages complex rules and regulations governing securities on issuance and secondary transfers.

Open Finance Network

Created in 2014, The OpenFinance Network (OFN) uses blockchain technology to create an U.S. regulated security token platform. “We wanted to give users the control over their funds. Since with security tokens, there is a lot of overhead holding tokens on a centralized platform. So to put capital to better use, we went with self-custody. We are not entirely decentralized though, and we think this is attractive to all types of users.”

Open Finance Network is comprised of the ledger, the token and the adaptors. Open Finance’s a global registry of assets that are represented by security tokens as well as entities such as broker-dealers, transfer agents, custodians or escrow agents that can be used on different security token processes.

Good Money

Good Money is a new type of banking platform founded by Gunnar Lovelace. When a new customer signs up with Good Money, they receive an equity share – in other words, they become co-owners. Lovelace says customers could hold as much as 70% one day.

Good Money operates similar to a credit union, which are non-profits, and offers members no ATM or overdraft fees. 50% of its profits are invested into green projects and charitable donations. The platform’s customers vote on where profits should be invested, but the options will only include sustainable investments, like clean energy and reforestation efforts.

RealBlocks

RealBlocks is creating a real estate capital markets platform designed to connect users globally so they can more easily raise capital for real estate. Built on the Ethereum blockchain, the platform allows organizations to raise capital through the issuance of tokenized securities.

On the platform, investors can directly purchase ownership interest in real estate with digital and fiat currencies. The platform also claims to provide a mechanism for peer-to-peer liqudity. According to RealBlocks, “anyone in the world is now able to directly invest, raise capital, and obtain liquidity for investments in real estate.” The platform also provides a mechanism for peer-to-peer liquidity. By using RealBlocks, anyone in the world is now able to directly invest, raise capital, and obtain liquidity for investments in real estate.

Conclusion

“There’s a belief in the institutional world that if the industry will be around for a long time, it will be very valuable,’’ Pompliano said in a phone interview. “The smart money is not distracted by price but looks at the long-term trends, and believes they’re betting on innovation as a great way to deliver risk-mitigated returns.’’

Today, even police officers and other state employees in Virginia’s Fairfax County are now looking forward to retirement with potential dividends from bitcoin. Two separate pension funds that collectively manage $5.1 billion in assets for the state’s police force and other employees have joined a $40 million investment in the Morgan Creek Blockchain Opportunities Fund.

If you look at the startups in which Morgan Creek Digital is invested, there are few token options. Using TrueUSD to hedge your crypto-investments offers one opportunity to augment your investment strategy. More interestingly, the CityBlock Capital security token represents an alternative to other VC-backed securities tokens, such as Blockchain Capital’s BCAP.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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5 stars on average, based on 2 rated postsJustin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.




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Netflix Price Hike Helps Bag $10 Million Alexandria Ocasio-Cortez Documentary

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Shortly after Netflix announced it would be raising the costs of subscriptions for U.S customers, the movie streaming giant just splashed out $10 million to secure a documentary on Alexandria Ocasio-Cortez.

Bearing the politically provocative title of Knock Down the House, the movie was subject to a bidding war at the Sundance Film Festival last week, where Netflix outbid competitors such as Amazon and Hulu to gain rights to air it on their platform.

The $10 million figure was only revealed this week, however, and it immediately takes its place in the record books as the largest purchase ever recorded for a documentary film at Sundance.

Netflix Economics

As discussed previously on Hacked, the price hike enacted by Netflix – which saw standard subscriptions rise from $7.99 to $9.99 per month – is unlikely to affect the company in a negative way. While the stock price did stumble earlier in the week, it recovered 2.6% rapidly just days later.

HD and multi-screen subscriptions were subject to the largest price hike in the company’s history – from $10.99 up to $12.99; an increase of over 18%. The premium plan, which encompasses streaming on four seperate devices, rose from $13.99 to $15.99, making it more expensive than competitor HBO NOW for the first time in its history.

One of Netflix’s main advantages is its international user-base – one which reached as high as 117 million in 2018. Only 55 million of those users came from inside the U.S, which begs the question: how did a documentary about a regional political representative in New York’s 14th district become the most sought after cinematic property in Sundance history?

Knock Down the House

According to the plot summary:

“The film follows four women who decided to run for Congress in the 2018 United States elections: Alexandria Ocasio-Cortez of New York, Amy Vilela of Nevada, Cori Bush of Missouri, and Paula Jean Swearengin of West Virginia. Vilela, Bush, and Swearengin lost in the primary round, but Ocasio-Cortez won the election.”

Whether it’s true or just an attempt at legend, the story goes that director Rachel Lears began working on the film the day after Donald Trump was elected president.

The film won the Sundance Favourite award last Thursday, and has accumulated a score of 6.1/10 from twenty-four votes on IMDB; and a 100% positive score from eight early reviews on Rotten Tomatoes. On reviewer from IndieWire gave the film a ‘B’ rating, adding:

“Stylistically, the film isn’t at all fussy: on-screen graphics are straightforward and informative, and Lears leaves the editorializing out of her introductory captions, though the film’s score often proves manipulative during the most unnecessary of times.”

With recent Sandra Bullock starrer, Bird Box, estimated to have been viewed by over 80 million households, it will be interesting to see if Knock the House Down translates just as well to an international audience. Although, Netflix can probably afford to take a hit for the sake of pushing its new political favourite.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 146 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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ICE Has Raised $182.5 Million for Upcoming Bakkt Trading Platform

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The downturn in crypto has not deterred high-profile investors from betting big on the future of the market. Intercontinental Exchange (ICE), the world’s largest stock exchange operator, has raised $182.5 million in support of its Bakkt cryptocurrency venture.

Bakkt: Institutional Support Grows

The Bakkt startup has raised $182.5 million from more than a dozen high-profile investors and venture capital firms, CEO Kelly Loeffler announced Monday. First-round investors include: Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Goldfinch Partners, Alan Howard, Horizons Ventures, Microsoft’s venture capital arm, M12, Pantera Capital, PayU, Naspers’ fintech arm and Protocol Ventures.

“Our work today is centered on driving institutional access for digital assets, along with merchant and consumer uses, and we’re already expanding on this vision, collaborating with great companies like Starbucks in these efforts,” Loeffler said.

Further details on Bakkt’s 2019 objectives will be announced sometime next month, though Loeffler indicated that the focus is on developing new infrastructure for the nascent market. This includes the “industry’s first institutional grade regulated exchange, clearing and warehousing services for physical delivery and storage.”

What is Bakkt? Preparing for the Physical Bitcoin Futures Market

Bakkt is scheduled to launch its bitcoin futures market Jan. 24 but delays in regulatory approvals could see that date get pushed back by a week or more. Further details can be found in the following article from Dec. 22.

Disrupting Traditional Finance

Bakkt has been described as the world’s first physically-backed bitcoin futures market, but its mandate stretches far beyond that. When ICE first unveiled the crypto startup in August, the goal was to broaden institutional access and consumer adoption of digital assets. Through high-profile partnerships with Starbucks and Microsoft and with the support of early investors like Susquehanna International and Fortress Investment, Bakkt is aiming to bring “regulated, connected infrastructure together with institutional and consumer applications for digital assets,” according to Jeffrey Sprecher, the founder and chairman of ICE.

NYSE Owner Is Betting Big on Cryptocurrency with Bakkt

The launch of a physically-settled bitcoin futures market as early as next month means institutional investors can access digital assets through a trusted custodian. On the consumer side, Starbucks will be the flagship retailer of Bakkt with the goal of developing practical applications for commercial use. According to Starbucks senior executive Maria Smith, consumers will one day be able to convert cryptocurrencies into dollars at various Starbucks locations.

Starbucks will play an important role in helping Bakkt disrupt the traditional payments market. One of Bakkt’s stated goals is to move consumers away from credit cards toward crypto applications.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 772 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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