This may well be "true" in the legal/accounting sense, but just because it's not allowed to be "an investment scheme" that doesn't automatically make it a pre-order, nor does it stop me from giving people money for investment-like-purposes but calling it something different to avoid both SEC shutting it down, and at the same time with the understanding that I'll have none of the redress that an SEC sanctioned investment might give me.
Yeah, there's a no-zero chance that the Kickstarter money might get stuffed in someones pocket without even a token effort to achieve the stated goal. One could also argue there's a lot of subprime mortgage holders and CDO investors who are fundamentally no better off than if every Goldmann Sachs employee was currently living it up in Mexico on stolen, instead of just "irresponsibly but legally paperwork compliant" SEC-approved "investments"
No, we should. Complain loudly about "fradulent investment schemes".
But at the same time, wonder what the _next_ money-losing thing that anyone who thinks Kickstarter is an "investment scheme" is going to need government protection from.
Do people _really_ think Kickstarter projects are the sort of thing that requires government/SEC oversight?
Edit: In retrospect, looking through the replies in this thread, there clearly _are_ people who consider Kickstarter backing to be "investment". I'd love somebody of that opinion to explain why they think that, and whether it's a wording/terminology issue with how Kickstarter and/or projects describe what they're doing, or whether it's something fundamental in the Kickstarter and/or crowdfunding process.
Not at all: complain about it all you want, and make your decisions in accordance with your understanding of the relevant risks.
Just recognize that a certain level of risk - in the form of possible breaches of promises - is inherent in the nature of all of these things - traditional investment, pre-orders, and Kickstarter alike - and that there's no way to pre-empt that downside without eschewing the upside.
With a traditional pre-order I have a pretty strong guarantee from my credit card company. With a traditional investment I take on the risk in return for a chance of a big gain. As a client/customer Kickstarter seems to combine the disadvantages of both with the advantages of neither.
Yeah, there's a no-zero chance that the Kickstarter money might get stuffed in someones pocket without even a token effort to achieve the stated goal. One could also argue there's a lot of subprime mortgage holders and CDO investors who are fundamentally no better off than if every Goldmann Sachs employee was currently living it up in Mexico on stolen, instead of just "irresponsibly but legally paperwork compliant" SEC-approved "investments"