I've written a couple of posts on a new investment platform I discovered, Kickfurther, which crowd funds inventory for small businesses, and decided to update you on my results with it. I started writing this post a week ago, figuring I'd fill in the amounts as they came in, as I was supposed to get six payments on Sunday, Monday and Tuesday. It is now Friday at lunchtime and I haven't gotten anything.
What is Kickfurther? If your local widget seller wants to buy a truckload of them to sell at Christmas but does not have the cash in hand to buy them s/he can ask Kickfurther investors to fund them After deciding what return the investors should get, and after being checked out by Kickfurther to make sure it is reasonable for that business to buy that number of widgets and to expect to sell them within the time the business says it will, the offer goes live on Kickfurther.com. At that point, I, as an investor look at it and decide if I think it is worthwhile. I don't get paid until the inventory sells, so I look for a product that looks saleable, a good return rate and a relatively low "PSR", mean percent of the product that must be sold to make me whole. Once the company starts selling the widgets they make monthly payments based on the number of widgets sold. If they sell them all in the first month, I get paid quickly. If it takes longer than expected, I have to wait. The amount returned is a flat percentage agreed to ahead of time. Kickfurther (actually the investors, Kickfurther is the agent) owns the product, not the vendor, so if sales do not happen, Kickfurther can repossess the property and sell it through other channels.
So, how is it working for me? Right now I have a little over $1400 invested. I have backed twenty-nine different products. Most of them are still in the phase between funding and payment; however these have started the payback process:
Amara Swimwear Using a strictly linear payback schedule, Amara should have re-paid 33% of the backer's money. They are at 27%. The backers are supposed to make 10% over six months. You can look at some more of their suits, and buy them in my Kickfurther store.
North Coast Organics: North Coast promised 8% after four months. Were they ever wrong; they paid everything back after 2.5 months. That's right, I earned 8% on my invested money and they only had it for 2.5 months.
Humanoid Wakeboard: I was supposed to receive an 8% return after three months. That hasn't happened. What was supposed to be the final payment brought the payback to 60%. The company says sales are improving, so hopefully we'll get the rest of the money soon. I think it is too early to consider this a loss; it just isn't quite the gain we investors wanted. Just as North Coast Organics didn't pay us any less when they paid back early, Humanoid Wakeboard isn't obligated to pay us more because sales were not where they hoped. If they have not paid for the boots thirty days after the end of the projected sales period, the investors will be polled on how to deal with the situation. You can buy these in my Kickfurther store too.
Marlie Madison: Marlie Madison is a suburban Dallas boutique. They promised 11% after six months. So far their payments have been just short of where they need to be. The owner has pointed out that summer is brutal in retail and I'm pretty sure we'll get paid eventually. However at this point she is five days late on her payment for the month.
Clarisea offered 8% after three months. They were supposed to make one payment, which was due September 1. Instead we got a note from the owner saying that she was expecting to pay us next week. She said she'd had to shut the business down temporarily due to having a kidney transplant. Their products are available in my Kickfurther Store.
Jersey Kids: While Jersey Kids only offered 4% after 2.3 months, I thought it was worth it because the company appeared to be established and I figured the products would sell. They were supposed to have two payouts and the first was due four days ago. While nothing has been posted to my account, there is a message board where investors can communicate with the companies, and the company responded that the payment was sent in timely. There is a subreddit about Kickfurther and there was a post there leading one to believe the Kickfurther people were out of the office this week. Perhaps this is just a posting delay.
Allergease reminded us that Kickfurther businesses are generally those that cannot get conventional bank financing. Something happened after the offer was funded, after investor's credit cards were charged, and Allergease decided not to go forward with production. I did not earn any money on this, despite the fact that they had my money for about three weeks. I'm glad I did not lose any money on this deal.
Max-Axe Guitar is supposed to pay 5% after three months. Their first payment was due four days ago. There has been no response on the comment board. You can buy from their website.
The Shrine sells duffel bags. Their offer was 10% after six months. Their first payment was due three days ago and they have five more scheduled payments. On the message board they said they thought Kickfurther would automatically draw the money from their account. They have learned that is not the way it works and have sent the money and will be timely next month.
I have more payments due next week, and most seem clustered at the beginning and end of the month. Also, when offers are put on the site, they have a completion date. If they are not funded by that date, they are taken down. If they are funded before that date, there is a longer time before the first payment during which your money is invested. For example, Harvey Prince, maker of this
offered 8% after 4.5 months. However the offer went live August 27 and was funded on August 28, at which time backers' credit cards were charged. However, the end date, the date from which the 4.5 months is computed, does not start until September 12.
So, what do I think? I've read that the Kickfurther platform is "in Beta"; they are still working out the kinks. It looks like some of those "late" payments are just kinks. The real question is what rate of return can reasonably be expected and maintained. The platform hasn't been in existence long enough to get a real handle on what loss rates can be expected. Yes, investors own the inventory and can try to sell it ourselves, but I wonder how Kickfurther plans on selling this stuff if the vendors can't. Some losses seem inevitable though this seems more secure than Lending Club or Prosper. I plan to continue to re-invest the payments I receive and I plan to gradually add money to the platform. Right now there seem to be more businesses wanting money than investors willing to put it up. However small requests, particularly if high rates are offered, go quickly. If you would like to invest in products through Kickfurther, if you click on the affilliate links throughtout this article, you will be given a $5.00 bonus. Since the minimum investment is $20.00, it gives you a good chance of a good return on the first product. The drop in the stock market this week should remind all of us that having some alternative investments (and you'll have to decide for yourself whether this is the alternative investment for you; I am not a finanical expert and don't claim to be) can get us through periods when the stock market drops. If you are a business owner and want to explore financing your inventory through Kickfurther, please click here and I get a referral fee.*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and She Picks Up Pennies*