Ups and Downs with Kickfurther

I started investing with Kickfurther on April 9, 2015.  Since that time I have invested $2321.25 and re-invested paybacks and earnings.  As of right now, October 15, 2015, I have invested in 43 different offers.  Of those, seven have paid back my entire investment, plus earnings of between 8% and 20%.  Most paid back earlier than expected and the APR on those deals ranged from 22.01% to 56.13%. That's the good.

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See this doll?  He is "American Girl"-sized and comes with a story.  The story explains that his brother has autism, and what that means.  The doll is made by LorettaRose, L.L.C. and  is outfitted and packaged by students with disabilities, sponsored by the My Sibling Work Experience Program. This program provides job sampling experiences for students, aged 14-21, who are entitled by federal law to have transition services in their school setting.  While LorettaRose is a for-profit company, one of their missions is raising children’s social consciousness about caring for their peers and environment. They also educate the public about the need for more services for teens and adults with developmental differences.  Kickfurther allows me to invest money in small businesses and to help them grow.  I have an autistic son so this company caught my eye.  That's more good.

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This guitar, on the other hand, is being sold by a business which promised a 5% return after three months.  Their second of three payments was supposed to be last week; so far they haven't made any payments and the excuses have ranged from "the check is in the mail" to "the owner had a pulmonary embolism".  The owner has been rude to the backers and there were serious discussions about repossessing the inventory, though the decision was made to continue to monitor the situation for now.  

Kickfurther, in case you haven't read my other posts on the topic, finances businesses that sell tangible items.  The businesses apply for the amount they need to purchase a particular product or mix of products and offer a percentage return after a pre-determined period.  Businesses are allowed to offer as high or low return as they wish and as long or short a return period, providing their past sales figures indicate the sales are realistic.  Investors purchase shares starting at $10.00.  If enough people invest, the deal is done; if they don't, then the company can try again with different terms. If the deal is done; Kickfurther purchases the merchandise as agent for the backers and gives it to the company to sell on consignment.  In other words, in the strictest sense of the word, these are not loans, they are consignment sale contracts.  When the company sells the merchandise, they are supposed to pay Kickfurther for it.  If the merchandise doesn't sell, Kickfurther can re-possess it and try to sell it through other channels to recoup at least some of the backers' money.

One thing I like about Kickfurther is that these are not unsecured loans.  Most of these businesses are small and/or relatively new.  If they fail, I don't want to be in line with a bunch of other unsecured creditors trying to get money where there is none.  However, it seems to me that many of these businesses are treating these contracts like loans.  They are making equal payments on the due dates each month.  If they are paying for the inventory before they sell it, for whatever reason makes sense to them, that doesn't bother me.  What concerns me is that it is also possible that the business has sold our inventory and is using our money for other things, planning to make payments as scheduled.  That could lead to a situation where the company spends our money on something like rent, or to purchase additional inventory, and then is unable to pay us back when promised (or, worst case, at all).  Kickfurther is a relatively new platform and it makes changes where needed.  They are working on a system to track inventory sales.

As I said above, I have invested in 43 offers.  Seven have paid back completely.  Three are two months overdue with no payments made.  Five have had payments due and have made them, but one of those is substantially under the amount needed to complete payoff timely, though she has stated she is trying to catch up.  The other 28 offers have not had a payment due yet, so I think it is far too early to draw conclusions about the return on this investment.

How typical is my portfolio?  Judge for yourself.  There is a sticky post at the top of this subreddit that gives the status of all Kickfurther offers.

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt*