Saturday, August 27, 2016

Kickfurther: My Current Results

A few weeks ago, I posted a bunch of statistics about the Kickfurther platform as a whole.  Someone on Kickfurther's subreddit asked how I was doing.  This post is an attempt to answer that question.

Total Offers

While Kickfurther  has funded about 360 offers (I'm not going to count them again, but I know there have been some in the last two weeks), I have invested in 105 of them.

Cancelled Offers

About 6% of the offers have been cancelled and collection procedures of one sort or another instituted.  11 of mine have either been cancelled, or I don't think there is any hope for them, so my stats are worse than average in that regard. I have seven more offers that are substantially behind on their payments but which I think have a good chance of paying eventually.

New Offers

I have eighteen offers which have not paid anything because payments aren't due yet. Kickfurther has about 100 offers that haven't entered payback stage yet.  That means my portfolio is weighted toward older offers.  There are two reasons for this:

  • I've withdrawn about $550
  • Kickfurther has moved to a "pack" system which generally means I invest more than my previous $50 standard in each offer.

My Returns

If you add up my profits on completed offers (while Kickfurther considers part of each payment to be profit, I don't consider it a profit until I've gotten back more than I put in), and subract what I've lost or anticipate losing on cancelled or bad offers, the total is -$124.66. Yes, my aproximately $3,000 investment, most of it initally invested last summer, has lost money--at least before you add in the refunds Kickfurther has issued.  My refunds total $173.13 so as of this moment, I have gained 48.47, minus my $8.30 in withdrawal fees.

A Little Hope

The merchandise has been repossessed on two of my failed offers.  Kickfurther said they'd sold some of the Mulberry Silk Comforters and were in the process of figuring out how to divide the money, but they didn't say how much money they had.  Still, it should mean a bit more money in my pocket.  Also they have the Baboon Bamboo drawer trays.  They are trying to sell them in a variety of places, including Amazon.  You can get one here.

Baboon Bamboo Utensil Drawer Organizer
The Risks of Kickfurther

Any investment has risks, and a new investment platform is likely to have more risks that something that is established.  The trick to any form of investing is to figure out what the risks are and how you can mitigate them, and to make sure the possible rewards make up for the risks.  When I started with Kickfurther, I saw the risk as being that the merchandise would not sell.  If figured that most merchants would manage to sell some of the products; and so few if any offers would be total losses. I was mistaken.  While Baboon Bamboo and Mulberry Silk Comforters have worked that way--neither was able to sell all the merchandise and both promptly turned the unsold product over to Kickfurther for liquidation, most of my other failed offers have paid very little and none have easily returned the merchandise to Kickfurther.  

Clearly, at least at this point, Kickfurther is for money you can afford to lose.  Kickfurther is a work-in-progress; they are in the process of refining their legal documentation of these offers. They say they are refining the vetting process to get stronger companies involved.  They are strengthening the link between sales and payback.  Hopefully those things work to eliminate some of the fraudulent deals and make it easier to recover something on deals that go bad.  

My Plans

My plans are to withdraw funds from Kickfurther unless the rates go up or the defaults go down.  According to my count, about 1/6 of the offers go bad.  If you assume that failed offers end up being a 100% loss, and if you assume investors want at least  a 7% return on their money annually, then offers that pay need to average about 2% per month, and Kickfurther's rates now aren't that high.  If you assume a 50% return of investment on bad offers, you'd need about 1.5% per month on the good offers.  This means that at the current default rates, a six month Kickfurther offer would have to pay between 9 and 12%. Most don't, and those that do fill in seconds.  Unless the rates go up or the defaults go down, this is not a good investment.  
Disease Called Debt

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