Why I'm Winding Down My Kickfurther Investment

Of course the primary reason I'm pulling my money out of Kickfurther is because I'm not making money, and in fact, am losing it.  If that wasn't true, if I was making money, some of the things I'll discuss in this post would still concern me, but not as much. However, I think that a large part of the reason I've lost money on Kickfurther has been the incompetence of Kickfurther rather than the risk I knew I was assuming when I invested.

What is Kickfurther?

Kickfurther is a platform that was developed to allow ordinary investors (as opposed to accredited investors a/k/a rich people) to help businesses that needed cash to purchase tangible inventory.  The business model was that a business that wanted money to purchase inventory could offer that inventory on Kickfurther and investors could purchase part of that inventory, which was then returned to the company so that the company could sell it on a consignment basis.  As the inventory sold, investors would be repaid with a pre-determined profit.

Kickfuther specifically denies that these contracts were loans, but businesses would refer to them as loans.  While repayment was supposed to be based on sales, often it was not; rather businesses repaid in a linear fashion, unless the inventory was not selling, in which case they would pay less, or not at all.  

Kickfurther recently changed its business model to, at least for the present time, only "purchasing inventory" for companies that have a purchase order for that inventory.  They require assignment of the purchase order and file a UCC financing statement covering that inventory.  

Problems with Kickfurther

Inadequate Vetting of Companies

Kickfuther claimed it vetted companies using a proprietary formula.  While Kickfurther did not disclose that formula, it was obviously inadequate as several companies that were outright frauds were allowed to raise funds.  Also, after they began only financing purchase orders they were defrauded again by thieves using the names of legitimate companies.  The thieves got the money, not the companies and the investors were left holding the bag. 

Inadequate Contracts

The bottom line is that Kickfurther has had no way to determine if merchandise was selling, and, if it sold, no way to assure that companies used that money to repay investors.  They did not even file a UCC financing statement until recently (a UCC -1 is a standard form used to record a security interest in financed property). The founder said that he envisioned the company as part of the "trust economy" which to me means he isn't ready to play with the big boys.

Inadquate Rates

Any form of lending (and I know Kickfurther denies these are loans, but the companies receiving the money refer to them as loans and especially now that they are only financing purchase orders, the arrangements even more resemble loans) has to take into account an expected default rate and the amount of money lost on a typical default.

I invested in 17 offers that did not pay back as promised and from which I do not expect to receive any more money.  The total I invested was $834.50 and I have only been paid $286.65,   I have 85 offers that have finished and paid out.  My $5281 investment returned $5769.08.  Clearly if I had been smart enough to avoid the bad offers I would have made money, but my experience is pretty typical.  It takes a lot of good offers to make up for the bad.  I would have needed about twice the returns I earned to break even.

Another problem is that recently there have been two types of offers.  One type is for several months and the pack price is substantial.  The interest rate on them seems reasonable--over 10% for less than a year.  However, an investor must be willing to risk over $1,000 to participate in these offers and the company has no record with Kickfurther.

The other type of offer allows investments under $100 but the offers are short and the offered profit limited.  While it is true that investing money for two months and earning 4% is like investing it for a year and earning 24%, it is also true that each offer brings with it the chance of default--the possibility of losing all our money.  While earnings of 24% may make it worth taking the chance, earnings of 4% do not.

Incompetent Company

Kickfurther is the quintessential middle man.  Their only job is facilitating transactions between those with money (investors) and those who need it (businesses).  Despite that, there have been numerous complaints from merchants about their inability to link  with Kickfurther's bank account.  People are reduced to sending checks through the mail, which causes a delay in having those funds distributed to investors.

They were recently scammed into giving investor's money to three companies whose deals turned out to be fraudulent--it wasn't the company raising the money, it was criminals.

Questionable Solvency

Kickfurther makes money by charging merchants a 3% fee on money they obtain from Kickfurther.  They also charge investors 1.5% to withdraw money (that's 1.5% of both principal and interest).  Kickfurther is running on venture capital but that will run out sooner or later and right know, having been in existence for over two years, Kickfurther isn't making enough to pay the people running it.  How long will the venture capital last?  

My Conclusions about Kickfurther:

I still think the idea is good, but the execution clearly is not.  I am withdrawing money weekly but I expect to lose money when it is all said and done. I do not recommend that anyone invest with them but if you have to try it for yourself you can use my link and I may win a prize.  

*Part of Financially Savvy Saturdays on brokeGIRLrich.*

Kickfurther Merchant of the Week: Mirage Pet Products

This week's Kickfurther Merchant of the Week is Mirage Pet Products.  For those of you who aren't familiar with Kickfuther, it is an online investment platform through which ordinary people can help businesses finance inventory purchases.  Instead of lending money to businesses, the Kickfurther model is a "consignment sales agreement".  Basically, investors pre-purchase the inventory and then give it back to the business to sell on consignment.  As the inventory sells, investors are repaid, with a profit.  Mirage Pet Products is one of those businesses.

Q:  Tell us a little bit about Mirage Pet Products. Where is the company based?

A:  We are based in Aurora, Mo

Q:  When was it founded? Your website mentions a legacy of six generations in the pet industry. Tell us about that.

A:  My great, great grandmother was a dog groomer back in the heyday of the Standard Poodle and fancy cuts. My grandfather worked in a belt factory that transitioned into a dog collar factory over the years. He bought it in El Monte, California, and moved it out to Missouri. My great-grandmother worked in the factory, helping her son and daughter-in-law for decades before retiring.

In 2004, with my husband fresh off of active duty from Operation Iraqi Freedom, we started Mirage. We were 19 years old and just knew that working for ourselves was what we wanted to do. We were inexperienced and crazy but here we are still today! We had a lot of mentoring and help from my grandparents and great uncle. After so many years in the industry, they were able to guide us through quite a few changes in the economy (including the 2008 recession) and changes in demand. I will always cherish their assistance.

Q:  It is wonderful to have family support behind you, and thank your husband for his service.  Your website says that most of your products are manufactured in the US. Where are they made? Do you have your own manufacturing facility or do you buy from manufacturers?

A:  Most of our products are made here in Aurora, MO. We have a tight knit production crew working for us, they are amazing.

Q:   I'll be the first to admit I'm not a pet person and that I don't keep up with the latest in pet fashions or needs. However, I have noticed more and more pets wearing clothes, particularly in the winter. Are clothes for the pet or for the owner?

A:  It really depends on the breed of animal! A lot of owners dress their short-haired dogs for outside adventures to keep them more comfortable during the winter. For the most part though, clothes are fun and for the owner :-)

Q:  I notice you have a lot of Mardi Gras wear for dogs. I live in the New Orleans area and wish to compliment you on your good taste. Do you sell much of that line to people outside the New Orleans/Louisiana/Gulf Coast area?

A:  We do! Mardi Gras is becoming a larger holiday nationally and we are definitely seeing this trend reflected in our sales!

Q:   Do sell wholesale, retail, or both from your website?

A:  Both now.

Q:  Your dog treats are adorable! If I want custom colors or designs to match my party, are they available?

A:  Absolutely! We can custom make treats with anything on them!

Q:  How did you learn about Kickfurther and why did you decide to use them?

A:   I don't remember who it was but one of the KickFurther staffers sent us an email invitation and we decided to sign on! I'm so glad that we did, it's been a great experience!

Q:  As an investor, I'm glad you feel that way.   You finished your first Kickfurther offer ahead of schedule, and your second a little behind schedule. What was the difference?

A:   The second one included us pre-selling merchandise and offering customers long-term credit which really did not work in our favor over the slower summer months.

Q:  From your perspective, how does Kickfurther compare to other sources of financing. Put another way, you are now on your third offer; why do you keep coming back?

A:  We love the community!

Q:  To what type of business would you recommend Kickfurther?

A:   Because KickFurther has made some disappointing changes to their platform (at this point we won't be back for a fourth round) we won't be recommending KickFurther going forward. We used to recommend it to every business owner we talked with about funding/financing issues.

Q:  You must mean Kickfurther's decision to only finance businesses that have purchase orders for their products.  I can see how that could be disappointing to a company that fulfilled its promises on prior consignment sales agreements.  However, enough businesses were not meeting their obligations such that many if not most investors have lost money at this point.  I know I have.  From the message they sent investors, I think they will re-open the platform to businesses like yours once they re-tool some of their contracts and vetting procedures. 

 Have you tried Kickfurther from the investor side? Would you recommend that friends or family invest via Kickfurther?

A:   I would've before the changes! I haven't had a chance to use it from the other side.

Q:   Do you have a giveaway for us?

A:  Yes! We've got two gift certificates for $25 each.

Q:  Thanks.  I'm sure two of my readers will enjoy them! They can buy something cute like a sparkly dress and a new seasonal collar.   Anything else you'd like to tell us?

A:  Thank you to those who have invested in us, it's been a pleasure to work with you!!

It has been a pleasure getting to know you!  Mirage Pet Products can be found on Amazon or on their website.   You can follow them on facebook or on Pinterest.   Now, on to the giveaway!

Entry-Form

Is Kickfurther A Scam or a Legitimate Investing Option?

I had a comment left on a post suggesting that I needed to re-evaluate Kickfurther and the posts I've written about it.  Since it has been a while since I looked at the platform as a whole, I'm going to take some time and do so.

What Is Kickfurther?

Kickfurther is a platform that allows ordinary investors to assist businesses who need money to buy inventory.  The Kickfurther concept is that rather than lending money to the businesses, investors pre-purchase the inventory, and then return it to the business to sell on consignment.  As the inventory sells, the business repays the investors, with a profit margin.

For example, Wanda sells widgets.  She buys them from the widget factory for $10 and sells them for $20.  Generally speaking she sells 500 widgets a month.  She comes to Kickfurther and asks investors to finance 1,000 widgets for six months, so she asks for $10,000 and promises to pay back $11,000 by the end of six months. 

Wanda knows it will take a month from the day she places the order until the widgets arrive at her store,so the offer is written so no payments are due for two months.  Then, every month, Wanda is supposed to pay for the widgets she sold that month.  How much she is required to pay per widget is determined ahead of time, and that is expressed at the Percent Sold for Return--so that if Wanda's contract said she had to give KF $15 for every widget the PSR would be 73%.  If Wanda only had to pay $11 per widget the PSR would be 100%.  Obviously a lower PSR is better for investors.

If production is delayed, or people decide they don't want widgets anymore, and at the end of six months, Wanda hasn't sold enough widgets to repay the investors, the investors are allowed to vote on whether to allow Wanda to continue, or whether to cancel the offer.  If the offer is cancelled Wanda can either pay off the offer or return the unsold widgets to Kickfurther which will then try to sell them.If investors vote to continue, then Wanda continues to sell the widgets but no additional compensation, in other words, no extra interest or late fees, is due to the investors. 

What Problems With Kickfurther Have Arisen?

The bottom line is that in more than a few instances, Kickfurther investors have not been paid.  This list tells you the current statistics.  Right now, if you do the math, the "average" Kickfurther investor who invested in a random sample of offers is in the hole.  Investors who lose money are not a happy lot.

The question is who is to blame for the failed offers.  The reality is that investing has risks and anyone who thought these deals were sure things isn't very bright.  However, I'm not convinced that the risk I signed up for is the risk that ended up getting me.

In reading the information on Kickfurther's website, I learned that KF owned the merchandise and that the businesses were selling it on consignment.  I assumed (and you know what they say about assuming) that KF had proper contracts and safeguards in place, so that the only real risk we had was the risk that those widgets wouldn't sell.  My personal appreciation of the risk was that we'd probably get at least some of our money back on all offers, that most would complete and that KF would end up with odd and ends of junk no one wanted to buy on some offers.

I was wrong.

First of all, it seems KF has no enforcement teeth.  They say their contracts have improved and that they are now filing UCC-1 statements on the inventory, but there have been many cases in which the companies have just disappeared so to speak.  They either never paid anything or quit paying and did not return the inventory.  In some cases lawsuits have been filed, but my guess is that they will be fruitless since one of the main things needed for a successful suit is a financially viable defendant.

There just does not seem to have been much due diligence on the companies. Kickfurther has recently begun pulling credit reports but that is a new innovation.  They have done offers for companies that it turns out don't really exist.  There are companies that admit to selling inventory and using the money for things other than repaying investors.  Right now I have 17 offers that have gone bad.  Of those only 2 have turned unsold inventory over to Kickfurther.

In short, as it as played out so far (almost two years), while KF bills itself as buying inventory that is sold on consignment, in reality, as I preceive it, though not billed as such, and specifically denied by Kickfurther, it is basically making unsecured loans to small business, which is a risky business.  Established companies that do it successfully charge higher rates and have tighter controls.

I added the text in red at the request of Kickfurther. I receivd an email that said

it's been brought to our attention that one of your articles is incorrectly labelling Kickfurther as an small business loan which is not part of our model.  I've been requested to ask that you update the article to accurately represent the Kickfurther model. ...please alter the text so that the copy accurately reflects the Kickfurther model.

At least one of the Kickfurther Merchants of the Week I interviewed referred to their arrangment as a "loan".  Kickfuther has had no way to guarantee that the invested money was spent on the backed inventory and no mechanism for tracking sales and making sure the sales matched the payments.  While the paperwork may have said "consignment sale agreement", you know what they say about ducks, don't you?

If it walks like a duck, and quacks like a duck, is it a consignment sales agreement?

Can Kickfurther Be Fixed?

Honestly, I don't know.  I don't know the realities of the business community.  However, some major problems I see:

No automatic payments on sales

I don't know the technological viability of the idea, though I tend to think it could be done.  Simply put, when one of our consigned items sells, Kickfurther needs to get notification and when the check for it hits the bank, KF needs to grab it.  Expecting a company that is having trouble paying the bills to pay us first obviously isn't working.

The overwhelming majority of companies, even companies which have paid as promised, have paid in a linear fashion.  In other words, if they had five payments due, they paid 1/5 in each payment.  I find it hard to believe that none of those companies sold more than what was necessary to remain in good standing with investors.

Clunky cancellation/collection procedures

Since payment is due only when a product has been sold, being late with the first payment, or having payment be less than the scheduled amount isn't necessarily a cause for alarm.  However, I have several offers that are quite late, without any explanation from the company.  In order to cancel the offer and make the balance due in 30 days, over half the dollar-weighted investors have to vote for cancellation.  My guess is that in most cases by the time that is done, the inventory is long gone and the money spent on the electric bill or some other pressing business need.  Any decent debt collector will tell you that the sooner you get onto a problem borrower, the greater your chance of success. 

I have one offer where the business owner admitted to selling some of the inventory and using the money to pay himself a salary.  Eventually, about six months ago, and after payments were eight months late,  the offer was cancelled.  KF just asked the backers to vote on a settlement agreement with this company, but they've given us no information on which to base a decision, despite requests on a private message board and email requests.  At this point I have no idea whether the offer we have is any good.

Some backers are pushing for a lawsuit, and if we have a viable defendant that may be the way to go.  However, the almount owed is under $20,000.  I doubt the contact calls for penalties, interest, attorneys fees etc.  Based on things the owner has said, my opinion as someone who knows something about lawsuits (but I'm not a lawyer and I don't give legal advice) is that we don't have a slam dunk case against him, which means to win the case we'll need to litigate, not just file suit and get a default judgment. Assuming we win, we'll then have a judgment, and collecting on those isn't necessarily easy, particularly when the defendant has few assets and could see bankruptcy as an alternative.

On the other hand, if businesses see that KF isn't willing to legally enforce its contracts, more will try not to follow them. 

Return is not commensurate with the risk

At this point, the average Kickfurther investor has lost money.  I'm in that number.  I'm not too far in the hole, but I'm there.  Clearly the reward isn't worth the risk.  Yes, if you managed to avoid the defaulting offers, you'd have a good return, but unless there are people out there who are more expert than I am, avoiding the bad offers is more a matter of luck than knowledge.  

Prosper used to let lenders bid on loans.  Unfortunately what happened is that the amatures doing the bidding bid the price down to the point that the defaults took the profits.  Early Kickfurther offers were often over 10% for 6 months.  When investors snapped them up in seconds, the returns dropped.  Now that investors aren't as quick to grab offers, returns are climbing.  However, I don't think they are up to the point they should be.

Kickfurther needs to develop some sort of rating and/or underwriting procedures and they need to price offers at a rate compatible with the risk. 

Too rich for my blood

Kickfurther recently switched to a "pack" system, where you buy the smallest possible portion of the consigned inventory, rather than contributing a certain dollar amount.  Going back to our widgets, If Wanda had only one type of widget then a "pack" would cost $10 and would consist of one widget.  If Wanda was buying 10 different types of widgets, then a pack would cost $100 and would have one of each type.  Recently there have been packs that cost several hundred dollars, and one that was over $1,000.  While there are certainly some KF investors playing with that much money, I don't think most of us are.  Given the luck I've had with KF so far, there is no way I'm putting subtantial money into any offer.

Update:

I started writing this post last night.  Tonight Kickfurther's CEO posted an update on reddit that stated that starting February 1, all offers would be backed by purchase orders and that Kickfurther would have tighter controls on the inventory and the money.  Further, he was hoping to raise enough money to pay out the failed offers.  You can see his message here.   I wish him the best, and I hope this new model works.  

Conclusion:

I've said before that Kickfurther is a place for money you can afford to lose.  I haven't seen anything that makes me change that opinion.  I think Kickfurther has potential but right now, on average, investors are not making money.  

I also think they are doing a horrible job with PR right now.  The CEO's post about improvments to the platform was a good thing, but then he asked for positive reviews at Trust Pilot (where I had previously written a cool review).  When folks went there, they found that Kickfurther's business development person had given Kickfurther a five star review.

I've given Kickfurther a lot of free and reasonably positive publicty.  Even before my red text addition above, I think it was clear to any reasonably intelligent reader that Kickfurther did not consider itself to be a lender.  Was it really necessary to tick me off by requesting that I change my post?

If you'd like to give Kickfurther a try, if you use this link, you'll get $5.00 toward your first offer.  If you have a business that is looking for a new way to finance inventory, use this link to see if KF will work for you. 

Kickfurther Defaults

As those who read this blog regularly know, I invest some money via Kickfurther, a platform that finances inventory for businesses.  In short, a business creates on offer on Kickfurther that states what inventory they are purchasing with investor's money, along with the rate of return and time frame.

How is a Kickfurther Offer Designed?

Wanda's Wonderful Widgets might want to finance 1000 blue widgets, which cost them $10 each to make, and which they sell for $20.  They believe that once they have the money in hand, it will take two months to make the widgets, and then four months to sell them.  They write an offer asking for $10,000 for six months, with an investor profit of 10% (a typical return, though some companies offer more and some less).  By some process Kickfurther does not publicize, it is determined how much of the revenue, per widget, goes to Kickfurther and how much goes to the vendor.  That split determines the PSR--the percent sold for return.  Let's assume that for these widgets, there is a 70/30 KF/Vendor split.  For every $20 widget sold, Kickfurther gets $14 and Wanda gets $6.  That means that 786 widgets have to be sold to give Kickfurther their $11,000.  The PSR is about 79%.

How is a Kickfurther Payback Supposed to Work?

If things go the way they are supposed to, investors look at the offer and believe that it is in their best interest to invest, and do so.  The vendor then gets the money, pays for production or buys the inventory, and starts to sell it.  Once the lead time for production passes, the vendor starts repaying the investors.  The way it is supposed to work is that as the product sells, Kickfurther gets paid.  In the case of our widgets, if Wanda has sold 300 widgets when the first payment comes due, she is suppposed to pay Kickfurther $4,200 (300X$20X70%).  If she only sold 100, she only owes $1400.  Wanda is supposed to pay monthly until she has sold enoough to repay Kickfurther completely.  Obviously, the lower the PSR, the more room Wanda has to discount the product, offer samples or otherwise sell for less than the originally figured price.

What if the Widgets Don't Sell?

What if six months has come and gone and Wanda has only sold 200 widgets?  At that point the investors can vote (on a dollar weighted basis) to either let Wanda continue to sell the widgets, or to end the contract.  If they decide to end the contract, Kickfurther gives Wanda the option of purchasing the remaining inventory for enought to make the investors whole, or of turning the inventory over to Kickfurther, which will then attempt to sell the widgets.  

How Has This Played Out in Real Life?

Kickfurther is a relatively new platform that is learning while it is growing.  Originally vendors were pretty much on the honor system as far repaying backers.  Most who have repaid their backers have done so in a linear fashion--dividing the total amount due by the number of projected payments and paying that amount monthly, or until they wanted to do another offer.  There have been a number of companies who have not paid anything or who have paid so little that it seems hard to believe the sales did not require a larger payment (and in some cases the vendors have admitted to having sales but using the revenue for other expenses).  Kickfurther has said they have tightend up their contracts and, for new offers, will require reporting on inventory sold.  Suffice to say there have been times when backers should have been repaid more quickly, and I suspect some where they were paid with the vendor's money, just to stay on track.

Is Kickfurther Really a Consignment Sales Platform?

Honestly, at this point, I don't think so.  If Kickfurther really wants to enforce the consignment sale contract they need to 

• Assure that money raised goes to purchase inventory.  There was an offer up this week from a swimwear company that said in the offer that part of the money raised would go to advertising, not inventory.  
• Integrate into the vendors' sale system and automatically transfer KF's share of the revenue away from the company as payment is received.  Otherwise you are asking investors to make a decison on the credit-worthiness of the company as opposed to the saleability of the merchandise.  

As things stand now, vendors are on the honor system as far as paybacks go.  They have no incentive to stick to the contract if sales are better than expected and every incentive to not use other money to pay off the offer if sales are worse than expected.

  Also, getting action from Kickfurthe requires at 50% vote of the investors.  I have one co-op that is over 140 days late with their first payment and KF has done nothing because 50% of the investors have not voted "no-confidence".  I don't have a problem with the "no confidence" vote if a vendor is selling, paying and way behind schedule.  At that point it becomes a decison for investors: Do you think KF will do a better job of selling this merchandise than what the vendor is?  If you think KF will, then vote "No confidence".  However, when a company is clearly in breach of contract (or even apparently in breach of contract if they have all that merchandise and have been unable to sell it) then KF needs to step in legally while the business and/or its owners can still be found. 

In another case, the company was sold and the new company has refused to pay.  The "no confidence" vote is under 50% .  In that case KF did step in despite the lack of vote, and sued the new company.

I still think the concept of Kickfurther is good; the question is whether the contracts can be designed to be enforceable and whether the offered rates are sufficient to offer a profit to investors.  If you think you'd like to invest via Kickfurther, use this link and you'll get $5.00 towards your first co-op.  

Kickfurther Merchant of the Week: Noodle Mon

Today I have the pleasure of interviewing Susan Laudwig, one of the founders of Noodle Mon, a company that had inventory funded by Kickfurther.

As my regular readers know, Kickfurther allows ordinary investors to help companies that sell tangible products buy those products.  Instead of the investors lending money to the companies, the investors purchase the inventory and then return it to the company to sell on consignment.  As the inventory sells, the companies re-pay the investors, with a profit to the investors.  If the products sell more quickly than anticipated, the investors are supposed to be paid more quickly than anticipated.  If the products take longer to manufacture than planned, or if they do not sell as quickly as planned, the companies are only obligated to repay the investors for the products sold, and the investors do not receive additional compensation for the additional time.

Q:  Can you tell us a little bit about yourself and your company.  Where are you located?  When did it start?

A:  Noodle Mon was started the in 2011 by Steve and Susan Laudwig, it is located in Osage Beach, Missouri @ the beautiful Lake of the Ozarks.  Steve had been in manufacturing for 30 years and had sold his company.  Susan Laudwig had been an entrepreneur for 15 years and had recently sold her marketing company.  They both had wanted to live at the lake and had wanted to start a business so that they could live full time at the lake.  Steve felt he could manufacture a better water toy than was offered on the market and Susan could provide the sales and marketing to take the product to the market so the CHILLraft was born!

The company was named Noodle Mon after an tale of a Jamaican Captain that was chartering a boat full of young & fun college kids boating to Party Cove.  A random guy had ended up on the boat ride back and was being overly obnoxious.  The girls had requested the Captain drop this guy off at the next dock as they wanted him removed from the boat.  However, the Captain, pulled the boat right over in the main channel and asked the guy to get off the boat, leaving him swimming.  As the boat pulled away, the young girls were upset that the Captain had just left him in the main channel.  The Captain said, "What?  I gave him a Noodle Mon.”

Q:  This picture shows kids standing on a CHILLraft.  Did the photographer get them just before they landed in the water or are these mats that stable?  How many people can use one raft at a time?

A:  Kids and some coordinated adults can run and stand on the CHILLraft all day long and it isn’t hard.  They hold over 1000 lbs so they can support a lot of weight.  These mats are stable in the water but if you are running down them, you are likely to eventually fall or jump in the water as they are in constant movement.

Q:  If a raft is used every weekend, but cared for properly, how long will it last?  What is proper care?

A:  The raft can last 5-7 years if taken care of properly.  The main thing is keeping it in the shade when not in use.  It has UV protection but the sun can dry out the foam over time.  Also, don't jump on the raft from a boat or dock.  You can run on it or step down onto it, but bigger kids and adults that jump from another object onto the center can risk ripping it.  However, the CHILLrafts come with lifetime repair and rips can be fixed.

Q:  Can you pull a CHILLraft behind a boat with a passenger on the raft?

A:  No.  CHILLrafts are not meant to be towed.  The inflatables work much better than foam for that.

Q:  Your website has a form potential customers can fill out and get information about dealers near them.  In general, can most people find a dealer near them? 

A:  We do not have dealers in all the states.  We are in 15 states but we do offer free shipping some of the year for those customers who do not have dealers close to them.

Q:  How did you first hear about Kickfurther and why did you choose to use them?

A: I found them via an internet search and they had good reviews.

Q: You are right on target, having paid back about 2/3 of the offer.  So far, what has been your impression of Kickfurther?  Do you think you will use them again?

A:  No, I will not be using them again as long as their payback plan is the same.  Also, they never set up my payback schedule correctly which made all my investors question us and why we weren’t providing that information.  I prefer just equal payments rather than paying as you sell your product as that can be an accounting nightmare since some units are sold at retail price and others sold wholesale.  Also, customer payment terms and what funds were used for what shipments just makes it difficult to pay the way Kickfurther wants us pay.

Q: Have you tried Kickfurther from the investor side?  Knowing what you know, would you recommend it to family and friends looking to invest money?  Why or why not?

A:  I have not tried it from an investor side.  I would recommend it to investors that are able to have riskier investments for decent returns.

Q:  Do you have a giveaway for us?

A:  We will offer two winners $40.00 coupons  from our sister company, The Water Soul Nautical Apparel Company.

Thank you!  That will allow them to buy some of these cute items;

You can learn more about Noodle Mon  and Watersoul on their website or by liking them on facebook.  You can also follow them on Twitter.

If you would like to help companies like Susan's, and possibly earn a profit for yourself, use this link and you get $5.00 toward your first investment. If you have a company that needs help purchasing inventory, use this link to learn about Kickfurther and whether it is for you.

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Kickfurther Merchant of the Week: Wild Mantle

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Today I'd like to welcome Avi Loren Fox to Racing Towards Retirement.  Avi is the founder of Wild Mantle, which got some financing from Kickfurther.  As my regular readers know, Kickfurther allows ordinary investors to finance inventory for businesses and earn a profit for doing so.  

Q:  Tell me a little about yourself--where are you from, where did you go to school and what did you expect to be doing at this point in your life?

A:  I was born and raised in Narberth, Pennsylvania, a small town just outside of Philadlephia on the Main Line. I was homeschooled from second to eighth grade, giving me an early dose of what it's like to be independent and have agency over my path in life. I then attended Lower Merion High School and went on to graduate from the Honor's Program at Temple University. Growing up, when I pictured my life, I don't remember picturing the "career" aspect of my life. Whenever I tried, I got a total blank. I realized in high school that perhaps the job I would have wasn't invented yet. In hindsight, this turned out to be true as I went on to start my own company and create a job for myself. But when I was younger visualizing my future and where I expected to be at this point (I turn 30 in October), I remember thinking more about the lifestyle I wanted to have and also what kind of woman I wanted to be. I had a lot of strong female role models growing up and I sort of took my favorite virtues and characteristics from each and decided that that was the woman I wanted to be. Although I'm a work in progress like anyone else, I very much am living into this woman that I visualized years ago. 

Q:  Give us a short conception and birth story about Wild Mantle

A few years ago, I made a hooded-scarf out of some beloved old cashmere and wool sweaters. It felt cozy and warm, and when I put it on, I felt a quiet sense of comfort and courage. When I wore it out into the world, people noticed, and they’d ask “What is that? I want one!” I heard the same thing from each person who tried it on: “it feels like a hug" and “I feel like a warrior.” I decided to call it the MANTLE, and before I knew it, I was making them for lots of other people. You see, the word MANTLE not only means a loose fitting hood or cloak, it also means your role or responsibility in the world. I decided I would design all my mantles to deliver a hug of coziness and courage. And in turn, the MANTLE would be an invitation to think about what mantles one carries and how they can step into more of an empowered role in their world. 

After demand exceeded my capacity to make the mantles in my hometown, I launched a Kickstarter campaign and raised nearly $40,000 to produce our flagship Alpaca Wild Mantle at a B-Corporation artisan knitting mill frozen in time in the Colorado Rockies. This past May, I launched a second Kickstarter and raised nearly $50,000 to produce our premier Summer Collection. Now, we are growing a community of women around the world who can relate to this idea of "taking up your mantle" and want to come together with other women over topics such as sustainability, empowerment and adventure. I host events for these women in the Philadelphia suburbs, and I'm excited to grow this in the future as we get bigger. 

Q:  Which of your products is your favorite, and why?

The Charcoal Alpaca is my favorite. It's the first color of alpaca we made during our first Kickstarter campaign. We are actually currently sold out because it is so popular (don't worry, we're making more for this fall and you can currently reserve yours via pre-order on our website!) and I love how it has become such a classic amongst our other newer styles. It's the one I wear pretty much every day in the winter; inside with the hood flipped down as a cowl and then outside with the hood up to help maintain my core warmth. 

Q:  As a woman entrepreneur do you believe you have run into any problems that your male counterparts have not?  Do you believe being a woman has given you a leg up on the guys in any way?  

We live in a time where women stepping up in the work force is not only encouraged, but also highlighted and celebrated. My parents raised me to believe I could be anything I wanted to be. For example, when I was a kid, I remember thinking about running for president when I grew up. It never occurred to me that I couldn't do it because I was a woman, it was more a thought like "I'm probably not going to run for president someday because being in the political system isn't the game I want to play....but if I did...what if I won? Wouldn't that be cool?" Entrepreneurship is the game I want to play, and I haven't, to date, run into any problems (that I know of) that my male counterparts have not. I have received support from organizations specifically targeted at women, and I do feel very supported by my community because I am a woman entrepreneur. 

Q:   I notice that you have done a lot of crowdfunding of your business via Kickstarter and Kickfurther.  Is there any reason  you have chosen this type of funding?

A:  Kickstarter was an obvious and fun way for me to get started, as it enabled me to test my idea among the community and only manufacture orders that were previously placed. It is an amazing way for a new entrepreneur to test their proof of concept, build a customer base, and also get through the inevitable first round of learning experiences that come with launching a new product. We've successfully completed two Kickstarters and one Kickfurther. I also received a loan from Kiva and the Tory Burch Foundation, both of which are paid back. 

Q:  Where did you first hear of Kickfurther, and why did you decide to use them?

A:  After I did my first Kickstarter successfully, I started getting emails from companies eager to help with the next phase of funding. Kickfurther caught my eye, and I decided to use them because the immediacy of the raise was advantageous to my timeline and I liked the idea that backers might turn into future customers, as they did on Kickstarter. 

Q:  You successfully finished your first Kickfurther campaign a month early, which I'm sure made your investors happy.  Are you planning to use Kickfuther again anytime soon?  Why or why not?

A:  Yes, I hope this made them happy! I am not planning on using Kickfurther again. While I really like the team and concept, the interest rates are really high and I'm currently switching to a line of credit. Additionally, I didn't find that the backers on Kickfurther translated into customers or helped at all with sales (as was the case on Kickstarter) so from a purely monetary standpoint Kickfurther no longer makes sense for me. 

Q:  Would you recommend Kickfurther to other business owners?  Why or why not?

A:  I would recommend Kickfurther to a business if their needs matched what the platform delivered. I've referred a few friends to date, actually. 

Q:  Have you tried Kickfurther from the investor side?  Why or why not?  Would you recommend it to friends or family who have money to invest?

A:  I am an investor on Kickfurther. When I decided to launch my campaign, I wanted to know what it was like to both sides. I would recommend it to friends and family with caution. Most of my investments have gone really well, but one person completely dropped off the planet and I'm still waiting to see how that will work out. It is probably the case that the money I'll make in the investments that went well will equal the money I will lose on the one that went bad. So in the end, although a good learning experience, it will probably not be a financially lucrative experience. 

Q:   Would you like to offer a giveaway? 

A:  Sure, how about we do a $20 gift certificate to my website?

I'd like to thank Avi for joining us today and for offering a $20 gift certificate.  You can visit Wild Mantle at their website, They are also on Instagram, facebook, Twitter, and Pinterest.  

 If you want to know more about Kickfurther, click the "Kickfurther" label under this post.  I've written extensively about Kickfurther and my experiences with it.  If you would like to invest with Kickfurther, use this link and you get $5.00 off your first investment.  If you have a business which needs money to purchase inventory, if you use my link, I get referral credit, and bloggers have to eat too!

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Kickfurther Merchant of the Week: Silikids

This week's Kickfurther Company of the Week is Silikids, which makes silicone kitchen ware.  I have the pleasure of interviewing the co-founder and CEO, Stacey Feeley.  For those who do not know, Kickfurther is an innovative source of financing for companies that need money to purchase inventory.  Kickfurther investors (people like me, and maybe you) crowdfund the inventory purchase and then return the inventory to the company, which sells it on consignment.  As the inventory sells, investors are repaid, with a profit.

Q:  Tell me a little bit about your company.  When did it start, where are you located?

A:  Silikids was formed in 2006 in Los Angeles, CA.  Its main offices are now located in Traverse City, MI.  Silikids is the first mom-founded brand focusing on children’s products made out of SILICONE. The company combines need-based innovation with the technological advantages of SILICONE, offering an alternative to plastic wares found in the kitchen. Silikids' designs are safe, modern and practical.  SILICONE products offer superior function, while being easy to use and clean.  The Silikids mission is to be the alternative to plastic, and to bridge the gap between great design and affordability so as to  improve the way we live! A win-win for all!

Q:  I notice on your website that your team is all women.  Did you all know each other before Silikids?  Do you think that the fact that Silikids is women-owned and women-operated makes a difference?

A:  Giuliana (also a co-founder) and I have known each for 16 years and were friends prior to forming Silikids.  Matt Dawes, VP of Sales joined our team last year and has been a great addition to a team of mostly women.  Being a women-owned business has proven to have its benefits and challenges and overall it just fell into place that the team members were mostly women.

Q:  So, why is plastic bad, and silicone good?  I notice that you are putting silicone tops and covers on glasses.  Is that really safe for kids?  If I don't  want to use glass, can I put your tops on plastic cups? 

A:  I believe there is a time and place for plastic, but not necessarily at the table.  Plastics contain toxic chemicals (such as BPA and BPS, which are endocrine disrupters that mimic estrogen-like hormones linked to heart disease, cancer, autism, diabetes and many more diseases) that can leach into the foods and liquids we consume.  They have the most adverse affects on young children whose bodies are still developing and have a harder time eliminating substances from their bodies.  While some plastic items are now BPA-free, the chemical used to replace BPA in those plastic items, known as BPS, has proven to be just as harmful.

There are also serious environmental impacts due to plastic use.  Americans alone throw away 35 billion plastic water bottles a year and only a small portion of those actually get recycled. Silicone has the benefits of being non-toxic and incredibly easy to clean.  It it does not harbor bacteria or mold, it’s hypo-allergenic and has an extremely high temperature resistance (meaning it won’t break down like plastics). It  does not fade or scratch, it is microwave safe, freezer safe and dishwasher safe.  It is also extremely durable and meant to last so that it can be reused over and over again.

For those parents who do not want to use plastic sippy cups or drinking cups, we have some items (such as our glass cups) that have a silicone sleeve with built in shock absorbers and silicone tops that are assembled onto a glass to give the glass inside added protection.   This is a great way to transition kids to a "big kid" cup.  We have also released an all silicone (minus the glass) sippy cup and cup set as well.

Q:  Your website says you will recycle your products once a consumer is finished with them.  How long can I expect your products, for example your universal straw tops, to last in normal usage?  Also, can I put them in the dishwasher?  

A:  All items are dishwasher safe. If you find you have outgrown one of the Silikids items and would like to recycle it we can do that for you.  Most recycling facilities are not set up to recycle silicone; however we work alongside specific recycling facilities that can. Our Siliskin Tops (if used properly) should last forever. We have since gone through a few versions to improve durability and strength.

Q:  How did you first hear about Kickfurther, and why did you decide to use them?

A Kickfurther team member reached out to us last year.  The platform seemed like a great way to help finance inventory needs that were backed by PO’s.  The steps were pretty simple and we could set our own terms which was very unique.

Q:   So far, do you think it was a good choice?  Would you recommend it to other businesses?  Why or why not?

A:  Yes, it was a great choice for us and I would recommend it as a great tool for PO / inventory financing. 

Q:  From the viewpoint of a business, do you see any downside to Kickfurther financing vs more conventional methods?

A:  The difference (not necessarily a downside) is that you have to keep the backers up-to-date and build out a campaign.  Pretty easy to do!

Q:  Have you considered, or do you use Kickfurther from the investor side?  Would you recommend that friends invest via Kickfurther?

A:  From an investor standpoint, it's a much better return than what you’d see in a savings account etc.

Q:  With companies like yours it surely is, you've paid promptly.  So, I  understand you are sponsoring a giveaway.  What products do you have for our winner?

A:  We can do a giveaway for the following:

2pk Siliskin Cups
Siliskin Straw Tops
Siliskin 6pk of Reusable Silicone Straws
Siliskin Snack Bags

Q:  I'd like to thank Stacey for being with us today.  You can learn more about Silikids on their website.  You can check out their facebook page or follow them on Twitter or Instagram.  If you want to invest and support a company like Silikids, use my link and you get $5.00 toward your first investment.  If you have a company that needs money to purchase inventory, use my link and I get referral credit.  Good luck to everyone with the giveaway!

Entry-Form

Some Kickfurther Statistics

My regular readers know that I invest via Kickfurther, an online platform that crowdfunds inventory for businesses.  The way it is supposed to work is that a company makes an offer on the platform for a certain return over a certain length of time for use of the investor's money to buy inventory.  In theory anyway, the investors buy the inventory and then give it to the vendor to sell, and once it is sold, the vendor repays the investors, plus gives them their profit.

I have been pretty active on Kickfuther for over a year now and tonight I sat down and crunched some numbers on the platform.  I may have missed a couple or otherwise not have this completely accurate but hopefully this information is worth more than what you paid to read this blog.

Since its inception, Kickfurther has funded 353 offers.  Of those, 69 were paid back before they were due, 41 paid out in equal scheduled installments over the length of the agreement, 22 were late repaying investors and 21 contracts have been cancelled for non-payment.  That means almost 6% of the contracts on Kickfurther have been cancelled.

Kickfuther contracts are written with differing amounts of lead time, depending on the business. Since these are consignment sale agreements, the company needs time to acquire the merchandise and sell it before Kickfurther gets paid.  Of the 353 contracts ever signed, 98 of them are too new to have a payment due.  42 companies are paying timely, four started paying before the contact called for them to do so and are ahead, 26 are behind where they should be but are paying regularly.  6 started making payments but have stopped along the way and 8 should have made payments but have not done so.

What about the cancelled contracts?  Kickfuther refunded invesor's money on seven offers.  Kickfurther has the inventory from three companies and is trying to liquidate it.  On the other contracts they are negotiating, filing lawsuits and engaging in other collections activities.  However, it does not appear that the merchandise was there for Kickfuther to seize.  Hopefully the recent change to the "pack" system will make it easier for Kickfurther to track the merchandise and to make sure its investors get paid promptly.

If you would like to invest via Kickfuther, use my link and you get a $5.00 bonus and I'm eligible for prizes. If you have a business and are looking for financing, use this link and I get something

Portfolio Update July 1

Wow, half the year has gone.  It is time to take a look at our investment portfolio, analyze it and decide if any changes are needed.

Vanguard:

We have Roth IRAs invested in Vanguard's S&P 500 index fund, plus regular IRAs and a taxable account that we tranferred to Vanguard from a financial advisor.  The advisor had us in a large number of mutual funds, and the cost to sell each one is $20 per account; therefore we have not been in a hurry to sell them.  We did move out of the worst performing ones late last year and we just analyzed what was left. We have several funds that are significantly underperforming their associated index and if that continues at the end of the year, they will be on the chopping block.  After anaylzing everything we did decide we were overexposed in US stocks and so we sold some of our S&P 500  fund and bought Vanguard's index funds for international bonds and for international stocks.  Overall, these accounts are up 5.23% this year. 

One of the things a lot of people track is the income generated by their portfolio.  So far this year, this portfolio has generated $2788 in dividends and capital gains.  I expect that amount to rise as we have increased the bond percentage in our portfolio from about 25% to about 30%.  My husband is 60 and I am 55; we are getting to the point that we need more stability and income in our portofolio.

My 401(k):

My 401K was invested 25% in MFS Agressive Growth Allocation Fund A, 25% in Franklin Total Return Fund A and 25% in Janus Triton, with 12.5% each in MFS Growth Fund-A and Delaware US Growth Fund A.  For the first six months of the year, the YDT performance was 1.77% which is lower than my other investments.  

I decided to re-allocate and now I have 38% MFS Government Securities Fund A, 20% Janus Triton, 19% Oppenheimer International Small Mid Co A, 11% Delaware US Growth Fund A and 12% Pioneer Fundamental Growth Fund A

For the first six months of the year, my dividends, capital gains and other earnings (as opposed to increases in share value) totalled $1,647.85.  I expect that to increase in the next six months due to the increased bond holdings.

Motif Investing:

This was a toy for me to play with.  Motif Investing allows you to invest in up to 30 different companies at one time, for one fee.  You can either assemble your own group (Motif) or buy one of theirs.  Once you own the stocks, you can sell them one at a time, or you can sell the whole motif for only one fee.  The motif I developed isn't doing very well--my $1000 is down to $960, though I have collected some dividends.  Overall, I invested $7,000.  My portfolio is worth $7223.69 and over the last few months I have transferred $320 in dividend income to Loyal3.  So far in 2016, I have earned $105.31 in dividends at Motif, for a yearly yield of about 3%.  If you want to invest via Motif, use this link and we both get $100.

Loyal3:

I started investing with Loyal3 as an incentive to bring lunch from home rather than to buy it from the lunch counter in my building.  I got tired of that, but have used the account as a place to invest the dividends I got from Motif.  Through Loyal3, which is a no-fee stockbroker, I own stock in AMC Theaters, Alibaba, Disney, Hershey, Intel, Kohls, Target, TimeWarner, Unilever and VF Corp.  So far, I've broken even; AMC, Hershey, Intel and Unilever are up, the others are down.  My $630 investment has garnered me $5.91 in dividends for an annual yield of about 2%.

Prosper:

So far this year we added $300 in new money to this account and we transferred $550 from Kickfurther to Prosper.  Our XIRR return on this account is 11.48%. Prosper shows my seasoned returns to be $12.85%.

Lending Club:

I'm not liking all the things I've been reading about the corporate troubles Lending Club has so I haven't wanted to invest more money with them.  I haven't pulled any out, but I'm thinking about it.  Right now my account value is $19,791.89 and my adjusted account value (Lending Club computes a hypothetical value based on the number of late notes and how late they are) of $19,173.84.  The increase is only $313 so far this year.

Kickfurther:  

Kickfurther says my profit since the inception of the accout is $382.17.  However, they have yet to subtract anything from that for bad debts.  They paid me for the first four bad deals I had, in the amount of about $175.  Right now I have about $260 in deals that aren't paying.  Some I think have some recovery potential--KF has indicated that it has the inventory and I personally think the inventory will sell at some price (bamboo kitchen drawer organizers and silk comforters); the others I suspect won't give us much if anything, but hopefully I'm wrong.  Bottom line, for in investment of about $2500 made in dribs and drabs, mostly from June-Dec 2015, there is a real possibility that the value of the investment is a $20-50 loss, if you consider the $175 that KF refunded me to be a loss, along with my predicted loss from the deals I have that aren't paying.  The real questioin is how much value can KF get out of the bad deals; and at this time we haven't seen evidence they can get any.  However, they have a legal team working on it now. I think Kickfurther has potential; I'm just not sure the pricing is right on it.  If you want to try it, use my link and you get $5.00 toward your first investment.  

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and One More Broke Twenty-Something* http://diseasecalleddebt.com/extreme-saving-no-new-clothes/ 1. How We Avoided Buying New Clothes for a Whole Year http://brokegirlrich.com/the-little-costs-of-friendship/ 2. The Little Costs of Friendship http://familymoneyplan.com/interview-brokegirlrich/ 3. Behind the Screen Interview #7

Kickfurther Is Changing

Over the last year or so I've written a lot about Kickfurther, a relatively new investment platform through which investors help businesses by providing money for inventory purchases.  The Kickfurther concept has always been that investors were not lending money to the businesses but rather were purchasing the inventory, and then giving it to the businesses to sell on consignment.  The advantage to the business of this arrangment over a loan is that if things do not go as planned--if production is delayed or if sales are slow--money is not owed to the investors until sales actually happen, and interest costs do not increase.  The contracts call for a set amount of interest and an estimated payback time.  The advantage to investors over a platform like Lending Club is that we have a security interest in the inventory and that if it does not sell, we can reposses it.

How Kickfurther Used to Work

As investors we are not privy to the exact contracts between the businesses and Kickfurther.  However, from the investor perspective, once a business was vetted by Kickfurther, an offer was put on the website showing that XYZ business was raising $XXXX to purchase whatever they were buying.  It gave the interest rate and the payback schedule, with the schedule assuming linear payback.  Users would review these offers and purchase pieces of the ones they wanted (if they were quick enough--more demand than supply has been an issue on the site for some time).  Investors could invest as little as $20 or as much as 10% of the offer (and could buy more later if it didn't sell out).  When the business began payback, all investors shared equally in a pro-rata fashion.  

Problems with Kickfurther

My understanding of the consignment sale contract concept was that we as investors had relatively little concern about the overall viability of the business.  We weren't worried about whether they could pay the electric bill because we were supposed to be the first ones paid when a sale was made, and if the merchandise didn't sell, we (Kickfurther on our behalf) could reclaim it.  Since the merchandise did not belong to the business, I did not see it as an asset other creditors could seize.  

Unfortunately, I found out that Kickfurther did not actively monitor sales of the consigned goods and counted on self-reporting by the businesses.  Deals went bad--payments were not made--and I began to seriously wonder if investors really had any security.  One business posted on the Kickfurther message board for his offer (board is open to investors on that offer only) that he had sold over 20% of his inventory, but had paid us nothing because he needed the money to pay his salary.  Clearly there were problems.  

That same business owner complained that he had been promised that the investors would help market his product, and that had not happened.  I went and reviewed the agreement I clicked through when starting to invest (you know, the long one full of big words in small type that you have to agree to in order to do anything online, the one that I'm sure few people actually read) and sure enough, it said that investors would help market the products.  

Kickfurther appears to have started in late 2014 or early 2015.  By the summer of 2015 new offers were posting almost daily.  By the end of 2015 the first cases of obvious non-payment had occurred.  Kickfurther paid the investors off for some of these and I have not heard whether they were successful in recovering any of the inventory.  Since the beginning of 2015 there have been several offers where sales have been slow and the investors have not been paid.  There have been several others where it appears that either there were sales, but that the money was not paid to Kickfurther or that fraud was committed and the goods never manufactured.  Kickfurther brought aboard a legal team to standardize the way they dealt with non-paying offers and to shore up their contracts.

What Has Changed

Most of the recent changes seem directed toward firming up the consignment concept and the idea of the investors being participants in the business.  The consigned goods are now offered as a "package", such that each investor is buying a certain number of the consigned things.  In other words, if the offer is for red widgets, blue widget and green widgets, each "package" contains a red widget, a blue widget and a green widget.  If the widgets are expensive, then the package price is high--I've seen some over $1,000.  If the widgets are inexpensive, so are the packages.

For someone like me who prefers to invest a little money in a lot of projects, this concept has made me reconsider my investment strategy.  The question is how many offers will have inexpensive packages, and how many will have expensive ones.  When Kickfurther first changed, it seemed that all of the packages were over $100.  Right now there are three live offers; one is over $200 per package, the other two are  under $30.  There are three preview offers as I write.  One is over $200, one is over $100 and one is under $100.

The Kickfurther Store has long been a part of the site and investors are given a 5% commission on any sales.  Kickfurther has further sweetened that pot by saying that the inventory we sell in our Kickfurther store is first considered to be part of the inventory we bought, such that the profit from it pays us back.  If I invested in that pack of widgets and 50% of the cost of the widget was to go to repay backers, then if I sell a widget in my store, I not only get the 5% commission, I also get the 50% of the cost credited toward repayment on that deal.  Also, recently users had to verify some personal information and we had to acknowlege that we were expected to help market the products in which we invest.  Right now my Kickfurther store has some organic skin care products, some healthy snacks and some tools, but it looks like only the skin care sticks are available for purchase at  this moment.

Kickfurther is trying to strengthen the consignment concept with vendors as well.  They are expected to report sales monthly and to pay back as sales are made.  Some use Shopify which automatically reports sales.  It should be interesting to see how it all shakes out in the end.

Conclusion

Kickfurther is still working out the kinks and going through growing pains.  I think strengthening the consignment concept is a good idea, though I wish they would break these large orders into multiple packages to get the cost per package closer to $20.  In other words, to use my widget example, rather than offering packages of red, green, blue and yellow widgets for $100, I wish they would offer, as part of the same consignment offer, red widgets for $25, green widgets for $25 etc.  I think requiring accurate reporting of sales will help investors by providing more early paybacks and by letting us know that product didn't sell well, in case the vendor wants to do another offer.  

If you think that investing with Kickfurther is a good idea, use my link and  you get $5.00 toward your first offer.  If you have a business that needs money, use this link and I get a commission.  If you want organic skincare sticks, shop my Kickfurther store.

Kickfurther: An Update and Some Suggestions

If you read this blog regularly, you know that I have been investing through Kickfurther, a platform that funds inventory for businesses.  The theory is that Kickfurther, on behalf of investors, purchases the financed inventory and gives it to the business to sell on consignment.  Investors get a rate of return that is determined when the offer is made.  Hypothetically, businesses pay back as inventory sells.  If the inventory sells more quickly than expected, investors nominal rate of return remains the same, but the length of time the money is invested is decreased, raising the real return.  Conversely, if there is a production hold-up or if the product doesn't sell as quickly as expected (or much at all) the company does not pay more interest, even though they have the investors' money for a longer period of time.  If the business is unable to sell the merchandise, Kickfurther can repossess it and sell it so that investors get at least some of their money back. That's the theory.  Kickfurther has been in operation for a little over a year now and I've been investing for most of that time.  Kickfurther has been interesting to watch, and being an investor has given me a reason to interview some of the businesses which has given me readers for this blog.  However, at this time, I can't recommend Kickfurther as an investment, though if you have some money you want to play with, I think the possibility is there for good returns.  

Problems with Kickfurther

No standard rates of return.  Kickfurther has chosen not to set standard rates of return, choosing instead to let the market do so.  A couple of months ago, the rates seemed to be set at "lower than the competition" and offers were filling within seconds.  Clearly, investors believed those offers were good investments, and just as clearly, businesses realized they could lower the return a bit and still fill.  Then, about the same time, the size of the offers began to increase as larger companies came on board, and the offered rates dropped.  Offers went unfilled, and then the offered rates started to climb again.  Then Kickfurther substantially increased the length of time offers were up on the platform before funding (or not).  This increased the amount of time investor's money was tied up in offers. As of this writing there are nine open offers on the site, with returns of more than 1% per month and less than 2% per month.  However, the offered rates seem to have nothing to do with my perception of the risk involved in the offers.  They almost seem to be "Let's run it up the flagpole and see if anyone salutes".    In my opinion, if Kickfurther wants to go mainstream and be more than a toy for those of us who like to play with our money, they need some sort of standardized rating system to make it easier for investors to compare Company A with Company B.  They also need to standardize return rates so that if Company A and Company B are about the same, they pay the same per month; if Company A is riskier, they pay more.  The rates should be backtested with the data Kickfurther has now such that someone who invested in the platform as a whole would make a reasonable (say 5-8% annualized) return after defaults.  The great unknown with Kickfurther is the average value they are able to get out of failed offers.  However, logically speaking, if a widget company can't sell widgets, what makes it likely that KF will be able to do so?  At this point, had Kickfurther not refunded my money on failed offers, I would have just broken even--and I have a couple more offers that are looking iffy right now.  Prosper tried letting investors set the rate of return and they basically bid the notes down to a point that the average investor did not make money, after accounting for defaults.  I think that if Kickfurther does not adopt standard rates, which on average will make money for the investors, investors will end up leaving, which means businesses will not be funded, which means Kickfurther will fail.

No enforcement of consignment sales concept.  Kickfuther says they are working on it, but at this time, Kickfurther has no way of monitoring sales for some of the companies.  They can monitor those who use Shopify.  If you look at the payback charts from most offers, vendors are making equal monthly payments, like a loan.  As long as they do that, investors have no reason to complain--or do we?  At least hypothetically the widgets are ours.  If the business fails, we can repossess them, and since they are ours, they are not the property of the business and can't be seized to pay other debts.  Each Kickfurther offer is subject to a revenue split.  For each sale a certain amount (but not the total price) is supposed to be paid to Kickfurther.  Some businesses have openly admitted to making sales and not sending Kickfurther its share, probably betting that enforcement of the contract would be more expensive than it is worth.  Kickfurther has recently added an attorney to its staff, and now files UCC-1 forms on all inventory.  If Kickfurther is not able to enforce the consignment agreement, then we are basically making unsecured loans to businesses which is a risky business.

No (or at least rather untested) procedures for handling defaults.  This is related to the previous issue.  Kickfurther's basic procedure when an offer is late making payments or doesn't make big enough payments is to let the investors vote on when it is time to escalate.  Once a majority of the investors vote "no confidence" Kickfurther proceeds with a demand letter and repossession.  This means that companies that talk a good line can get extra time before there is any escalation, and that investors who want to be very pro-active in dealing with slow payers usually are unhappy.  For one thing, at least at this time, given the lack of tracking of inventory sales, there is no differentiation between those who are selling and not paying and those who aren't selling. One of my offers is cloth diapers.  They  have run into manufacturing delays and therefore have not sold (or even tried to sell) the diapers.  That's the risk I accepted when I invested on this platform.  Another offer is some bicycle lights.  The owner admits to selling 15% of the lights, without paying backers anything, because he needed the money to run the business.  As far as I'm concerned, he is in breach of the contract and his contract should be cancelled immediately and the inventory repossessed.  If Kickfurther doesn't show that they are willing and able to enforce their contracts, they are going to fail.

My Kickfurther Results

Money Invested

So far, I've invested in 104 Kickfurther offers.  My basic investment is $50, though I will invest more on second offers by a company or if something particularly appeals to me in an offer.  The total amount I've invested via Kickfurther is $2,691.67 and I've put $5518.69 toward claims (as one offer pays off, I reinvest the money in another). 

Cancelled Offers

Of those 104 offers, eleven were cancelled before they got started, generally because they didn't attract sufficient investment.  Four failed (one paid back about half what was owed, the others hadn't paid anything) and Kickfurther refunded investors' money so we had no gain or loss.  I still haven't heard what Kickfurther's final results with those offers were.  I've heard one company turned over the inventory, but I haven't heard whether Kickfurther was able to get anything for it.  I have not heard about the others. Kickfurther paid off those offers as part of their "learning process"; I do not expect that to happen on future failed offers. 

Troubled Offers

There are are various amounts of time allowed at the beginning of offers to allow for manufacturing and transportation during which no payment is due, since the payments are supposedly related to the sale of merchandise. Twenty-seven of my offers are currently in the payback stage, meaning that payments are or have been due.  Of those twenty-seven, eleven are behind schedule.  Now, that number is a little skewed because offers the same age as some of those have already paid back--the ones that stick around for a long time are ones that are trouble.  Because it is not in my best interest to badmouth those companies, I am not going to name them here, but I will describe them and the current status of their offers.  

Bedding:  The company is running into sales trouble and has paid back about 20% of the offer.  I believe that the unsold comforters are still in inventory and that we may eventually be made whole, but the return will not be good.

Kitchen Drawer Accessories:  First, the company claimed manufacturing delays.  Then poor sales.  Now, the owner is trying to sell the company.  About 20% of the offer has been repaid and unless the company sells, I don't think we'll see our money.

Cloth Diapers:  They ran into manufacturing delays and problems.  They are supposed to be making their final payment soon; instead they haven't made any.  Hopefully the diapers will sell once they are done.

Clothing:  They were supposed to pay out over five months; now it has been seven and only about half the money has been repaid.  They are making small payments but the inventory does not seem to be selling.

Bicycle Lights:  These were supposed to be paid out over eight months; we are now at month seven with no payments, even though the owner admits to selling 15% of our inventory (and based on what he said, I think he has sold 22% of it).  This is one of those cases where I think Kickfurther should step in; he is obviously violating the contract and they are doing nothing.

Maternity Clothes:  This store financed winter coats which did not sell as well as expected.  The owner is paying off the claim, but is behind schedule.  I think we'll get out money; it will just be late. 

Swimsuits:  Payback is behind schedule due to sales; owner says sales should pick up due to season and she will pay back in June.  

Swimsuits:  Six months into an eight month offer, only 17% has been paid back; owner promises better days ahead.

Athletic Shirts:  First two payments were fine; paid back 34% of the offer.  Company has been sold and new owner won't pay.  This is another one where I think Kickfurther needs to step in, whether or not the investors vote "no confidence".  

Athletic Mouthpieces:  They've paid back 40%.  First, they complained that Amazon changed terms on them and that's why they were late. Then they said they are in a slow season.  They say they will pay, or, failing that, turn in the inventory.  

Luxury Beauty Products:  First two payments were on time; 33% has been paid.  Two payments have been missed but they promise to pay in May.  Since they were supposed to be able to pay after selling 16% of the merchandise, I'm concerned.  

Finished Offers

I have 32 offers which have paid out.  My total profit is $195.15.  I ran all the numbers through the XIRR calculator and found that if you assume all my currently late offers will pay, my annualized return is about 18%. If you assume that none of them pay, it goes down to about 8%.  However, if you subtract the $175 Kickfurther paid me for the offers that went bad, I've barely broken even, and if I withdrew the money from Kickfurther, I'd be in the hole since they take a withdrawal fee.  

Conclusion:

I think Kickfurther's concept has promise but that as it is currently executed, the risks far outweigh the rewards.