One of the most significant hurdles that aspiring entrepreneurs face is related to finances. The traditional methods for raising seed money and startup capital are found by applying for small business loans, taking on silent partners and other substantial offers. These traditional sources of funds have inherent downsides, including strict qualifications and a lengthy timeline. Many would-be entrepreneurs have been unable to move forward with their business idea because of this major hurdle.
Kickstarter has changed the landscape for entrepreneurs through its crowdfunding platform. While many companies that have received initial funding from Kickstarter have achieved incredible levels of success, others are notable disasters. Coolest Cooler is one of the products that has been developed and brought to market with funds raised via Kickstarter, and it is also one of the most notable disasters.
Coolest Cooler seemed to fill a hole in the traditional cooler lineup. This advanced product included a built-in blender that was ideal for making mixed drinks while out and about. This innovative cooler was listed on Kickstarter in 2014, and it quickly raised more than $13 billion through crowdfunding. Only the Pebble Time smartwatch has raised more money throughout Kickstarter’s entire history. In December 2019, the company’s CEO, Ryan Grepper, released a statement saying that the company is closing its doors. This announcement means that many of its investors will experience a financial loss.
Specifically, the statement blames the new tariff on Chinese imports on the company’s collapse. This 25 percent tariff only applies to products sold in China, but the CEO states that it affected the company’s entire product line. Some of the company’s Kickstarter backers have already received a return on their investment, but approximately a third of its investors may never see the money that they were promised.
Some people who observed the company closely may have spotted signs of issues well before the company’s collapse. Consider that the cooler was placed on Amazon for sale before all backers received products that they were owed. In addition, only 40,000 out of approximately 60,000 individuals received coolers owed to them as of March 2018.
Prior to this, the company was involved in a case brought by the Oregon Department of Justice. This case settled in 2017. The settlement required the company to pay $20 to every individual who did not receive a cooler, and the payments are required to be made by 2020. Despite the settlement, it is unclear if a company that has run out of money will be able to follow through with the agreement.