Offtopic: When Crowdfunding Goes Bad - Jolla Tablets

The Jolla Tablet was pitched on fundraising website Indiegogo two times, raising over $2.5 million to over 21k backers.

The major premise of the product was it's new, but lightweight OS called Sailfish and a laptop with tech specs that met/exceeded similar iPad and Android offerings. The development team included mature, experienced industry executives and ex-Nokia engineers. Nokia sentiment drove interest, with many backers fondly recalling the company's heyday.

Common Startup Problems

Like many crowdfunded projects, Jolla had money issues, missed repeated delivery dates, stopped communicating with backers, but eventually shipped 121 models of 1st gen product (that many users reported problems with).

However, then the company declared itself incapable of future deliveries last month including thousands of pre-ordered devices.

The End Of The Company

In a blog post this week, the startup timidly announced it's closure plan:

  • Ship a few more tablets, another 540. This means Jolla ships ~660 of the ~9000 units they initially raised money for.
  • Refund the remaining pledge amount to backers.

You Must Apply for Refunds

Here's the shocking part: Buried in the post is the requirement to apply for a refund, else Jolla keeps the money as a 'donation':

Q: If I do not want a refund, and want to donate the money to the future of Jolla. What can I do?

A: We are very happy to receive this question, thanks for the support! If you are an Indiegogo backer, you will be asked to apply for a refund. By simply ignoring this you will be donating the funds to Jolla for its exclusive use.

Even worse, you don't get the full refund at one time, but have to wait up to twelve months:

"Due to the financial constraints this will happen in two parts: half of the refund will be done during Q1/2016, and the other half within a year, our financial situation permitting."

I am not a backer and have no financial interest in this product.

However, I thought this story is pretty sordid! It is also a good cautionary warning against 'investing' in startups and products that do not yet exist, even if they have an experienced development team. Beware!

What's the 'future' use of funds for a company that's going out of business?

Re: 'future use' - Parts of the project may still have market life and be resold.

Several of the duped backers claim the company never really intended to ship the tablet as a primary goal, but were looking instead for cheap capital to finish development of the Sailfish OS, a mobile OS designed to compete with iOS and Andriod in the mobile market.

Critics claim that Jolla has a marketable OS; they just need the right stars to align for developers and a device manufacturer to license it. Jolla retains all rights to that OS, even if no backers got hardware that runs it.