Raine scooters 'hibernated' with $500,000 of Kickstarter money spent

Raine, a Melbourne start-up, billed its electric scooter as 'the world's smartest, safest, and most exhilarating' and hit its crowdfunding goal in just 43 minutes in 2019. Two years on, in a business update in mid-2021, the company announced it was 'hibernating': a weekend cost increase of several hundreds of thousands of dollars from its overseas supply chain, it said, 'blows us out of the water on cost and supply', and production would stop until market conditions work.

The money is gone for the more than $500,000 in Kickstarter backers: co-founder Marc Alexander said their funds had been spent on designs, moulds, parts and samples, and 'with Kickstarter, people are genuinely backing the creation of a project with a reward that may come'. About $267,000 was refunded to customers who bought through the company's website, and investors in its recent equity crowdfunding round on Birchal will also get their money back — but Kickstarter backers were told there is no time frame for a relaunch that might deliver their scooters.

Backers' frustration centred on the timing: software developer Justin Taylor, who put in about $1,500, noted the company had told consumers scooters would start shipping this month, and 'a week later they said we are hibernating'. One backer spent the equivalent of two months' salary; another said he had sold his car relying on the scooter as his main transport. Backers came from Australia, Japan and the US.

The company kept taking confidence-building commitments — 'shipping starts this month' — one week before announcing it could not build at all.

Reward crowdfunding money was consumed by tooling and samples, leaving nothing to refund when the plan failed.

Website buyers and equity investors were made whole; only the Kickstarter backers, the original believers, were left with neither scooter nor refund.

Crowdfunding converts customers into unsecured funders of a manufacturing plan; when the bill rises, the platform's rules — not the backers' expectations — decide who eats the loss.

Raine says it plans to give Kickstarter backers their scooters if it relaunches, but could not provide a clear time frame. The Crowd Funding Institute of Australia used the case to warn that rewards-based crowdfunding is 'a risky way to go about buying things'.