Kickfurther Review

Kickfurther is a crowd funding platform. It is a platform that enables individuals to purchase inventory for small businesses. The best way to explain Kickfurther crowd funding platform is with a real life example.

As I walk you through a simple example, I have Kickfurther’s terminology in bold interlaced through the post instead of providing a dry glossary at the tail end. This will help you grasp their terminology easily.

Let us take a ride, shall we?

 

 

Kickfurther Introduction

Let’s say that Amy (brand) is in the business of selling hats. She is really good at it and through her hard work she has established her brand.

Given that Amy’s hats are very popular, suddenly Walmart approaches Amy and says that they would like to purchase 10,000 hats. Walmart places a purchase order with Amy.

Now Amy is a small timer. She only has enough money to purchase 100 hats at a time.

She needs someone to assist her with inventory purchase or to give her outside capital so that she can go purchase inventory to fulfill the Walmart order for 10,000 hats.

Amy can take the conventional route and approach a bank to borrow money or look at an alternative route, like Kickfurther, a crowd funding platform.

 

Kickfurther Co-Op

Amy chose not to go the conventional route and decides to give Kickfurther a try. She approaches Kickfurther and presents her case.

Kickfurther does their due diligence that includes but not limited to reviewing / verifying the purchase order from Walmart, and reviewing / verifying Amy’s supplier information.

If everything checks out fine, Amy signs over the entire payment from Walmart for the purchase order to Kickfurther. The Consignment opportunity (Co-Op) is announced on the Kickfurther platform.

Amy purchases hats from her supplier at $10 per piece. She is raising $10,000 through her Co-Op so that she has enough money to purchase 1,000 hats to fulfill the purchase order from Walmart.

Amy’s Co-Op is announced. Amy is offering a 10% profit margin. This means you could expect a profit of $1.10 for every dollar you contribute.

This is where you and I come in.

Kickfurther has more than 10,000 members (buyers). You and I would be considered buyers.

 

Not all of them are probably interested in Amy’s hats.

Perhaps 500 people are interested in Amy’s hats. Each of these 500 folks purchase inventory.

You can purchase inventory only in “product packs”. In this case, “2 hats” would be one “product pack”.  In this example, the package price is $20.

The minimum contribution required to participate in any Co-Op is $20.

Some buyers purchase one product pack (2 hats, $20), some 5 product packs (10 hats, $100), and this goes on until it all adds up to $10,000.

As soon as an inventory of 1,000 hats has been purchased, the Co-Op is fully funded. It is no longer open for any other buyer to get in.

 

Order Inventory

Once the Co-Op is fully funded, Kickfurther would purchase inventory from the supplier pointed to by Amy.

If Amy has already made a partial payment to her supplier, then Kickfurther may issue the funds to Amy to pay her supplier.

 

Inventory Shipped and Received

Amy’s Co-Op was funded, inventory order was placed. The supplier produces 1,000 hats and ships it out. Walmart receives the hats. Walmart is happy to receive the hats on time.

The purchase order from Walmart has been fulfilled.

 

Payment

As soon as payment is received from Walmart, Kickfurther distributes the funds and profits to the Kickfurther buyers who participated in Amy’s Co-Op.

When a Co-Op reaches this stage, it is considered to be completed.

Duration is the amount of time Amy (brand) estimates that she will require to produce and receive inventory, sell, and provide a full payout to complete the Co-Op.

If Amy says that she can complete the Co-Op in six months, and she executes to that timeline, you would get a 10% profit in six months.

That is pretty impressive.

 

Kickfurther Co-Op Risks

There is no business without risks. If the purchase order craps out for some reason, then Kickfurther would work towards liquidating the purchased inventory and return liquidated profits to the buyers.

In an absolute worst case scenario, you could lose all your money you put into a particular Co-Op.

 

Kickfurther Risk Mitigation

The key to risk mitigation here is to diversify your contributions across several Co-Ops.

Secondly, do your homework. Be cautious and contribute to brands that have demonstrated success in the past.

 

Kickfurther Fees

If you purchased 5 product packs (aka 10 hats), your total contribution is $100. Amy successfully completed her Co-Op. Money has been distributed. You receive $110 back.

If you choose to pull the $110 out of your account, Kickfurther charges 1.5% service fees.

You would pay $1.65 (1.5% of $110) in fees to Kickfurther. Your net profit would be $8.35 or 8.35% after all fees and expenses.

That is an impressive profit in a six month period.

 

Kickfurther Updates

As the Co-Op goes through its life cycle from Offer Closed, Order Placed, Inventory Shipped, Inventory Delivered, Complete, Kickfurther will keep you posted on progress and status by sending out updates.

In 2017, Kickfurther is moving to a model where it would only fund Co-ops that are 100% backed by purchase orders. This is an excellent move in the right direction.

 

Taxes

Kickfurther does not issue a 1099. They provide a detailed spreadsheet of your transactions.

I tried asking Kickfurther whether the returns should be considered short term capital gains or interest income.

They declined to comment and suggested that I should talk to my accountant.

 

Contribute with Credit Cards

If you have credit card debt, this is not an option for you. If you live within your means, use your credit card responsibly, and pay off your monthly balances in full, then consider funding your contributions at Kickfurther using your credit card.

I plan to use my credit card for funding my Kickfurther contributions. The simple reason being I get 2% cash back on all my purchases. Why would I want to lose free money?

 

Conclusion

If you are looking for a new income stream, Kickfurther is a viable option worth considering. I read a blurb about Kickfurther in Joe’s Retire By 40 blog where he was talking about his income streams for 2017.

I decided to probe further and this post came about. When I did my research, it certainly looked like an alternative income stream worth considering. I am always looking for ways to boost my online income and Kickfurther offers that opportunity.

I have signed up with Kickfurther and will keep you posted on my profits periodically. If you use my referral link to sign up, you will receive $5 from Kickfurther to fund your first inventory purchase.

 

What are you doing to increase your income streams in 2017? Would you consider Kickfurther?

 

 

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12 thoughts on “Kickfurther Review”

    1. Welcome back, Emily!

      I was on the phone with Kickfurther and they were very helpful and answered all my questions. However, with regards to taxes, they declined to comment. I don’t know whey they don’t issue a 1099. Regardless, I ‘m going to let my accountant sort this out 🙂 while I focus on better things.

      I think if you are cautious in choosing which Co-Ops you participate in, you could make decent profits. As I give it a spin, I will keep you posted.

      Thank you for sharing RAnn’s blog, it would interesting to read her posts on Kickfurther merchant profiles.

      –Michael

  1. Great over view. I’m pretty sure it’s interest income like P2P lending.
    I would start off slow with KickFurther. I invested in around 20 businesses so far and there are a lot of things that could go wrong. KickFurther improved the process this year so hopefully things will be better now. I’m seeing some late payments, but still hopeful to finish the deals.
    Thanks for the link! 😉

    1. Thank you, Joe! I think so too – logically it should fall under interest income. That is exactly what I plan on doing – putting small amount of money across different businesses. Funding of Co-Op gated by 100% purchase order backing is a great step forward which should help mitigate a lot of risk. You are very welcome 🙂

      –Michael

  2. Thanks for sharing about Kickfurther!!! This definitely looks super interesting and seems like a logical extension. Seems like it’s a bit like shark tank that we actually get to invest in. I’ll definitely be checking it out.

    1. Yes, indeed. As Kickfurther is improving their screening criteria and moving to a model where they fund inventory purchase only on Co-Ops that are backed by purchase orders, the risk of a Co-op failure would drop. It would be a win-win for everyone.

      –Michael

      1. Very interesting concept. I did the P2P lending when it first started. I don’t think they issued 1099 in the beginning either. I’ve been interested in real estate crowdfunding so this is also interesting. Will have to check it out.

        1. Thanks Andrew! The main advantage I see is that you can contribute a small amount of money to each Co-Op as spread your risk.

          –Michael

  3. Thanks for the details, Michael. The concept is very interesting. For my taste it seems a little complex. I think I’d really need to be interested in the goods and products in order to invest in any of the coops. But please do an update, I’m curious to see how the process works for you.

    1. You bring up a great point Mrs. Groovy. A lot of people contribute to co-ops only if they are interested in the product, which makes sense.

      In fact, Kickfurther allows you as a contributor to evangelize and sell the products that you contributed to and believe in.

      I do plan to write a follow up post on Kickfurther based on my experience.

      –Michael

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