Technology and smart solution entrepreneurs rule the world and excite people on daily basis with their forward-thinking approach and the promises for innovative products that can change the way we live. The FinTech sector has been rapidly growing with the support of traditional institutions like banks and modern ones like accelerators, incubators and, of course, crowdfunding platforms.
It was no surprise that Plastc caused such a buzz when they launched their crowdfunding campaign back in 2014. By promising to reinvent the way we make payments and to re-form the traditional concept of wallets, they have become the hottest topic in crowdfunding.
The idea behind the product promised the revolutionary credit card that has it all – Bluetooth connectivity, built-in touchscreen, password protection, wireless charging, the ability to hold multiple cards and many other cool traits that made the product seem like it was Leeloo’s favorite payment solution. From high promises and expectations to bankruptcy – sadly Plastc turned out to be another crowdfunding fiasco.
Recently the company announced their bankruptcy and saddened all people, who have believed in the product, made donations and were excitingly waiting to receive their rewards. Startups fail all the time, actually this is not the most shocking part of the story, but the fact that Plastc used the term bankruptcy is what makes this announcement so interesting.
It isn’t very common for startups in the Valley to announce bankruptcy for many reasons, two of which are very important – bankruptcy is expensive and most of the time there isn’t a need for assets to be re-organized as many startup companies have not many assets.
The risk of crowdfunding any type of idea is tremendous, but when we talk about tech products it is definitely much bigger. The reason behind the fall of Plastc was the inability to raise enough money after the successful crowdfunding campaign. The Series A funding of $3.5 million was unsuccessful. The second funding round of $6.75 million, which was almost certain, failed as well after the investors decided to back off even though they were presented with a working prototype.
The story of Plastc proves many key points that crowdfunders needs to take under consideration once they complete their campaigns – strong start doesn’t mean a strong finish. Running on the track of business innovation in such a challenging sector as FinTech requires not just keeping the pace stable, but also speeding up when you need so.
But often there are rocks on the track that can’t be jumped over. Failing to raise enough money after the initial investment was received proved that there were holes in the post-crowdfunding funding strategy.
Originally the pre-ordered cards were expected to be shipped in September 2015. The significant delay made many of the supporters question the success of the venture. And now the backers are left with the dreams of having such a revolutionary product as Plastc in their pockets, as no pre-orders will be fulfilled.