Kickfurther review 2. Manufacturing profit and spend.

Kickfurther is a platform that lets companies seek funding from the Kickfurther community by offering a return on investment (such as 8% profit in 10 months, for example).  Technically, these offers aren’t loans.  When you invest in a Kickfurther offer, you are actually buying inventory that is then sold on consignment by the company seeking funds.  With Kickfurther, you will earn a profit with each offer that you fund as long as the “borrower” pays out as promised.  A nice perk for the points & miles crowd is that Kickfurther allows funding by credit card and, in my experience, it is never treated as a cash advance.  Regardless of how you fund these offers, Kickfurther charges a 1.5% fee to withdraw the paid back funds to your bank account.

Kickfurther Overview and Strategy

Kickfurther Review 2 Eat the BearYou can find my first Kickfurther review in the post “My half-baked Kickfurther Review.”  Please read that post for details about how Kickfurther funding works, along with details about my own Kickfurther funding strategy.  Here’s a quick summary of the strategy I previously described:

  • Set a maximum long term investment target
  • Invest in offers I believe in
  • Diversify
  • Wait for interim payments before investing more

Thanks to advice from a friend, I’ve altered this strategy a bit:

  • I now focus more heavily on near term payout offers (e.g. I prefer deals that schedule payout in less than 8 months)
  • Rather than picking offers based on whether or not I believe in the products, I’m picking offers based on the apparent ability of the company seeking funds to pay out as promised.

It’s too early to know whether this altered strategy will help, but I expect it will.

Kickfurther changes to “per Pack” investments

Kickfurther is a fairly new platform that has been actively changing (mostly for the better) as it matures.  One huge change that was made recently is that all consignment investments are now tied to specific “Packs”.  A Pack is a set of specific products that you, as the investor, buy on consignment.  Previously, you simply owned a percentage of the consignment inventory based on the amount you invested.  The following conditions result from this change:

  • You can no longer choose the exact amount of money you want to invest. Instead, you pick the number of Packs you want to invest in.  For example, if one company offered Packs of products for $100 each, then 10 packs would equal a $1000 investment.  In that example, it would be impossible to invest less than $100 in that offer.
  • You can earn additional profit and get your investment back more quickly by selling these products through your personalized Kickfurther store.
  • You can choose to have your Packs shipped to you If an offer is canceled (which can happen when the product company fails to pay out through Kickfurther).  You will have to pay shipping and handling.

Further details about these changes can be found in this Kickfurther blog post.

Manufacturing spend with Kickfurther

Since Kickfurther investments can be funded by credit card, Kickfurther can be a mechanism for both profit and manufacturing spend (i.e. running up credit card spend for the rewards while getting your money back – eventually).  Keep in mind the following caveats:

  • You have to be able to float the investment long term.  Most offer terms are 6 months long or longer.  Partial payouts start much sooner, but it can be many months before you earn back your full investment plus profit.
  • There is real financial risk.  The products you invest in may have production issues, may fail to sell, etc.

Personally, I’ve been using Kickfurther to meet minimum spend requirements when I sign up for great credit card offers, to increase spend for big spend bonuses, and to earn category bonus points.  My financial results to-date can be found below.  First, though, here are a few “gotchas” to consider if you decide to use Kickfurther for manufacturing spend:

  • Your credit card is not charged until an offer is fully funded.  This means that Kickfurther isn’t a great option for last minute spend.
  • Offers that are not fully funded get cancelled without ever charging your credit card.  I had a situation where I had funded an offer in order to complete minimum spend on a Marriott credit card.  I then put away the card thinking that I was done with it.  However, the offer was never fully funded, so my card wasn’t charged.  Fortunately, I figured this out in time and rushed to manufacture spend another way.
  • Kickfurther doesn’t show you which credit card was used with each offer.  I’ve learned the hard way that It’s a good idea to keep a spreadsheet that details every Kickfurther investment I make, including the credit card used for funding.
  • You can no longer pick an exact amount to charge to your credit card.  It used to be easy to invest an exact dollar amount.  If you needed $300 more spend on a card, it was easy to use Kickfurther to invest that exact amount.  Now that they’ve changed to Pack investments, though, all charges are a multiple of the Pack price.  While this isn’t a big deal for most purposes, it does eliminate the possibility of using Kickfurther to drain Visa/MasterCard/Amex gift cards.

My Kickfurther results to-date

Kickfurther review 2: Kickfurther Interim Results

Above is a picture showing my portfolio to-date.  The green solid line shows my cumulative payouts.  The green dotted line shows the expected payouts.  As you can see, the current expected payouts are slightly higher than actual payouts.  This means that some companies in my portfolio have missed payout dates or have paid less than expected.  The blue line shows cumulative profit.  Fortunately, the small gap between the solid green line and dotted green line appears to be smaller than my profit earned to-date.  In other words, if I’m reading this correctly, I am coming out ahead, but only just.

I’ve funded a total of 38 offers to-date.  Of those, 20 have had at least their first payouts due by now.  The following stats apply to those 20 investments:

  • 3 are complete (e.g. they fully paid both the original investment amount plus the promised profit %)
  • 15 are in-progress
  • 2 have been cancelled due to failure to pay
  • 8 (including the 2 cancelled investments) have paid less than expected to-date
  • 4 have paid more than expected to-date

The two that were cancelled represent less than 2% of my total cash investment.  And, both of the cancelled offers have already paid about a third of expected.  Theoretically we can recover more of the loss through seized products, but I’ll have to wait and see how that pans out.  In the meantime, I’m happy that I heavily diversified my investments.

The 8 investments that have paid less than expected to-date (including the 2 cancelled investments) make up 33% of my cash investments (not counting investments not yet due for payment).  I’m not too concerned though, since a number of these are seasonal businesses that are expected to have “lumpy” payouts.

The 4 investments that paid more than expected to-date make up 30% of my cash investments.  It appears that I bet well and invested more heavily in these companies than most others.

Wrap Up

To-date, I’ve done OK manufacturing spend with Kickfurther, but I haven’t made much of a profit.  Thanks to advice from a friend, though, I’ve altered my Kickfurther investment strategy towards shorter offers from more solid companies, and I think that decent profits are likely in the future.  I’ll write up a new Kickfurther update once I’ve given the latest strategy time to pan out.

If you’re interested in trying Kickfurther, you’ll get $5 to invest if you signup with my referral link.  Or, if you already use Kickfurther, feel free to post your referral link in the comments below (note: URLs within comments are often flagged as Spam so I can’t promise that your referral comment will show up).

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

More articles by Greg The Frequent Miler »

Pingbacks

Comments

  1. What recourse do you have for non-payment? Are you completely at the mercy of Kickfurther to collect? How do you dispute a payment with a business you lent to if you disagree on the payout amount? Have you had any experiences to report with their customer service? Do they even have customer service?
    Financing small businesses via credit card without any real knowledge of their assets, liabilities, inner workings or any information whatsoever on the management is a very risky proposition. And keep in mind you are funding this through a young startup which could go out of business at any time without any advance notification. And then how do you collect on your loans if Kickfurther goes bust?
    Anyone considering using this service should proceed with caution….

    • I hope that I did convey in this post and my previous post the risks involved.
      To answer your questions:

      Recourse for non-payment: Kickfurther is supposed to handle taking over the products we bought. I haven’t been involved in any that have reached that point yet, but at least one may be close to that happening, so I’ll learn better then what is involved.

      Recourse for partial payment is the same as for non-payment.

      Customer service: I’ve dealt with them a few times via email and have been happy with their service.

  2. I totally agree with an investment advisor on the Kickstarter type of business, it’s not an investment, more a gamble for the person putting money in. It’s great for the company receiving the money though. I’d rather put the money into Kiva so if I don’t get the money back, I still feel good.

  3. I agree with the 2 previous comments about Kickfuther, it is more of a gamble than an investment. I used this 5 times and have had multiple cancellations with not all payments received and another is behind on its payments. SO PROCEED WITH CAUTION when using Kickfurther.

  4. I used Kickfurther once last year and was pleased with the results, though I don’t plan to do it again any time soon, as I’m not very liquid right now. I think it’s a solid investment platform, though. If you’re really interested, then you may want to follow the Kickfurther subReddit to discuss various offers, strategies, etc.

  5. I started off a bit more conservatively than you Greg. Participated in 3 offers that, to date, have all maid early or on-time payments.

    PS. Have 7 keys saved up – what about you?

  6. There’s a lot of discussion on the Kickfurther subReddit at the moment (link already posted by brteacher). It’s definitely worth reading the subReddit before opening a Kickfurther account. Having said that, there’s a couple of Reddit users who are extremely vocal and very negative, so don’t believe everything.

    For the last week or so, it has been very difficult to invest in any of the more popular deals. They’re being funded in seconds and I just don’t have the computing power or internet speed to get in on them. Expect this to only get worse in the future. I’ve had doubts lately about whether I should keep my account, or pull my money out as each offer finishes. It’s a coin-toss at the moment. I have to say that the communication from the KF team is very good, even if they’re not so good at sorting out the bugs on the website.

    Anyway, if you’re considering joining after all that, I’d be very grateful if you could consider using my link. Thanks Greg for allowing the links!

    http://kickfurther.com/u/3yf8bzw29l

  7. Kickfurther/Kiva are not MS. It is gambling, pure and simple. I imagine you always win every time you gamble Greg. And you pay for it with your credit cards. The fact that you don’t put caveats on these methods makes me wonder if you get Kickbacks ala the Points Guy.

    VERY YMMV. Personally I’d avoid.

    • I agree. There are way too many red-flags that are happening on the KF platform. I request Greg not to promote this platform.

  8. I’m trying out KickFurther with the BrewJacket product: https://www.kickfurther.com/status/brewjacket-inc

    I can use and sell the rest if the campaign goes bust.
    As long as the pack price is under the $500 CC limit, you can order multiple packs one at a time, so I ordered 3 packs for a $1014 investment, and covering $1k of the $5k spend on a new card.
    As mentioned above KF funding isn’t actually tapped unless the campaign gets full funding, so here’s hoping! 🙂

Leave a Reply

Your email address will not be published. Required fields are marked *