Tabletop creators are caught in a boom-and-bust crowdfunding cycle

Even before the outbreak of the COVID-19 pandemic, Wyrmwood Gaming’s YouTube series was calling Wyrm Lyfe, gave the internet a glimpse of how the wood processing company works. Fans could ride along as the company launched a record-breaking campaign for an affordable modular gaming table in 2020. They were also present when the growing company had work problems, internal conflicts and disagreements about how it should grow. But in recent months, a bigger problem has become apparent: that Wyrmwood, like so many other tabletop creators, feels trapped by the very tool that helped bring it to life – crowdfunding.

Wyrmwood’s recent Kickstarter campaign for a modular standing desk ended in disaster in October. The project required $3 million from backers to be fully funded, but the terms worried some consumers. The initial buy-in has been set at $3,000, nearly double the cost of the cheapest console in the range. The goal was to stabilize the company’s production pipeline by restricting demand only to well-heeled consumers, a demographic that had flocked for its past products. With a set number of desks to produce, it could easily keep its 200 US-based employees busy while encouraging Kickstarter backers to upgrade their purchases sometime later.

But while big donors quickly jumped in and the campaign surpassed $2.5 million in a matter of days, consumers on a budget (and international customers) simply couldn’t participate. Only a few days into the campaign, the ticker actually began to roll backwards. The project was eventually canceled on October 27, almost $800,000 short of its target.

You could see the team reacting to the situation in real time on YouTube. There was a tense cell phone call and some performative booze when they got serious in a boardroom. In another scene you could see Kickstarter’s newly anointed Director of Games on hand to oversee his company’s support for the high-profile campaign and sets out to find something to do. A case of champagne sat unopened on a conference table while management licked their wounds over pizza. Just by designing and photographing its patterns, Wyrmwood probably lost a sizable sum, and layoffs have been threatened as an option to cut costs for months. A purchase option for the desk was later added to the website as a pre-order.

Why does it have to be like this? Wyrmwood has been in business since 2015, but whenever it released a new product, it came back to Kickstarter at least four times a year, just like so many other companies in the board game and RPG industry. On a phone call to Wyrmwood’s marketing director, Bobby Downey, just days before the campaign’s launch, he explained why: The company felt there was simply nowhere else to go. It needed the capital at the favorable terms it offered through crowdfunding to advance its business.

“Kickstarter is great,” Downey said, “but, you know, instead of getting these bursts of cash, we want to put our more expensive stuff online — like our dice vaults, like our dice, like our rolling trays — and hopefully we’re going to be less messy and one.” work a little more like a normal company.

“We call it ‘the Kickstarter crack,'” Downey offered. “This is how we stay awake, right? [It’s] necessary, but we cannot stay there forever.”

William Michael Cunningham, founder of Creative investment research and author of The JOBS Act: Crowdfunding Guide for Small Businesses and Startups, notes that while crowdfunding is still relatively new on the global stage, it has earned its place in the market. But it was never intended to be the kind of addiction it’s become for companies in the tabletop space. The bottom line is that economic policy in the United States over the past 30 years has failed small businesses. And banks too.

“Remember, in the ’50s and ’60s, banks were where you went for any semblance of startup funding,” Cunningham, a University of Chicago-educated economist, said in a recent interview with Polygon. “A restaurant. A barber shop. Whatever. [Now] They are totally out of this business, especially the big banks.”

Consolidation has led to fewer banks overall, particularly community banks and savings and loan associations. The remaining banks are larger, with larger reserves and larger fish to fry.

“If trends continue linearly, by 2040 there will only be two banks left in the country,” Cunningham said. “This is a failure of banking policy. Everyone was caught in the 1980’s ‘greed is good’ Investment banks, good.’ The Goldman Sachs kind, Lehman Brothers kind – all without recognizing the social benefits that small, tiny mom and pop banks have offered to the community and the innovation economy.”

Cunningham says a bank should ride a white stallion to save a successful manufacturer like Wyrmwood todaybut they’re too busy looking for the next opportunity to sell Elon Musk most of the $44 billion he needs to buy Twitter.

“If they had any sense – which they don’t – they would step in and be the saviors here,” Cunningham said. “Come to the rescue for a local small business and stick it all over their ad. They won’t do it because they are selfish, greedy and only focused on short-term money. But they should.”

Another traditional source of local capital is the credit union, a hyper-local source of reinvestment for close-knit communities. But their numbers have dwindled, especially in the last 20 years, and many have closed their doors or been gobbled up by larger banks.

“Every single sector has been driven by this unreasonable profit maximization theory,” Cunningham said, “resulting in their inability to provide institutions like Wyrmwood Gaming with the support that they — I think we both agree — […] Assuming they are even properly run, this is the kind of organization that should be able to get financial support.”

But they can’t, and the situation is unlikely to change any time soon. Wyrmwood’s next option? venture capital. You can watch Wyrmwood co-founder Doug Costello bring the idea to life – where else? — in a video on YouTube. His other co-owners sound scared, and Cunningham says they really should be.

“The venture capital model doesn’t work [at this scale]’ Cunningham said, ‘because it’s too focused on making a profit. These guys want 100% return and all that crazy stuff.”

Either that, said Cunningham, or shark tank. Ironically, this is one of the last places Geek Chic, the iconic maker of nerdy furniture that went bankrupt in 2017, turned when faced with financial troubles.

So how can creators break their addiction to crowdfunding?

“You have to focus on building solid, high-quality products,” Cunningham said. Because here’s the other thing about crowdfunding: crowdfunding only works if you’re offering something you can’t get anywhere else, at any price.”

Once those products come to life, the company sells them year after year—connecting with your biggest fans in a direct and authentic way—rather than using the hype cycle for the next big inflow of ready cash. And unfortunately, a fast-growing company like Wyrmwood might need fewer than 200 employees to do it.

Crowdfunding is an extraordinary tool to breathe life into unique projects. This is why Kickstarter has spawned so many capable competitors, such as Gamefound and Backerkit – two platforms that originally emerged around providing crowdfunded products to backers. Tabletop and video games in particular have found a home in this economic niche, with developers making money on Kickstarter alone more than $1 billion in the gaming category since 2009. But especially in the last few years of the pandemic, looking at the latest board games or tabletop trinkets feels like hopping on a treadmill. Campaigns asking you to put your money down before the opportunity passes eventually end… only to be resumed almost immediately as long-running pre-orders on other platforms. It’s a cross-platform ouroboros of hype, constantly feeding on – and draining – consumer goodwill.

Turns out it’s a terrible way to run a business, too.