Apr 21, 2016 | By Tess
At the beginning of March we wrote about the Gizmo 3D printer, a top-down DLP 3D printer which was being featured through an especially promising Indiegogo crowdfunding campaign. Sure enough, by the end of its campaign the new and innovative 3D printer has received nearly 140% of its initial goal of $95,000, and its inventor Kobus du Toit was prepping to fulfill all his backers’ rewards. In a statement released earlier today, however, Gizmo 3D announced that its timeline would be delayed because of an unexpected blocking of funds by PayPal.
The online payments company reportedly issued an email to the 3D printing startup after the close of its successful Indiegogo campaign, asking for verification and documentation of the funding they had received. After sending in the required documentation, however, which included a written explanation of inventory storage, ownership documentation, details on refund policy among other things, PayPal has decided to continue holding a collateral amount of $80,000 for an unspecified amount of time.
Gizmo 3D, which posted quite candidly about the ordeal, even included the email they received from PayPal on April 19th, indicating why they were withholding the funding. The email reads:
“During a recent review of your PayPal account, we determined that it was appropriate to apply a reserve to your account effective in 24 hours. A collateral amount of $80000.00 will be set aside from your current available balance. In addition, a rolling reserve will be set at 55% of the processed amount for each day, to be held for a 180 day rolling period.
For example, 55% of the payments you receive are held at the end of the first day and will be released 20/04/2016, 55% of your payments are held at the end of the second day and will be released on18/10/2016, and so on.
The decision regarding your reserve setting was based on our review of the level of risk associated with your account. We looked at several factors in determining that there is a high level of risk associated with your account including:
Delivery Timeframe - (Extended length of your delivery timeframe).
Overall processing volume – (There is a significant change in the level of payments your business is processing compared to your processing history).
High risk business model – (There has been a change in your business model or your business model is considered high risk due to one, or a combination of the following (list is not all inclusive) – how and when items or service are delivered, item or service being sold, inventory management).
We regularly review reserve levels and make adjustments when possible. You will be notified if your reserve settings are adjusted (increased or decreased) in the future.”
Kobus and Michelle du Toit
Of course, if you know anything about crowdfunding campaigns, none of the above declarations are very alarming, as the premise of the crowdfunding system entails receiving a large amount of funding (usually with not much existing beforehand), and delivering products with a delay after the funding is received. Additionally, and which worries Gizmo 3D Printers founder Kobus du Toit the most, the email has no indication of how to fix the reserve problem or even how long the funds will be held for.
As the statement by Gizmo 3D Printers explains, “We will be unable to deliver the much appreciated orders from our backers in time if we do not have the money to do so. Plus we run the risk of losing our patent for which $10,000 is due in a month’s time to keep it safe. Quite a devastating situation after working so hard for so long on building our good name and trust with our suppliers, distributors and the community which will also be affected by it.”
To get their funding back as soon as possible and to get to the bottom of the problem, Gizmo 3D Printers has filed an official dispute against PayPal with the Financial Ombudsman of Australia. As the statement explains, PayPal now has 21 days to reply to the case, until which time the 3D printer startup cannot do very much. Efforts were made to refund the Indiegogo backers and try to get the funding back through bank transfers, but this was unsuccessful, so now, all Kobus du Toit can do is wait for a decision to made regarding his dispute claim.
While for the moment there is not much information about what will happen with the funding, or when it will be made available for use by Gizmo 3D, the tricky situation has shed some light on an apparently quite regular problem for Indiegogo campaign launchers. As Gizmo 3D explains, PayPal reportedly often blocks crowdfunding campaign money, so it has requested that Indiegogo issue a disclaimer to its campaign starters letting them know that this is a potential risk. We’ll be sure to follow any developments of this story closely.
Posted in 3D Printer Company
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