Ouch! Not entirely unexpected of course, there are many inexperienced people who try to get something going, and get experienced the hard way. I wonder sometimes if Kickstarter and Indiegogo are training a new breed of entrepreneur or con artists.<p>What I haven't seen too much of yet, but expect to, is something that is a cross between Quirky and Kickstarter where a company with product development expertise runs 'kickstarters' as essentially a way to schedule excess factory capacity. Given a couple of designers you could have them throw out ideas and if they get funded, then make those. A bit harder to forecast than the current process but it seems like an interesting way to monetize excess capacity.
A huge red flag for a crowdfunded project is any sort of new technology that needs to be developed before the project can be successful. Something that has never been done before might simply not be possible or might turn out to be impossible to resolve before everyone loses interest. The amount of money available makes no difference past a certain point.<p>These hard/impossible problems can sometimes be hidden inside other apparently easy problems. This is particularly true if there is a significant software component.