One of only four Zanos ever to make it to a Kickstarter backer / Mark Harris

Kickstarter tasked me, a freelance reporter, to find out why a highly funded crowdfunding campaign for a palm-sized drone flamed out in order to give backers the full story, and provide lessons for itself and others. My report follows. Kickstarter had an advance look, but wasn’t allowed to make changes. (Read this for the background on my commission, or skip to the very end of the article for a brief summary of my findings, some additional details and disclosures.)

In spring 2013, the Secretary of State for Wales at the time, David Jones, visited a young company at the Pembrokeshire Science and Technology Park. On a windswept campus at the western tip of the country, Jones heard Torquing Group’s enthusiastic managing director, Ivan Reedman, share a vision of Welsh-made autonomous robots for industry, commerce, and the military.

“Torquing Group’s work is an excellent example of a successful small business with their sights firmly set on growth and expansion,” enthused Jones later. The key to Torquing’s growth, Reedman believed, would be a cutting-edge consumer quadcopter developed from his experience working on a surveillance drone for a local defence contractor.

Eighteen months later, flush with an investment from another company at the technology park, Torquing Group launched a campaign on the crowdfunding website Kickstarter for a palm-sized drone called the Zano. The Zano would dispense with fiddly on-screen controls in favour of mimicking gestures from a Wi-Fi linked smartphone, automatically tracking and following its operator, avoiding obstacles, and even shooting “selfie” photos and videos — for up to 15 minutes at a time.

Reedman’s goal was modest: £125,000 (about $190,000 at the time) to enable him to move his Zano prototype into full production. “Zano is up and flying, holding position, avoiding obstacles, streaming live video back to a smart device, capturing video and photos,” said the Kickstarter campaign page. “Our supply chain is 100% ready to go, from vital components that make Zano fly, to the very boxes that Zano is packaged in.”

Torquing’s promotional video showed some impressive footage of the drone in action. Drinkers at a Welsh pub smiled as a Zano flew up and hovered over them, displaying a countdown on built-in LEDs before snapping a photo that they immediately examined on a smartphone. Zano was then shown filming rock-solid footage of a mountain biker, following a motocross rider’s gestures, and automatically returning to land at his feet. Kickstarter itself selected Zano as a Staff Pick, which gave it prominently placed promotion on the site (the company now calls these Projects We Love).

The internet went wild. Torquing met its initial funding target in just 10 days, then blew right past it. As pledges smashed all Reedman’s “stretch goals”, they unlocked additional features: built-in storage, high-def (1080p) video recording, thermal imaging cameras, wireless charging, the ability to fly upside down, and more. Reedman touted extras like facial recognition and 360-degree panoramas soon — and all for a pledge as small as £139 (about $210). There were drones costing 10 times as much that couldn’t match Zano’s specs. The campaign promised delivery of all reward drones in an equally staggeringly short production window — in June 2015, just six months away.

At the International Consumer Electronics Show (CES) in Las Vegas a few weeks later, Engadget shortlisted Zano for its official Best of CES Award, one of just 49 nominees among an estimated 20,000 new products at the world’s biggest trade show. “Kickstarter made the prototype happen, and now it’s a very real proposition,” gushed Engadget in early January.

By the time the Kickstarter campaign ended on 8 January 2015, over 12,000 backers from around the world had pledged an astonishing £2.3m (nearly $3.5m), 20 times Reedman’s original goal. It was, and still is, Kickstarter’s most funded European campaign.

As 2015 rolled on, a flurry of updates from Zano — they would ultimately post around one a week — delivered encouraging news. The final chipsets for Zano arrived in Wales in mid-February, the firm said; a tiltable camera was developed; and Reedman’s engineers were building a high-performance computer to process hundreds of Zano videos online. Videos showed Torquing’s labs and assembly lines, one with staff using the Zano’s infrared obstacle avoidance system to play “drone tennis”.

To accommodate demand from enthusiasts who had missed the Kickstarter campaign, Torquing set up a website to take pre-orders, eventually racking up over 3,000 additional sales.

But cracks were beginning to show. Some key plastic parts were delayed, there were never-ending compliance and calibration tests to complete, and something was up with the propellers that arrived from China, according to campaign updates. Once-eager backers started to get restive, demanding to know exactly when their autonomous drones were likely to arrive.

Zano drones finally began to trickle out of Pembrokeshire in early September — no more than a handful at first, building slowly to total over 600 by the end of the month. The internet went wild again, although for very different reasons than before: Kickstarter backers were infuriated when they discovered that pre-order customers were receiving drones before loyal crowdfunders. Pre-order customers were infuriated for a different reason: Their Zanos were barely operational.

They reported that drones would repeatedly “bunny hop”’ a few centimetres in the air before landing again, or veer off wildly to crash into walls. Video quality was dreadful, and there was no sign of even basic obstacle avoidance or gesture control, let alone fully autonomous flight. In mid-October 2015, already months late, Torquing again pushed back delivery for the bulk of the Kickstarter rewards to as far off as February 2016.

On 18 November, the axe fell. Torquing announced via a Kickstarter update that it was entering a creditor’s voluntary liquidation, the UK equivalent roughly of an American “Chapter 7” bankruptcy filing. It appointed a liquidator who would bring its business operations to a close and attempt to sell the company’s remaining assets to pay its outstanding bills. Legal documents show that Torquing had not only burned through the £2.5m from its Kickstarter campaign, it had run up another £1m in debt. It was Kickstarter’s most spectacular flame-out to date.

No more Zanos would be made or sent out. Staff were sent home, and Torquing’s supercomputer was switched off and would be sold for parts. Because the Zano drone checks in over the internet with Torquing’s servers each time it powers up to retrieve calibration data and updates, the few drones in the wild were instantly and permanently grounded, like a dastardly robot army foiled in the last reel of a bad sci-fi film. After an abrupt final post on Kickstarter, Zano’s creators retreated offline and refused to engage with either backers or Kickstarter itself, contrary to the platform’s policies for failed campaigns.

By the end of November, it was clear that Zano was finished. But what had actually happened? Was the Zano project a scam from the word go, a money-making scheme to defraud backers? Were the Torquing leadership team inept, negligent, or incompetent, or some combination of all three? Or perhaps they were the victims, sunk by unscrupulous suppliers, malicious staff, or hackers?