In a backer update emailed to supporters yesterday, the second most funded Kickstarter campaign delivered some disturbing news. In brief, Coolest Cooler has ran out of cash.

The email, signed by Coolest Creator Ryan Grepper, danced around the subject a bit. Grepper stated;

“However, this update is letting you know that unfortunately there will be further delays for some of you. We are in the process of identifying the right partner who can provide the capital and strategic resources to fund the remaining production of backer rewards and help grow the company to the next level. We’re not quite there yet, but it is moving forward.”

Grepper sadly admitted the cost of creating the Coolest Cooler surpassed the price charged to backers of the Kickstarter campaign. An unfortunate conundrum for the young business;

“That reality was known last year, but we forged ahead. We were confident in our company and the market for premium quality coolers, which had absolutely exploded. We knew that the Kickstarter funds, in the end, would not cover the actual cost of fulfilling all the backer orders (see below for a detailed financial breakdown), but with such huge interest we knew we would find a way to help us finish the process and grow as a company.” [emphasis added]

Grepper explained that while the campaign raised well over $13 million (from 62,642 backers), after Kickstarter got their cut, transactional fees, development, people and operations dropped the cash down to $7.4 million. This amount is not sufficient to complete manufacturing and shipping to the thousands of backers who remain Cooler-less.

It appears expectations of retail success on Amazon Launchpad was a bit of a disaster. Grepper hoped to subsidize early sales with new purchases;

“there was so much confusion and misinformation among the backer community that over 100 people placed negative or fake reviews on Amazon, which ultimately had a detrimental effect on demand. Ironically, those voices hurt our very ability to get everyone their Coolests faster.”

So where does the Coolest Cooler go from here? Good question.

Grepper is in need of a partner and one with deeper pockets than his own;

“The process is well underway to find the best partner, and then ramp up production and get every backer his or her Coolest as soon as possible. However, at this point, we can’t estimate exactly when this will happen.”

When we broke the (2nd) Coolest Cooler campaign we had no idea it would become such an unexpected crowdfunding success. This was do largely in part to Grepper’s drive and determination to succeed where he had failed previously. So don’t count Grepper out – yet.

He is holding a Hangout next week on Wednesday (March 2nd @ 12Noon PT). He will probably receive an earfull but, as always, crowdfunding campaigns must maintain communication and transparency with early supporters. Hopefully he will have more positive news this coming week.

As for backers, a quick trip to Kickstarter comment alley and, as one would expect, people are disappointed;

I guess we finally see the truth. They need more money to complete the project, which they will never get. I requested a refund and was told to fill out a form, and they would address my refund request just prior to my cooler shipping. WTF??

Is there a nicer way to say “F*** off”?

just checked Amazon and they are in stock ready to ship! Why are you screwing over your original backers and putting Amazon customers to the front of the line? THIS IS TOTALLY A FAILED PROJECT. I guess I am out my investment plus no cooler. Beware of the BS this is a dead product.

I don’t understand how he asked for $50,000, received $11 million, and it’s a fail?

I have been waiting 2 years and I was one of the initial backers (BEFORE YOU REACHED YOUR GOAL). I was so excited about this project and now I wonder seriously if I am ever going to get it.

I hope I do but I have my doubts. Never ever again, sorry Kickstarter.

There are plenty more statements from backers, both supportive and negative. Comments number over 15 thousand..

The challenges of the Coolest Cooler project highlights a nagging issue with rewards based crowdfunding campaigns. Too frequently overly-optimistic presentations are sunk by the reality of management and insufficient cash. Yes, there have been plenty of very successful rewards based campaigns that have launched new products and businesses. Just look at the Pebble Watch. But there have been many that have failed.

Update: Kickstarter points out that just 9% of funded projects on the Kickstarter platform fail to deliver rewards so an edit has been made.