SmashFund claims their invite-only social crowdfunding network can help every person get the money they need to pursue a project they’re passionate about. How’s it work?
Basically, CEO Rob Towles tells us that you simply have to “build a massive user base,” and then the company will “come along side you and help you fund your project.” All you have to do is take 5 minutes to start an account and invite five (or more) friends to do the same.
As revenue comes in, SmashFund returns 80% of this to active members through their revenue sharing program. And along the way, your friends, family, and followers can pitch in to help fund your project as well.
Did you notice that—although SmashFund claims to be a crowdfunding website—obtaining funds from third-party sources is at the bottom of how you’ll make money? So, what service is SmashFund actually providing? Are they just a pyramid scam?
We’ll explore it all in this review. To kick things off, let’s learn more what the company claims to be; namely, a crowdfunding space.
What is Crowdfunding?
Forbes defines crowdfunding as “the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.” Simply spread the word, and you might find that many small donations from backers (people who fund your project) quickly add up to a large sum of money.
However, the reality is that most crowdfunding projects aren’t successful, generally because it takes a lot of hard work. In other words, just because you want to create something, this doesn’t mean that others will hop on board.
To put some perspective on this, according to Kickstarter, one of the biggest players in the industry, they had 303,277 total launched projects as of 6/10/16. Of these, only 107,156 were successfully funded—a success rate of just 35.95%.
What about SmashFund? Will they help you have better than a 1 in 3 chance of success? If so, how? Do they even meet the definition of a crowdfunding space?
How Does SmashFund Work? Is it Expensive?
First, signing up for a SmashFund subscription basically just involves entering your name and address, and handing over your credit card info to pay the $149 monthly fee.
Upon signing up, you’ll be given an affiliate referral code, which is a unique URL that tracks activity. What activity, specifically?
SmashFund wants you to get the word out to as many people as possible. Then, if they also sign up for a SmashFund subscription using your referral code (known as an “invited connection”), you’ll get $50 per month as long as their membership is active.
If someone signs up for your network without this referral code (known as a “viral connection”), then you’ll get $4 per month. Overall, you’re allowed to have as many as 16,000 connections in your network.
Unlike other affiliate marketing programs, your SmashFund earnings aren’t tied to any time limits or goal requirements, and there’s no percentage taken from contributions (outside of a third party Stripe fee of 2.9% + $0.30 per transaction). Funds are deposited weekly.
Pro tip: For more details (although you probably won’t learn anything new), be sure to read through SmashFund’s Revenue Sharing document.
Given this model, what kind of money are we talking here?
How Much Money Can You Expect to Make with SmashFund?
On the surface, it would seem like you stand to make a whole lot of money with SmashFund. For example, even if you only signed up 5 invited connections a week, this means that you’d rake in $1,000 after just one month. And the more you signed up, the more money you’d exponentially make.
But here’s the problem: You’re not actually selling anything with SmashFund. You’re not trying to convince others to sign up because they’ll gain access to some kind of groundbreaking crowdfunding platform, or that they’ll be able to reach a much wider audience once their project goes live.
Nope. Instead, you’re simply selling more subscriptions. What will these people get for their money? The exact same referral code you started with, which they’ll then have to hawk on others to help recoup their expenses.
This is the very definition of an unsustainable multi-level marketing (MLM) scheme. But don’t take our word for it. Let’s see what others are saying.
The SmashFund Reviews Are In, & They’re Not Good
Pretty much anywhere you look, SmashFund is not well-received among legitimate online sources (i.e. those that aren’t directly promoting SmashFund subscriptions).
BehindMLM does a great job of visually showing you how SmashFund’s affiliate structure works (notice how it’s shaped just like a pyramid?), so be sure to check it out. Also, here’s just a sampling of what they said:
“… Under the guise of operating a crowdfunding platform, SmashFund offer participation in a chain-recruitment scheme.
… Nothing is marketed or sold to retail customers, meaning all commissions paid out through SmashFund are tied to recruitment.
… Mathematically for a small number of SmashFund affiliates to make money, the majority of participants must lose it.”
ValueCreationProfit expressed many of the same concerns:
“I am concerned that the crowdfunding platform at SmashFund is yet another mask for a Ponzi scheme where new subscribers are required to be added regularly for the revenue sharing mentioned earlier.
Imagine if everyone has 16000 connections in their network, how much does SmashFund need to pay out monthly to its members? We all know that Ponzi scheme always will not have a good ending.”
Not to put too fine a point on it, but WorkingHusbands also seemed to agree:
“Basically, all you’re buying with your SmashFund “subscription” is an affiliate link, and the only way to make money is by convincing others to sign up under this link.”
Based on this information, SmashFund definitely feels scheme-y. What about the founder of the company? Are they a successful businessperson?
Who Is Rob Towles?
SmashFund’s CEO is Rob Towles, who previously operated a company known as Efusjon, an energy drink club that went belly-up in 2010 after being sued in a class action lawsuit. The plaintiff alleged that the company was a pyramid scheme, and the suit was eventually settled privately that same year.
After Efusjon, it appears Mr. Towles simply rebranded his energy drinks (and pyramid-like commission model) with a new company named LabActive. As of this writing, however, it appears the company is no longer active.
Taking all of this together, should you sign up for a SmashFund referral link?
Is SmashFund a Crowdfunding Site Worthy of Your Money?
Look, you’re an adult and it’s ultimately up to you what you do with your hard-earned money. But when it comes down to it—assuming you’re looking for a solid return on your investment—we don’t think SmashFund is the way to go. Why?
Did you notice that, despite Rob’s lengthy video presentation and drawn-out answers in the audio recording, that he really never said anything new? Instead, he just kept throwing around buzzwords du jour, like “disruptive,” “crowdfunding space,” “Instagram easy,” and “algorithm.” He also repeatedly talked about how super excited he was, how super awesome SmashFund is, and how super cool this opportunity is.
These are what we like to think of as “politician’s answers.” Initially, they might seem to address the question, but if you scratch just under the surface, you’ll find they often skirt the actual question and instead focus on inducing an emotional response (versus a logical one).
In our opinion, CEO Rob Towles took this approach because there’s really not anything revolutionary about SmashFund. He often compared the company to Facebook and LinkedIn, but by all appearances, unlike these massive successes, SmashFund doesn’t offer anything tangible for your time and money.
Based on this, our recommendation is to stay far away.
More on Pyramid Schemes: Do Multi-Level Marketing Companies Differ From Pyramid Schemes?