Crowdfunding sites like Kickstarter must be honest about what they do

Crowdfunding sites such as Kickstarter and Indiegogo represent a classic entrepreneurial phenomenon: Once you roll out your great idea, customers use it in ways you didn't imagine, and you wind up in a different business than you expected.

Kickstarter's founders wanted to help artists raise money. Indiegogo co-founder Danae Ringelmann pictured aiding capital-strapped small-businesses owners like her parents. Neither intended their site to act as a test market. But that's what they have become.

"It's a way to access capital, but what it's also become is a market-testing and validation platform," Ringelmann said. "What we're doing is creating pre-markets for ideas," she said.

In theory, the sites operate a bit like a pledge drive: give us money for a good cause and we'll send you this nifty tote bag. But the economics of running a campaign work best if the same cash you use to complete your project gives you products or event tickets to hand out.

"If a project's goal is to produce a pure 'public good' - like data, as it was in my case - almost any exclusive, tangible reward offered to backers winds up simply adding costs, making it that much harder to raise the required funds," says Cosmo Wenman, who ran an unsuccessful Kickstarter campaign to finance 3-D scans of classic sculptures. "The tote bag is not free."

As a result, the most successful crowdfunding projects aren't charities. They're ventures that produce something people wish they could buy.

That makes crowdfunding a great way to test the market. "You're going directly to your fans, your customers, the people who're going to be your customers," Ringelmann said. "You're finding out whether anyone is willing to pay for your great new idea."