On another forum, there was a discussion of millennials, and how they are way overconfident and way underexperienced. I've seen that in my own line of work... 20-something people who have spent a year or two working somewhere and believe they are experts at developing products and running businesses.
Some young people are cocky and overconfident. This is news? No, no, it isn't. That you think it is suggests your own experience, or your ability to learn from it is lacking.
Some older people thing that kids today are X & Y (where X & Y are unfavorable). Also not news.
While kickstarters like this seem like slow-motion trainwrecks, what's the harm, really? So, a bunch of people are out an average of, what $150 or so after refunds are paid out? Yeah, that sucks, and if it were me, I'd feel shitty about it, but, on the other hand, this is a tool for people doing high-speed photography, not exactly a cheap profession or a hobby. I doubt $150 is a very significant loss.
And lets compare kickstarter to some of the other things people spend their money on: Skying: I haven't been in quite a while, but I gather equipment still costs hundreds, lift tickets cost quite a bit, travel and lodging (if needed) add up, and there is always the risk that you'll injure yourself, that the snow will suck, or that the weather is too bad to ski.
Perhaps a better comparison would be professional sports. People spend hours watching games on TV, they buy big TVs, and pay for expensive satellite dish or cable service. Some buy logo-wear to show their devotion. Some buy season tickets, or maybe they just go to a couple of games. How much does that cost? Particularly if they get a hot dog and a beer. They get emotionally invested, and at the end of the season, they have almost certainly suffered a bunch of disappointment, even if their team ends up triumphing. With kickstarter you might get to see "your team" triumph too, and get what you paid for to boot; or you might be disappointed.
Contributors should go into these things with their eyes wide open: the project may be late, or fall short of promises, or not deliver at all. The funding platforms should educate people on risks, and be proactive about dealing with fraudulent projects and maniacs.
This didn't seem like fraud or mania though, just too much foolishness, and to their credit, they finally figured out for themselves that it wasn't going to work, before they ran of money AND they decided to quit, rather than doubling down and refund the remaining funds.
As for regulation, it may be called for at higher dollar amounts, particularly if the contributors are actually investors, rather than just customers/fans and the promise includes a large financial return, rather than just the product being developed.
Oh, and back to the topic of experience, or the lack of it. People learn as much from failed projects as successful ones, sometimes more. I don't have a problem with a world where people can raise modest amounts of money from a few thousand people and succeed or fail, and try again.