You do get something back, you prove the idea has legs. Someone might go build it. It might help to give something more to backers but it seemed too much to work on for the MVP. I mean, if this idea gets 0 users (again) there's no point in adding more stuff to it.

On refunds there are two options. The builder can either accept the $1000 or refund them.

I don't know what would work. The reason I put a hard-cap on $1000 is to not get in legal trouble during this launch. Getting more than $1000 might make a service classified as an MSB (money services business). For the same reason, I'm thinking of refunding all the money back after 30 days, and not letting the builder keep any of the money.

This got me thinking. If 100 people all pony up $1000, then you've got $100,000 of funding and no equity (as the founder). But if we stretch this idea - say $1000 buys equity in the startup equal to 49% / (total number of backers). The founder still keeps control and now has no cap on funding. I write this with almost zero knowledge of equity financing of startups, and vc's, etc... Just spit-ballin' here!