Here is an update from Magical Game Factory (what Watermelon is calling themselves now, I guess):
*MGF does not work like an auction, where only the vote of highest "bidder" matters. It works (sort of) like a stock company, where a majority of the stock holders take the decision. The money is NOT wasted for those who picked a "losing option", as the money will still be converted to games when the project is over. For now, when Project Y has the poll about console, you could say an investor could join because he would want just a new WaterMelon game. Then, after console is choosen, it's time for genre. Then people who are interested in the winning console may join because it's already decided it will be a game for that console.
*MGF will have the passion of Pier Solar, but in a different way. Project Y will be very different, as it's a project started in the Factory. Project SF was started inhouse and will be more like Pier Solar. WaterMelon already has a bunch of concepts shelved for various genres, many could fit well for Project Y if that's what the Investors want.
*You aren't paying for vaporware. If that was the case, online auctions would also be vaporware until you have the items in your hands, because the seller can decide to ship it anytime he wants.
*You can't exactly choose the protagonist to be a Goatse sprite before some other things are choosen. You don't exactly decide everything on a game the first week of development. You begin selecting console, then genre, then style etc. and go on, step, by step.
Someone else responded with:
"Why such explanation couldn't have been given before, in the same day that the e-mail was delivered?"
Which MGF replied: "Because the many misunderstandings of the concept wasn't there then." They seriously did not see this coming.
Then Black Tiger asked an excellent question which went unanswered:
Do investors get credit towards copies of the eventual game? Like if some buys $50 of gems will they receive a copy of the final game free of charge and will someone who pays $1000 receive 20 copies of the game or $1000 worth of Pier Solar game, soundtrack and any other Watermelon products?