The idea is usually that the project team either has already done the R&D and they're just raising money for the production run, or that they're going to do the R&D for free because they're going to own the business and make a profit on every sale after the backers get the initial production run.

Both wildly naive it seems, but I suspect that's how people imagine it. The demo videos usually show a "done-ish" product and downplay how much more needs to be done to actually ship it. And they always talk about how strong their team is and how it's totally doable even though it's not done yet.

The wifi lightbulb people come to mind. Total smoke and mirrors demo video and it took a major multinational getting involved to actually ship the product. That's the Belkin WeMo.