If we are talking about hardware kickstarters, or book kickstarters, or anything which involves manufacturing, if they do not have a working prototype yet it is always a risk to invest in it. If they have a working prototype and the money is only to pay for low rate initial production then the risk is low.
Looking at their project page, it really seemed like they had a prototype. They had lots of pictures taken with their "really fast" prototype. Which was presumably actually an updated V1 unit, and not actually a prototype of the new one at all. This puts them in a nasty position legally. They claimed to have a functional prototype. They appeared to be displaying an actual cased prototype. They gave every indication of being further on than they really were.