Crowdfunding is now a permanent fixture of the financial ecosystem because founders and investors see it as a vital risk mitigation system, said Danae Ringelmann, founder and chief development officer of Indiegogo.
In 2002, Ringlemann co-produced a reading of an Arthur Miller play that was popular but didn’t raise much money. This gnawed at her and after years of working on Wall Street she and her friends Slava Rubin and Eric Schell launched a new funding platform for films at the Sundance Film Festival in 2008.
Today, Indiegogo ranks alongside Kickstarter as one of the chief means by which start-ups, activists, artists and non-government bodies attempt to crowdfund projects.
“When we launched Indiegogo with a beta and a video in January 2008, we had this novel idea of using the internet to raise money and we didn’t know where that could go,” Ringlemann said at the Web Summit in Dublin.
“Ever since then it has just blossomed – all kinds of people are using Indiegogo, from entrepreneurs to artists, non-profits, activists, you name it.
“If you want to get that idea off the ground use Indiegogo and make it thrive.”
The Web Summit 2014: Interview with Danae Ringelmann of Indiegogo
Ideas that have thrived include the ‘Let’s Give Karen – the bus monitor – H Klein A Vacation!’, which raised US$577,546 and ‘Let’s Build a Goddamn Tesla Museum’, which raised US$1.3m.
“We’ve seen campaigns raise millions of dollars to campaigns that may make thousands or a few hundred at a time. To us, it just means Indiegogo is here to help people make money for whatever they need.”
Indiegogo itself has taken on a slew of new investors, including Virgin’s Richard Branson and Tim Draper, founding partner of Draper Fisher Jurvetson and the person who coined the term ‘viral marketing’. This follows a US$40m Series B financing round.
Risk mitigation in the digital age
Crowdfunding is becoming a form of validation and a rite of passage for start-ups to raise finance and assess market appetite for their products.
“Indiegogo is becoming a permanent part of the financial ecosystem, not because it’s an alternative form of financing but because it is also an incredible risk mitigation strategy.
“Hardware entrepreneurs are using Indiegogo not just to get the funding to launch but also to mitigate their market and execution risks.”
She said Indigegogo has been building an analytics platform specifically to allow new ventures to test features and pricing.
“It’s about building businesses smarter and faster. We’re seeing venture investors investing in companies contingent upon them doing Indiegogo campaigns; this provides them often with the ability to refine the product and identify the market fit before they launch fully.”
One of the issues that raises its head increasingly in crowdfunding is the danger that people may try and launch dubious campaigns to raise finance for blue-sky products that have no chance of success or even working.
Ringlemann said curation is not the answer.
“That’s going back in time and to why finance was broken in the beginning – because we didn’t have an efficient way to connect investors with the things they could help. Ideas were going unborn every day.
“Curation is not the answer. But what is the answer is an open sustainable and scalable approach where all opportunities have a chance of rising to the top.”
She said Indiegogo is working on merit-based algorithms and systems to amplify ideas.
“We’re getting more sophisticated around relevancy – it’s really the crowd curating everything and not just a bunch of individuals.
“Credibility becomes clear based on experts providing advice and guidance and we’re seeing partner pages evolve with venture capitalists endorsing different campaigns.”
Ringlemann said Indiegogo was also the first crowdsourcing platform to launch Apple Pay.
“We’re all about flexibility and optimising the experience and if it means giving customers multiple payment options, we’ll do it. We’re excited seeing fluidity come to payments because that’s an industry that needs to be disrupted, too.”
Women Invent Tomorrow is Silicon Republic’s campaign to champion the role of women in science, technology, engineering and maths. It has been running since March 2013, and is kindly supported by Accenture Ireland, Intel, the Irish Research Council, ESB, Twitter, CoderDojo and Science Foundation Ireland