Indiegogo pioneered crowdfunding in 2008 when the company's cofounders, Danae Ringelmann, Slava Rubin and Eric Schell grew tired of the options available for securing access to capital. They believed the Internet to be the ultimate tool available to democratize fundraising. Their intuition was prophetic. Today, Indiegogo is the largest global crowdfunding and fundraising platform helping social, creative and business entrepreneurs, from ideation to distribution.
I spoke to Indiegogo Founder and Chief Business Officer Slava Rubin about his founding story and why Indiegogo is securing new outside partnerships to help entrepreneurs take a creative, social or business venture from ideation to distribution.
A global solution to fundraising
Indiegogo's existence as a platform is to democratize fundraising, a mission they plan to solve for globally. As Slava described, "Creating more efficient capital markets is not a U.S. concept, but a global concept."
Indiegogo established a global reach quickly after launch and within the first three years of operating, the platform was distributing funds to 70 countries a week. Today, close to 50% of campaigns and fundraising on Indiegogo happens outside of the U.S.
Creating a virtual factory for entrepreneurs
Indiegogo is distinct from now-defunct invention factory Quirky and its competitor, Kickstarter.
Quirky recently filed for bankruptcy as it was unable to substantiate its business model of crowdsourcing invention ideas and then developing and distributing the best ideas themselves. Taking on that overhead as a linear business proved to be unsuccessful.
Kickstarter clearly states that it's not a store. The platform limits its focus to crowdfunding. It doesn't provide a product marketplace or distribution and manufacturing partnerships to help Kickstarter campaign creators launch their product.
Indiegogo's approach compared to Kickstarter and Quirky is night and day. Indiegogo has made a big effort in helping entrepreneurs and new businesses with more than just the funding stage and the platform helps the entrepreneur through the whole lifecycle of their project.
- Retailsellingand manufacturing--Indiegogo is collaborating with Amazon and Brookstone to create opportunities for massive retail distribution of Indiegogo-funded products, both online and in brick and mortar stores. (Brookstone helps with manufacturing as well.)
- Fulfillment and production--A partnership with fulfillment and distribution company Amplifier enables campaign owners to easily produce, package and ship perks including shirts, hats, mugs, stickers and other items used to reward contributors for their financial support.
- Institutional investments--As angel investors, venture capitalists and private-equity firms increasingly turn to Indiegogo as an incubation platform for the next big ideas, more than $760 million in institutional funding has poured into companies that have run Indiegogo campaigns. To help companies turn their crowdfunding campaigns into successful businesses, Indiegogo partnered with notable Angel investor Gil Penchina to create the first ever dedicated fund to invest in crowdfunded companies.
- Promotion--Through a partnership with shopping center company Westfield, Indiegogo campaigners are able to display their products in the first ever coworking, tech-demo and event space at the Westfield San Francisco Centre.
While Quirky tried to house a lot of this added value within its walls, the risk and overhead proved deadly. Indiegogo externalizes this risk through partnerships.
Indiegogo's auxiliary services beyond crowdfunding differentiate the platform against its competition. Furthermore, from a customer satisfaction perspective, you can imagine that Indiegogo's additional partnerships would better position campaign creators to successfully launch their products and meet their funders' expectations.
Another area of innovation that Indiegogo has invested in is its product marketplace, InDemand. After an entrepreneur of any kind hits their funding goals, they can start selling their products on InDemand. Indiegogo isn't a store either--it's a platform. Indiegogo mitigates the burden of a store's overhead by not directly owning the inventory. This allows Indiegogo to provide value to campaign owners while protecting its business interests.
Slava explains, "We didn't vertically integrate the entire process, but we partnered with the right players to take ideas from ideation to distribution."
An early indicator that this strategy is paying off is Axent Wear Cat Ear Headphones. Two U.C. Berkeley students used the Indiegogo platform to exceed their original campaign by 1,172%. This was the strongest market validation possible. Furthermore, through the partnerships Indiegogo has in place with Brookstone, the entrepreneurs had a retail partner in place. In fact, they were able to take pre orders while ironing out the specifics of their retail partnership.
By helping new products grow--from funding all the way through distribution--Indiegogo is enabling agile product development for modern day entrepreneurs.
Correction: An earlier version of this column misstated the global reach of Kickstarter. People outside the U.S. can start campaigns. It also misstated its interest in supporting the success of projects and in campaigns delivering promised rewards to their supporters.