Featured in Wired Innovation Insights
Rumor has it that Amazon will enter the crowdfunding space; the JOBS Act Title III is around the corner; and Indiegogo just introduced InDemand – a post-campaign service that goes full circle for startup entrepreneurs. We spoke to Danae Ringelmann, co-founder and Chief Development Officer of Indiegogo, about their 2015 pipeline and position in the ecosystem.
Going 360 for Startup Entrepreneurs, Ramping Up for a New CrowdInDemand is a post-campaign service that allows campaign owners to keep on raising funds after they successfully have reached their funding goals… and after the (typical) 60 days of being live are up. This creates a continuity in the communication flow; it makes it easier to direct post-campaign traffic (as opposed to re-directing to alternative post-campaign solutions such as eBay’s Innovators Collective); it allows for SEO repurposing; and it makes it easier to understand contributor analytics. From the platform’s point of view, it creates an opportunity for additional monetization of “what already works.”
Kevin: Indiegogo has been a part of the crowdfunding movement from the very beginning, and has brought several innovations on its path. Why have you chosen to launch InDemand in 2015 and not earlier?
Danae: After carefully going through suggestions and analyzing how we can cater to the needs of our campaign owners we decided that this is was the time. The users (“campaign owners” and “contributors”) always guide the development of Indiegogo. We have a continuous dialogue with both sides of the table to ensure that the platform reflects individuals desire to get involved with new ideas as well as the need for campaign owners to “deliver on their hopes and dreams!”
Crowd Dynamics and a New Audience
Let’s have a closer look at how post-campaign funding shifts incentives for contributors, and let’s for simplicity assume that the rewards and their price-tags stay the same during and after a campaign. In this setting, the incentive to contribute decreases the closer a campaign gets to its goal; until today, campaigns would be over-funded partially because the crowdfunding platform is the only way to pre-order.
Kevin: How do you think InDemand will change the dynamics of crowdfunding? Do you expect to see changes in success-rates, time-to-success and funding volumes?
Danae: That is very hard to say. Definitely, something we are monitoring closely. The feature itself will boost funding volumes, and significantly de-risk the companies who use it. It smoothens the pre-selling process and cuts acquisition costs because all of the presentation material and the crowd’s feedback is saved on the campaign site. Just as important, it allows campaigns to keep the momentum and energy that lead to the success in the first place.
It might seem strange to talk about Adopters in a pre-selling market, but this is the normal term for customers who are on board right after the first Early Innovators. In a crowdfunding setting, we can think of Early Innovators as the contributors who get on board in the first days after launch, and Adopters as the ones who follow troop later on.
Kevin: Where do you expect to see the largest growth in your contributor base? – Among Early Innovators or Adopters?
Danae: Both will grow, but it’s hard to say exactly where will see the biggest increase before we get more data. InDemand will attract new users on its own and at the same time attract more entrepreneurs, and in turn more “early birds.”
Kevin: InDemand is a step towards a 360-solution for entrepreneurs. Are there similar initiatives in the 2015 pipeline?
Danae: Definitely! In fact, during CES 2015 we announced our latest partnership with Amplifier, a leading full-service production company. They will be able to help campaign owners with production, packaging, and shipping of the rewards that are not directly in the campaign owners’ own production lines.
Crowd-first and JOBS Act Crowdfunding
As the crowdfunding space evolves, entrepreneurs adapt and explore creative ways of leveraging social media, and in some cases make crowdfunding an integral part of their business development. In the US, regulators are preparing to allow non-accredited investors to participate in startup financing, and the success of reward-based crowdfunding is often used as an example of the public’s interest in startup financing.
Kevin: Indiegogo has had a voice in the JOBS Act debate since day one. Do you think reward-based crowdfunding and investment-based crowdfunding will attract the same crowds?
Danae: I think we will see a general increase in the number of people who wish to get involved and I think that we will see overlaps as well. What we have learned from Indiegogo’s crowd is that people support crowdfunding campaigns for four reasons: Passion, Perks, Participation, and Pride (“The four Ps”). When we talk about investment-based crowdfunding, you should add Profit to the list. Of course, the JOBS Act will attract pure profit seekers, but I don’t see a reason why people who get involved because of “the four Ps” shouldn’t be interested in investing in the companies and teams they get involved with.
Kevin: The SEC has announced that JOBS Act Title III crowdfunding will take off by the end of 2015. Do you think Indiegogo will take part in this kind of investment-based crowdfunding?
Danae: If that’s what our customers want, it is definitely something we will explore. There is a general distrust in Wall Street and in large parts of the financial system… I have a personal example: While we were in the early stage of building Indiegogo, one of these typical financial advisor-types approached my mom to help her investing for retirement. She couldn’t get any specific information about which companies she would have in her portfolio, let alone have a say in how it should evolve. Her take on this was very clear:
“Why should I fund people I don’t know, so that they can invest in companies I don’t agree with?”
Danae (cont.): Platforms such as Indiegogo are rebuilding the trust in the financial system simply by removing these gatekeepers, and letting people get involved with exactly the campaigns they like. This is why crowdfunding might be much, much bigger than anyone could predict. We are unleashing capital far beyond the innovators and contributors we see in the marketplace today.
Kevin: With this trajectory, it seems natural that larger entities would be looking for a market entrance. Lately, it has been rumored that Amazon might make a play in the crowdfunding space. Any thoughts on that?
Danae: I have not heard it officially confirmed, and there will always be rumors. However, we do expect that larger enterprises will move into crowdfunding. We are in the business of bringing ideas to life… and it’s only a matter of time before large enterprises realize how invigorating and rewarding that can be. We have been open about what we’re doing from the very beginning, and secured multiple partnerships this way.