With news that the grandfather of crowdfunding is raising $40 million to fund its growth, co-founder Slava Rubin explained how crowdfunding—and his site, in particular, were improving capitalism.
The reason we started Indiegogo in 2006 was because we were frustrated trying to raise money using the Internet. We thought, 'Why was it that access to capital was always about the gatekeeper?' While other industries were already being democratized. So, we came up with an idea for a platform that you could raise any amount of money for any idea. (Source: TechCrunch)
Indiegogo was founded by three founders in 2007; legend has it that they each tried to raise money for something they were passionate about and didn't succeed. So, Danae, Eric, and Slava joined forces to create Indiegogo, a crowdfunding site that enables people to donate funds easily for projects they're excited about supporting.
Indiegogo by the Numbers
With an initial focus on helping independent filmmakers fund their projects, Indiegogo is used widely by entrepreneurs of all kinds. While Indiegogo could be credited with coining the term crowdfunding, by the end of 2013, it's probably the second largest crowdfunding platform in the world.
Unlike Kickstarter, the reigning champ in terms of dollars raised for crowdfunding projects, Indiegogo doesn't publicly release its performance data. But that hasn't stopped some interested bloggers from doing their own research.
According to this blog, which used software to essentially estimate the crowdfunding site's activity, Indiegogo has:
- cumulatively 44,000 crowdfunding campaigns
- a success rate of 34%
- raised $99 million from successful campaigns
- 40% of dollars that IGG raised were generated from campaigns that raised more than $100,000
Indiegogo and How It's Different From Kickstarter
It turns out, when you look into Indiegogo's performance numbers, that the crowdfunding platform has a higher failure rate (projects don't reach their target funding) than Kickstarter.
This can be attributed to the fact that Indiegogo doesn't have geographic restrictions—it allows entrepreneurs from around the world to raise money for their projects. The site is also less selective when it comes to determining which projects and what type of campaigns it opens for fundraising on its site.
One of the reasons that Indiegogo has so many more failed campaigns is because they allow anyone to launch a campaign. Indiegogo places no geographic limitations, and neither do they
Some Indiegogo Successful Crowdfunding Campaigns
- Ubuntu Edge ($12.8 million): The Ubuntu Edge crowdfunding campaign on Indiegogo included more than 20,000 donors from 63 countries. All in, this crowdfunding campaign for a new type of smartphone averaged over $17,000 in donations per hour. By the way, the largest single donation was $80,000.
- Canary Home Security ($1.9 million): This smart home security device that monitors everything from motion to temperature to vibrations raised almost $2 million on Indiegogo. Over 7,000 people contributed to this project.
- Scanadu Scout ($1.6 million): The Scanadu Scout is a wireless health monitor that transmits a person's vital signs to their smartphones. This crowdfunding campaign had over 800 donors with some donors contributing over $10,000 with 26 of them supporting the campaign with over $700 donations.
- Flow Hive ($12.48 million): Flow Hive makes harvesting honey easier on the beekeeper and so much easier on the bees. This Indiegogo crowdfunding campaign features a really innovative time that essentially makes harvesting honey as easier and opening a faucet.
For a list of Indiegogo's top crowdfunding campaigns, check out the company's website.
Indiegogo Taking on Equity Crowdfunding
As U.S. regulation on crowdfunding continues to evolve. Indiegogo is getting ready to move from enabling just reward crowdfunding and is seriously considering equity crowdfunding. This means backers can not only pre-buy a really cool new product but with equity crowdfunding, backers turn into actual investors. So, when successful VR device, Oculus Rift, sold to Facebook for $2 billion, crowdfunders wouldn't only be left with a really bulky headset, but backers would own a piece of the company and profit if the company was bought.