Crowdfunding has grown from something only a handful of people knew anything about to a multimillion dollar industry where small and large companies alike can try new ventures, get last-mile funding for projects or unveil the coolest gadgets for wearables, STEM development, robotics and much more.
Indiegogo was launched in 2008 as a platform for people to raise money for charities or new ideas, but later became a staple for startups to launch new products, before also becoming a place for large companies to see if conventional ideas and products can find an audience.
David Mandelbrot, CEO of Indiegogo, sat down with Electronics360 to discuss the company’s rise in crowdfunding, the company’s trip to CES 2018 back in January, what’s coming next and Indiegogo's dive into the realm of cryptocurrency.
What were some of the cool projects Indiegogo showcased at CES this year that will be available in 2018?
Well, a lot of them are already shipping! Misfit, Mifold, MUSE and Play Impossible have already shipped and are either in stores, selling via their website, or both. Headspace, Lifepack, AIRIA, and Ockel Sirius are all scheduled to start shipping this year.
How do you get the word out about all these projects? Is it a challenge to get people interested in cool stuff if no one knows about it?
It can certainly be a challenge for products that are trying to enter a really crowded space, but we find that people are excited to find out about and share the cool innovations on our platform. We encourage campaigners to spread the word to their friends and family, who then share with their networks, and so on. We also use our newsletter, social media channels, and discovery features on our website to showcase the tech that really gets people talking.
Did you get approached at CES about possible future campaigns, or did you meet with people about what Indiegogo can bring to their ideas?
We always talk to people about what Indiegogo can bring to their ideas, because we see ourselves as part of their team, rather than just a platform. CES is a great place to talk to anyone who is interested in anything from funding, to market testing, to building buzz about a new product. We talked to first-time entrepreneurs, tech veterans, and even people from large enterprises who could use Indiegogo to bring new products to life.
What do you see as the next big thing in crowdfunding? Will it be something we have already seen or will it be something completely different?
There are two areas that are going to see tremendous growth in crowdfunding. The first is equity crowdfunding, which is finally allowing "regular" people to invest in the companies they care about, and letting entrepreneurs work more closely with fans and supporters to grow their businesses.
The second is that we're seeing large companies realize that crowdfunding isn't just a way for early-stage startups to finance their businesses. More and more Fortune 500 companies are using crowdfunding as a way to engage with early adopters, learn more about their customers and successfully launch their products.
There is a lot of coverage about the campaigns that fail or fail to deliver in a timely manner. Are you addressing this at all?
That's something that always makes us sad, because the campaigns that fail to deliver are such a tiny percentage of the campaigns that run on our platform. I understand that reporting a failure stories is usually much more interesting than saying "the campaign progressed as expected and delivered on time to satisfied backers", so I think it's important that we actively showcase our campaigners stories. There is always a challenge or an obstacle in every story of entrepreneurship, and those lessons are what inspire future generations of entrepreneurs, as well as backers who are curious about supporting crowdfunded projects.
Is there a way to change the perception of crowdfunding as being a huge risk, even if that is not usually the case?
I'll start by saying that traditional crowdfunding—meaning funding a campaign that is in concept or prototype phase—is inherently risky. Being part of this spirit of innovation is what makes backing a crowdfunded product different from simply walking into a store and buying it. What's missing is education and transparency, which are both things that we have been focused on addressing. We've made an effort to be clear about what backing a crowdfunded project means.
These entrepreneurs are trying to make something brand new and build a business from scratch, which is hard! That being said, we obviously do everything we can to help them reach their goals and deliver. We have a variety of partnerships to help entrepreneurs with some of the challenges they face after they've gotten the funding they need. This means that they have support when it comes to manufacturing and shipping, which can often be more difficult that expected. We've also updated our policies to ensure that entrepreneurs communicate often with their backers. We've found that even when delays occur, backers are much more understanding when they are told what's going on.
We also recently launched the Indiegogo Marketplace, which exclusively features products that are ready to ship. If backers are not quite ready to join the crowdfunding adventure, they can still find products that are just too cool for stores.
Do you work with startups and creators to make sure they don’t promise too much or aim too high when they begin a campaign?
Absolutely. We have an extensive set of educational materials that help campaigners determine realistic goals, and we also have a dedicated campaign strategy team that works with campaigners to think through exactly what they need. We also encourage campaigners not to try to raise 100% of the funds they need in a single campaign, but rather to break it up.
What tips or tricks do you have for startups or creators about what makes a successful crowdfunding campaign?
Preparation is key. Entrepreneurs should spend a minimum of two months getting ready to run a campaign. This gives them adequate time to put together eye-catching graphics, engaging campaign copy, and enticing perks. We've also seen that getting personal with backers is also essential in establishing trust, which can be communicated through the campaign video. Finally, to keep the trust going, it's important (and actually required) to regularly update backers. They signed up to be part of the journey, and they might become lifelong customers, so entrepreneurs need to nurture that relationship.
Indiegogo has recently got into the cryptocurrency market. Can you explain the rationale behind this and what you hope to accomplish?
We really see the cryptocurrency market as a natural extension of what we've been doing for the last 10 years. It's another tool that helps entrepreneurs get the financing they need in the way that best suits their business.