DALLAS, July 18, 2012 – In January 2008, Indiegogo launched what would soon become a self-serve global crowdfunding site that would change the way individuals make movies, art, and raise money for charity. Although Kickstarter made a bigger splash when they went public and a year later Indiegogo has quickly become one of the two most popular global crowdfunding platforms available.
In June 2012, Indiegogo closed a $15 million Series A round, dwarfing the $1.5 they had raised in September 2011 during their first round of funding. The money will be used to support operations and surmount a growing list of 400 competitors, including brand new Fundable, which plans to use the recently signed JOBS Act to offer equity in exchange for donations. Adding to the list of existing Indiegogo investors is Metamorphic Ventures, MHS Capital, ffVenture Capital, and Zynga Inc. co-founder Steve Schoettler was Khosla Ventures and Insight Venture Partners.
“We need to improve the user experience to make sure people can discover campaigns better, create frictionless funding and ensure campaign owners have the tools they need to better promote their campaigns and get exposure,” said Indiegogo co-founder and CEO Slava Rubin.
Indiegogo first went public at the Sundance Film Festival in January of 2008, focusing solely on independent film. The first majorly successful fundraiser on the site came only three months later: “The Lilliput”, a documentary about Jewish dwarf Umchzek Kerber’s Holocaust survival story, garnered $10,000 to shoot a sneak peek for the film.
The site expanded to include all industries in 2009. In 2010, it partnered with Fractured Atlas, a non-profit arts service organization, to utilize their Fiscal Sponsorship Program. The program would support non-commercial projects looking for funding from the creative arts community. By 2010, Indiegogo was featuring over 3,500 projects on their site and was nominated for the Best Community Site Webby Award.
“Working with Fractured Atlas lets any non commercial creative project owner offer tax deductions to their funders without paying double the fees or spending double the time,” said Rubin. The program allowed project owners to solicit funds from entities that donated only to nonprofit organizations with IRS tax-exempt status, and their fiscally sponsored projects soon raised over a million dollars through the partnership.
Today, Indiegogo is operating in 196 countries and has featured over 100,000 projects, ranging from fertility treatments to art installations, heart transplants to small businesses, and even to Internet-famous Karen the Bus Monitor’s $449,000 charity retirement fund, Indiegogo funds it all. No project is turned away.
“Indiegogo is unique because we’re completely global, completely open to any idea. We don’t judge anything,” said Slava Rubin about what has become the site’s most controversial aspect. While some appreciate the lack of a campaign review process, others criticize Indiegogo for letting “low-quality” projects muddle the site. According to Rubin, an algorithm chooses which projects to promote on the home page based on activity and engagement metrics like “funding velocity.”
Despite the arguments over quality control, it seems that Indiegogo is flooded mostly with worthy causes, many of them from nonprofit organizations. The site’s help section even features a step-by-step guide on setting up your nonprofit PayPal account to receive tax-deductible donations.
Recently, an unexpected lawsuit filed by FunnyJunk.com fueled an even less expected fundraiser from cartoonist “The Oatmeal,” who used Indiegogo to raise $220,000 — 1000% of his goal.
It all started when Matt Inman, creator of The Oatmeal, publicly ousted FunnyJunk.com for stealing and re-hosting his original content on their site. FunnyJunk responded by lawyering up and accusing Inman of defamation, demanding $20,000 compensation and threatening a lawsuit if he didn’t comply. In response, Inman headed for Indiegogo.
“Instead of mailing the owner of FunnyJunk the money, I’m going to send the above drawing of his mother. I’m going to try and raise $20,000 and instead send it to the National Wildlife Federation and the American Cancer Society.”
The campaign was a wild success, surpassing his goal only 8 days after the campaign was published.
Another remarkable fundraiser made possible by Indiegogo was the campaign launched for Karen Klein, a bus monitor who was shown being relentlessly bullied on a school bus during a difficult-to-watch ten minute YouTube clip. During the video, uploaded by YouTube user CapitalTrigga, Karen is shown hiding her tears behind sunglasses and sadly gazing out the window as a throng of children call her names and tease her for being “old, fat and poor.”
Ukranian Redditor Max Sidorov quickly started an Indiegogo campaign for Karen, called “Let’s Give Karen - The bus monitor - INDIEGOGO Klein a Vacation!” Adding, “She doesn’t earn nearly enough ($15,506) to deal with some of the trash she is surrounded by. Lets give her something she will never forget, a vacation of a lifetime!”
Well before the deadline, the $5,000 goal was absolutely flooded with over $650,000 in donations. Karen has since appeared on multiple national television talk shows to discuss both her ordeal and the appreciation she feels for the outpour of support from strangers throughout the world.
Although the end result was both successful and heartwarming, many were skeptical at first. Sidorov had initially hooked up the Indiegogo campaign to his personal PayPal account instead of requesting that Karen add her own information. Although this issue was quickly rectified, it raises some eyebrows concerning the site’s regulations (or lack thereof) and how their apparently light security measures could possibly facilitate scammers.
With over 5,000 active campaigns in any given month, Rubin says that the average investor pledges approximately $74. Donors can search the site by location, category (including cause/charity, creative, and entrepreneurial), or browse by featured, most funded, least funded, newest, or “ending soon” campaigns.
In addition to focusing on individual campaigns, Indiegogo has numerous partnerships for business-to-business opportunities in addition to Fractured Atlas, such as Women Make Movies and Startup America.
Despite Indiegogo’s success, many still choose NY-based Kickstarter, which has grown 70% in only three months and recently increased their total site pledges to $290 million. Kickstarter’s biggest endeavors include a video game by Double Fine (over $3 million), comic book reprints by The Order of the Stick (over $1.2 million), the Pebble “smart watch” (over $10 million), and musician Amanda Palmer’s upcoming album (over $1 million).
While the sites have been lauded as almost identical, key differences set them apart.
Kickstarter is all-or-nothing. If a campaign’s goal isn’t reached by the end of its cycle, all donated money is refunded. Indiegogo’s Flexible Funding option allows the user to retain campaign donations even when the goal is not reached. In this case, Indiegogo charges a 9% per-dollar fee. If the user chooses to refund all donations instead, no fee is applied.
At the end of a successful campaign, Kickstarter will take 5% of the earnings, while Indiegogo only takes 4%.
Kickstarter requires every project to be pitched and reviewed. Upon approval, a page can be created and published on the site as an active campaign. Indiegogo has no such process — virtually anything goes.
Kickstarter funds projects that “are finite with a clear beginning and end.” The site focuses on artists, filmmakers, musicians, designers, and performers who are trying to fund an event or project such as a movie, video game, or new piece of technology. Indiegogo funds projects and ideas on just about anything.
Both sites offer rewards, or “perks,” with which campaign owners can gift to donors, namely those who contribute a specific amount of money. Perks can be anything from receiving a piece of art in the mail to earning a sit-down interview session with the director of the campaign.
As crowdfunding is praised for being “the future of business,” Indiegogo stays on top of the heap and continues to distribute millions on a monthly basis. Even YouTube is catching on to the crowdfunding craze. It now officially supports the linking of annotation pages to both Kickstarter and Indiegogo. This means that instead of placing links in the easily overlooked description section beneath the video, they appear directly on top of the clip itself.
Besides competing with behemoth crowdfunder Kickstarter, another concern for Indiegogo is the JOBS Act. Indiegogo was invited to the White House for Obama’s signing of the act in April, and the act is now pending approval by the Securities and Exchange Commission. The JOBS Act is expected to become effective by late 2012 or early 2013 and will allow non-accredited investors to receive equity in exchange for funding.
While Rubin says that Indiegogo is looking forward to utilizing the JOBS Act, he notes that the company is working closely with the SEC to keep an eye on some of the act’s less appealing regulations:
“Some of the regulations, for example, [specify] that a small business can raise up to a million dollars. If they’re raising over $500,000, they have to have audited statements. I don’t think that’s very realistic in today’s business economy and it’s definitely not going to become realistic, I think, with crowdfunding.”
Rubin goes on to show his support. “In general, I think the JOBS Act is great,” he says. “It used to be that only accredited investors — the rich — were allowed to participate in investments, and this really allows anyone to participate in investing, which is very American.”
Indiegogo operates from its headquarters in San Francisco. The company salaried 15 employees last year and currently employs 20 people in San Francisco, New York and Los Angeles. According to Rubin, that number is set to keep expanding in the near future. As for what lies ahead, Rubin says “You’ll see more of the same commitment to our customers to help raise the most money that they could and help discover more campaigns to fund. I personally have used Indiegogo four times to raise money for my own causes. As far as an IPO, it’s hard to comment. We’re just focused on one customer at a time.”
Additional Indiegogo investors include Actarus Funds (Stephan Paternot, Co-Founder of the Globe.com), Georges Harik (one of Google’s first employees), Penny Black, Allen Morgan (Managing Director of Idealab’s New Ventures Group), Boris Wertz (INDIEGOGO Media Ventures), BoldStart Ventures, Brendan Synott (Co-Founder of Bare Naked), David Straus (Co-Founder of Withoutabox) and Robert C. Wolcott, Professor at the Kellogg School of Management. Indiegogo also plans to add Steve Schoettler, Co-Founder of Zynga, and Lewis Gersh, Managing Partner of Metamorphic Ventures, to the company’s board of directors.
This article is the copyrighted property of the writer and Communities @ WashingtonTimes.com. Written permission must be obtained before reprint in online or print media. REPRINTING TWTC CONTENT WITHOUT PERMISSION AND/OR PAYMENT IS THEFT AND PUNISHABLE BY LAW.