The rewards-based crowdfunding realm has become a robust and diverse sector of the finance industry. While some in the securities space look down upon platforms such as Kickstarter and Indiegogo, this is a misplaced perspective. Rewards platforms have become an important testing ground, and funding source, for multiple categories of businesses. Today many VCs ask aspiring technology products to prove their concept by pitching it to the crowd. This is a much more efficient process than extensive focus groups, or shooting from the hip and hoping a product is a success. Indiegogo co-founder Danae Ringelmann has frequently spoken about how crowdfunding has made “failure more efficient” and the product development process “smarter, faster, cheaper…”. And she is right. Her co-founder Slava Rubin recently shared that over $300 million of VC capital has ended up in the SMEs funded on Indiegogo highlighting the importance of crowdfunding in the capital ladder. So don’t get me wrong when I say Indiegogo needs to change. We love the platform but there are some things that simply need to work better. And they need to be fixed now.
Crowdfunding has been characterized as facilitating transparency and allowing “crowd-wisdom” to decide whether or not a product or service is viable. Having hundreds, perhaps thousands, of eyes on a campaign adds a lot of scrutiny to a product – something that is especially helpful when a new device incorporates evolving technology. Do you read the comments before you back a crowdfunding campaign? I do. And while I ignore the trolls and crazies, I welcome and appreciate the wisdom and experience of people who clearly know what they are talking about or simply have a valid point to make. This is part of the most powerful aspect of crowdfunding: the ongoing communication and discussion between backers and potential supporters.
Crowdfund Insider has written about several alleged “scampaigns”. A good example is the case of the wallet-drone, a crowdfunding campaign that was labeled an Alibaba clone as revealed by the deep-digging crew on Reddit.
Then there is the “gravity board” called Revobot, a kind of a mini-Segway without the handlebars, that was pitched as an innovative product; something new being supported by enthusiastic crowdfunding backers. Yet this product was already readily available on Alibaba. In fact some of the neighborhood kids have been cruising around on a Revobot-like product this summer while the campaign backers were being asked to wait to receive their “perk”. The campaign was small enough not to capture too much attention elsewhere. A couple commenters attempted to alert potential backers to the fact a similar product was already available but the campaign creator quickly deleted the comments. I call bullshit. If the crowd is censored than crowdfunding platforms fail to accomplish their goal. This is a transparency fail and is something that needs to be fixed now. Slava Rubin himself says the “key is transparency”.
What say you? What about the trolls & crazies? For anyone who followed the Sondors eBike crowdfunding campaign, the questions and accusations by commenters were fast and furious. The comment board became a bit of a farce at times yet Agency 2.0, then Ivars himself, pretty much let it go. In the end, the campaign raised a lot of money even with the constant scrutiny. Indiegogo, please let the crowd engage and reveal both the pros and the cons.
All contributions on Indiegogo are non-refundable. If you back a campaign, be it “fixed” or “flexible” funding, your money is pretty much gone. As Indiegogo states, a contribution is between the campaign owner and contributor. Perhaps you encounter backers remorse after a problem, or worrying question, is revealed by a comment (that has not been deleted)? Sorry. You are out of luck. You can panic call your credit-card company or beg the creator to send your money back. Neither is much fun. If you ask for a refund – sometimes more scrupulous creators comply – other times not so much.
Now Indiegogo does not release funds until after a campaign is completed. Within 15 days according to their terms. But shouldn’t you be allowed to change your mind? At least before the campaign closes? I think so. Once again if transparency prevails, a backer should be allowed to bail if you become concerned about the project viability or progeny, prior to campaign end. There is nothing worse than giving your money to someone and then discovering the campaign is bogus or in doubt.
Indiegogo has been the catalyst for many truly awesome products, something we want to see continue. The company expects to move into the investment crowdfunding space – most likely when Title III, retail crowdfunding, rules are finally revealed. The combination of perks with ownership should be a powerful incentive for their legions of followers – if they get it right. As a relatively new industry, there will always be bumps in the road, and a need to adapt, but then that is part of the process of becoming smarter, faster and more efficient in refining your product.