Rewards platforms like Kickstarter and Indiegogo were once the rage. The concept of “pre-sales”, enabling creators to offer a product before its production and giving interested consumers the opportunity to purchase it at a discount before its wider release, was embraced by many. But the reality was more difficult, as creators struggled to deliver on their promises, with many projects failing, thereby discouraging participation. In the end, these platforms are little more than e-commerce at a discount with a kicker that you may never receive the product. Many consumers decided it was a better option to go to Amazon and have the item delivered the next day, avoiding the risk.
While the Kickstarter pre-sales platform appears to be healthier (est. annual revenue of $113 million), Indiegogo was sold off to a Poland-based game board company, Gamefound, this past summer. While no details were released on the sale, estimates put IndieGoGo’s annual revenue at around $36 million. This was a big detour for a company that once had ambitions to enter the securities market, only to quickly fold and exit the investment market.
A recent report in The Verge indicates the transition to Gamefound’s control of Indiegogo has been a bit rocky, with an “upgrade” launched in October marred by technical problems, delivery delays, and user frustration.
As part of the transition, Indiegogo is attempting to launch a new feature dubbed “Express Crowdfunding,” where creators can ship things while the campaign is ongoing, which may be having challenges as well. Of course, this model is effectively an e-commerce service, which makes Indiegogo little more than a novelty shopping platform.
While the aspirations were grand and platforms did some good, companies like Indiegogo were always ecommerce, not crowdfunding, which involves a securities offering in which investors seek to benefit from an investment.