As far as disruptive digital businesses go, very few have had the kind of cultural and economical influence that Indiegogo has managed to achieve. As an idea that began in the mind of Danae Ringelmann back in 2002, it has led the crowdfunding revolution and drastically altered the way in which risky, but wonderfully promising projects get off the ground.
What you might not know is that Indiegogo was a reaction to Ringelmann failing to find funding for a theatre production she’d “worked her butt off” to put together. With her idealism running strong, she was frustrated that those who clearly wanted to see the project get off the ground, namely the actors and audience, didn’t have the power to do so. “Finance was broken,” she remembered, “and needed to be put back in the hands of others.” Starting as an offline idea, Ringelmann gained financial experience of things like funding vehicles through a bit of time on Wall Street. Her idea was to take that concept and and put a “democratic twist on it” – bringing public interest back into the decision-making process. This was an era when creatives ranging from artists to musicians were largely at the behest of wealthy backers, each of those cherry picking the projects they believed would have the most commercial value. But how could one or a few backers really know what audiences would go crazy for? That was the hurdle Ringelmann wanted to shatter, she just had to find an outlet for her democratisation mission. Key Indiegogo statistics:
Total funds raised on Indiegogo so far: $800m+
Number of people to have visited site: 117m+
Total raised from Europe on all campaigns: £51.9m
Biggest campaign to date: Flow Hive – $12.2m
Total VC funding raised by Indiegogo campaigns: $500m+
Not completely set on how to do this, she enrolled at business school and began explaining it to whoever would listen long enough. The University of California, Berkeley took her in and provided not only a mechanism to help bring Indiegogo to life, but also exposure to the two people who would ultimately become co-founders. Initially it was Eric Schell who first saw potential in the project, empathising with the finance issue having struggled in his efforts to help a theatre company in Chicago. He then in turn introduced Ringelmann to Slava Rubin and the three founding members, although they didn’t know it at the time, were brought together. Rubin was the one who advised the democratising capital move be taken online, but was faced with FCC regulation making it illegal for anyone to obtain a financial stake in a business that way. However, the three agreed that the opportunity was too big to not take online – even if they were going to face pressure to make it kosher. It is at this juncture that the creative minds of Ringelmann, Schell and Rubin came up with another innovation that would become a mainstay of the crowdfunding ecosystem – offering rewards for financial backers. Their thinking was if you can’t offer profit on the internet, then offer the next best thing. Rewards take the form of anything from a thank you postcard to early access to the product teams are trying to get funding to build. As the bedrock for websites like Indiegogo and its biggest rival Kickstarter, they have also now been adopted by equity-based crowdfunding platforms which want to offer investors an even bigger upside than profit. “It was a total experiment, but it’s now become a pillar for the market – everyone else has followed,” Ringelmann said. “It’s the same with the video pitch and the notion of showcasing the team. The fundamental components of crowdfunding were conceived on my whiteboard in Berkley.” She was frank in her admission that some things worked, and some didn’t, but the fundamentals were all essentially there. Ironically, she remembers thinking then that it might take 10-20 years to prove that the internet was an amazing mechanism for entrepreneurs, small businesses and creatives – basically anyone with an idea. Little did she know it would happen much faster than that. “We’ve now learned that in putting power back in the hands of people, great ideas come to life and in doing so a tonne of risk has been removed form the financial equation,” she suggested. “Luck shouldn’t be part of the financial journey. Entrepreneurial success should be a product of a great idea, grit and an audience that wants it.” Read more about Indiegogo:
Confident that they had an offering with massive potential on their hands, the three founders needed to find a distinct segment to start out in. While Indiegogo has, nearly a decade later, diversified so it fills every sector, that was not the case in 2007. Looking to Amazon as a case study of starting with one offering and building, they picked their own route. “Amazon launched with books and crushed it,” Ringelmann declared, “so we picked independent film with the intention of becoming the best film funding platform we can be.” As with most things on the internet, new opportunities arrived at their doorstep way before they had the time to execute on what they’d planned to do. The three quickly came to realise it had to be much more than film – bascially anyone who wanted to bring a concept to life. Most successful Indiegogo campaigns so far:
When we asked Ringelmann what the seminal moments during the last decade have been for her, she very quickly moved away from the big campaigns and explained all ideas are equal – whether they’ve gone from zero to $10,000 or zero to $10m, if that was what was needed to get the business of the ground. “For me, the seminal moments were just examples of people using the platform who really showed why we existed. We just wanted people to be able to fund what mattered to them, proving someone who never thought it world work wrong.” She recalled a story of a couple who were desperate to have a baby but couldn’t have IVF. Using Indiegogo and the simple perk of thank you notes, the two were able to raise enough money for the treatment and have their child. Another campaign which stuck with Ringelmann was one involving two young women at college in Berkley who loved to dance and came up with the random idea of having a pair of headphones that could radiate sound outwards as well as inwards. After coming up with the concept of cat earphones, they raised $3m on a goal of a few thousand. What really resonates about this story for her was a conversation she had with a venture capitalist who said they would never have backed such a crazy and risky idea run by a young and inexperienced team. “What has kept me up at night, the one main thing, has been to remove the gatekeeping process,” she revealed. “That’s what made it inefficient and unfair and what has differentiated us as others have come along and cherry-picked campaigns. We are here to let all ideas thrive, global or local, run by men or run by women.” Tune back in tomorrow to read the second part of our interview with Ringelmann, when we find out how she has dealt with competitors and why Indiegogo’s Enterprise Crowdfunding is set to provide corporates with a way to kickstart innovation.
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