Danae Ringelmann, Indiegogo: Fundraising by Crowd Sourcing

Transcript follows & video below

I wondered if you could tell me the story about how you created Indiegogo & what was the motivation behind it?

We fundamentally created Indiegogo to democratize fundraising. We wanted anybody across the world to raise money for their ideas. It all started many, many years ago actually when I was working on Wall Street in New York & helping filmmakers on the side & theater production on the side on the nights & weekends that I had. I experienced first hand how hard it was to raise money the traditional way with drumming up interest from individuals who had big high net worth etc. There’s something very fundamentally broken about that. I had a filmmaker send me his script after he found out I worked at a bank, spending $20 to FedEx it thinking I could be his angel to come & save him. It just really bothered me because I was 22 at the time. I didn’t know anything really about much. He had had a lifetime of work behind him & he was begging me for money. That resonated with me really strongly. I remember being really upset & calling my Mom, being pretty distraught. She said ‘Well if this really bothers you Danae, do something about it.’

Danae Ringelmann

Yeh for your Mom.

So planted a seed. It took a while for me to figure out what it was going to be. I came up with an idea. I went back to Business School @Berkeley to launch this idea. I met my cofounders who have been amazing. They came from technology & strategy backgrounds & they said if you really want to democratize fundraising you have to take it online. So we did. And now we’ve created this global platform in over 159 countries where anyone who has an idea & a passion can create a campaign & raise money. No one’s stopping them.

Danae Ringelmann

That’s so fantastic, I have to say. Great story too, wow! In the past have you found that women have more challenges as regards getting investment & funding. A lot of my interviews have obviously been focused on women & I just wondered if you’ve noticed in your experience that that has been a problem or a piece?

One thing I’m actually quite proud of is that on Indiegogo, women are 5 times more successful on Indiegogo as they are in the venture world.  So that’s pretty shocking, I think about 8% of venture backed companies are run or cofounded by women.  And on Indiegogo 41% of successful campaigns are run by women. So I think that just speaks to the democratization of the internet & of Indiegogo & what platform we’ve created where we literally give anybody the same tools to succeed. And it’s up to them to work hard & raise money but I think women are just as competent. Our platform is proving that having great ideas & raising the money from the people that care the most about those ideas.

Danae Ringelmann

It’s interesting that so many women are participating on the platform because one of the complaints that the VCs & women founders talk about is that there is not enough women actually going for venture or angel investment. Because of that the numbers for success are much lower. So would it be a safer means of sourcing investment, do you think, doing it a crowd sourcing way?

I think yes. Well let me step back. I think raising money via crowd sourcing so by launching a campaign on Indiegogo involving your network, extended network, friends of friends, future customers, friends, followers, everyone who is passionate about your idea. It’s a great way to jump start your fund raising funding because it not just gives you money, that’s clearly a benefit. But it also validates your market. We had one campaign that had reached out to 43 vcs in the valley. They all came back & said get a little bit more market traction before we put money into you. They said but we need that little bit of money to go build a product to then bring it back into the market & show that we have interest. What they ended up doing they went onto Indiegogo raised $25k for their mobile device. Now the vcs are calling them. It’s completely changed the dynamics. So I think it does a great job of validating that you’ve got a fantastic idea. We have one campaign called Emmy’s Organics which was by a young woman who wanted to expand her bakery for example. What she had done, she had already taken out her first loan to get her storefront up & now she needed another $15,000 to fund a new brand overhaul of her company. She just didn’t have the working capital & the cash flow from her existing business to expand the bakery & fund this brand expansion. So instead of trying for a second loan, she went onto Indiegogo presold macaroons & brownies to raise over $15,000 to fund revamping of her brand. It was incredibly powerful because it validated that people wanted to buy her stuff. She actually got more of her product out into the marketplace. It helped with her marketing & it got her money to actually do the branding. And it prevented her from actually going into debt further.

Danae Ringelmann

So what I’m hearing is that it’s actually knocking quite a few balls rather than just the one of raising investment.

Correct. I talk about the 5 benefits of crowd funding all the time. Clearly money is one. Second benefit is market validation that we just talked about, prove that people want your product or service. Third is the marketing that happens the moment that you have people voting with their dollar, they’re your best marketers ever by sharing on facebook & Twitter. Our whole platform Indiegogo is optimized for that, the sharing is prompted. The fourth benefit is the participation element from your customers or fans or funders. They’re kind of all one right now. Because whats happening on Indiegogo is customer financing in a very broad way. You’re giving your customers, fans a chance to participate in the making of your product which is something that they’ve never really been able to do before. If you wanted to make a music album for example, you would go off take out a loan, scrounge the money together. Go into the studio, pay the studio person for space & rental time, go make your album. Then go start selling your CDs. Now we have musicians, lots of females who are just preselling their albums to their fans. Their fans are pre buying the album & the money that they are actually raising is being used to go make the album so they can actually deliver the CD.

To summarize: 5 Benefits of crowd funding:1) money 2) market validation 3) marketing 4) curry serendipity 5) participation & support

Danae Ringelmann

I guess there’s a component in this of actually, because it is actually on the internet & because there’s lots of people involved, that it’s also spreading your brand or your name & getting more fans really? At least what’s possible, I would imagine?

Totally. All the feedback that we hear from customers is the amount of overwhelming support they feel when they launch a crowd funding campaign. Some of them are almost brought to tears because they know they have fans out there but they won’t really know how much they’re caring. When you vote with your dollar, you show how much you really care. We had one campaign owner, a Mom of 3 kids. She raised money for her photography business. She had been working part time for a long time & really wanted to launch her own business & was struggling with time & kids & the whole shebang. So she went onto Indiegogo, raised the money to launch her photography project. She was overwhelmed by the outpouring of support to do this. She got picked up by Good Morning America & then she got a book deal or an offer (we’ll see if she takes it). Talk about unintended, unexpected benefit that comes.

Danae Ringelmann

Opportunity, yeah.

There’s a man who writes about fundraising for filmmakers specifically. He calls this phenomenon the idea of ‘currying serendipity’. When you put your idea out into the world saying this is what I want to do, hey world I’ve got this passion, I’m going to do it with a little bit of your help, with $5, $100, $20 maybe just sharing the link 5 times with your 5 friends, you can actually help me do that. What ends up happening is the campaigns will fly around the internet & you never know what kind of good stuff will come out. We had actually a film maker, a woman who was doing a documentary on Hava Nagila, which is that famous Jewish song that everybody dances to. Everybody knows the song.

Danae Ringelmann

Even in Australia!

Even in Australia! It’s awesome. She ended up raising $13,000, all from people who loved the song or loved her work. Her campaign flew across the internet by being shared on facebook & email etc. She got a call one day from the grandchildren of the man who wrote that song from Israel. That’s because she put it out there in the world that she was doing this. Now they’re helping her make the film & providing introductions for even better interviews. So actually the quality of her film has gone up. The key here is just share, be transparent, be open. Invite people in because that’s what you’re doing with a crowd funding campaign.

Danae Ringelmann

Would you have any tips for women for those of us who have campaigns on Indiegogo? Any tips about how to make it work better?

Oh we have lots of tips. We actually put all of our tips & insights into our blog. So I encourage you to go check out our blog on Indiegogo . But I think the keys to success for raising money & engaging your audience is really starting with a great pitch. What that means is 3 things. It means getting really personal. So people contribute to people not just ideas, but people. So what that means is make a video pitch clip, put yourself in it, show why you’re making this project, why you care so much. What the impact on the world is going to be & what’s going to happen if it doesn’t happen. Because people need to feel the emotional tie to what you’re doing. And it doesn’t have to be just a cause or charity, even though that is a very strong element on our site. But it can be a small business. We have one project called ‘Walk in Love’ where a young couple own a T shirt design business & they just had gotten themselves into a kiosk & a mall. And now they needed to raise about $15k or $30k to build their business & expand so they could actually take out a space in the mall, a full office. They just got really personal, they put themselves in it. They showcased why they’re making T shirts & what the stories on the T shirts were. It was really personal & after watching that video you felt I want that guy & girl to win. So it’s that emotional tug. It’s a big key, so keep it personal.

Be transparent & specific with your use of funds. Talk about what you’re raising the money for & how you’re going to spend it because people like to know where their money is going. If there’s transparency there that will be more likely to help you raise money. The 2nd key ingredient to be successful with this, is being proactive. The last thing you want to do is post a campaign & walk away. Posting a campaign is just the beginning. You have to continue to update your fan base, your followers, provide progress updates which we give you all that technology on Indiegogo to do. Get out there & be proactive with the influencers in your area. So what that means is if you’re this T shirt company, it’s about going to bloggers or organizations that are trying to help small businesses in your area & having them write about your campaign. Or just being very strategic with who are the people in the world, what reporters, what leaders, what facebook group leaders, what organization heads care about your campaign succeeding. The 3rd element of a great success story is having a community that cares. So getting back to the market validation, if you’re creating something that no one wants to buy or no one wants to fund, then maybe it shouldn’t be done. Maybe it should stay with you & that’s it. But if you have a community that cares & you have customers that want your product, if you have fans that want your music, or if you have people out there that care about the charity or cause that you care about, then you’re going to be successful. It’s just a matter of reaching them.

Danae Ringelmann

I’ve heard you say then that it’s not just creative projects that this covers? Even a small business or a startup could actually get a bit of a start with some funding by doing some crowd sourcing? And you’ve got a few businesses on there I gather?

Oh we have lots of businesses & lots of women owned businesses. There’s one in particular that stands out, she was a fashion designer. She was trying to launch her fashion line. Then a makeup designer, she actually had investment dollars ready to go ready to launch her makeup line. But the investors wanted her to use chemicals in it & that was her whole point was to make a chemical free makeup line. So she said thanks but no thanks. She went onto Indiegogo & she raised all the money. She raised several thousand dollars to launch her makeup line. She did it by offering really cool perks. Like the ability to name the lipstick or the mascara. You can get really creative.

Danae Ringelmann

Yes well thank you so much for all this input & I definitely see that it’s another way for women to actually raise funds.

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