Thursday, November 20, 2014

Indiegogo co-founder envisions banks, investors in platform's future

Indiegogo co-founder envisions banks, investors in platform's future

Indiegogo sees itself today as a platform to empower people to fund projects they love. Like other businesses that look to innovate and evolve, it sees itself in the future as even more.
Danae Ringelmann, Indiegogo’s co-founder and chief development officer, envisions a day when the crowd-funding platform also serves as a financial tool, giving investors a way to “never say no” again to an idea or small business that they previously might have considered too unproven and risky.
“We very much believe the future of finance is one where Indiegogo is co-working with the traditional system — banks, venture capitalists — where Indiegogo is this incubation platform for ideas,” Ringelmann said.
Ringelmann mulled these ideas as the company plans an expansion into the Chicago-based 1871 tech incubator.
Crowdfunding platforms such as Indiegogo and Kickstarter, its main competitor, offer users a way to raise money for projects from non-accredited investors — ordinary people who receive products or perks rather than equity in a company in exchange for their investments.
Ringelmann, who was in Chicago late last week to speak at the BAI Retail Delivery conference at McCormick Place, told Blue Sky she thinks Indiegogo can provide a platform for banks and venture capitalists to assess fledgling companies.
She suggested investors could use Indiegogo performance as an indicator of future success. She says she wants to see her platform integrated into investors’ decision making, perhaps to the extent that a campaigner’s winning track record could trigger a loan offer.
“We’re seeing VCs not only using Indiegogo as a way to source deals,” Ringelmann said, “but also after they invest in companies, requiring them to do Indiegogo campaigns so they can refine their product-market fit before they do the big launch.”ogo.
She pointed to a company that did just that, running an Indiegogo campaign after raising $7.6 million. Before going to market, she said, Misfit Wearables adapted its product based on funder feedback — benefiting the company and its investors. 
Jason Best, principal at San Francisco-based Crowdfund Capital Advisors, said investors already are using crowdfunding platforms to informally source deals and vet them. He said his firm, which works with venture capitals, angel groups and hedge funds, expects to see startups build on the practice of hybrid funding. This means that companies will raise money from formal investors and through crowdfunding at an even greater rate. He said venture capitalists may tell startups to raise a certain amount via crowdfunding as a prerequisite to investment
“It’s already happening informally,” Best said. “It wouldn’t surprise me if the next step were an arrangement between a prominent VC and a crowdfunding platform."
Indiegogo aims early next year to establish a Chicago presence in Merchandise Mart-based 1871. Ringlemann said Illinois native Kate Drane, the company’s head of design, tech and hardware, will lead the local charge and will focus on building an Indiegogo-focused community and ecosystem here. 
Ringelmann said the company will use the experience as a barometer to take Indiegogo to other cities.
“The reason we’re even talking about working with VCs is [Drane] recognized a need in venture investors that want to use Indiegogo to connect with entrepreneurs and allow entrepreneurs to test their products before they launch,” she said. “She unlocked that and has done an amazing job of building a community. The venture world has a certain culture, and she’s really remained true to herself. She’s now one of the most well-loved people in that whole hardware venture ecosystem.”
Ringelmann said products such as these are still in the idea phase but that they stem from a desire to democratize access to capital. That same desire drove her to found Indiegogo in 2008 after years of seeing her parents struggle to raise capital for their small businesses.
Indiegogo’s former COO, she now focuses on developing what’s next for the platform, including its future banking and venture capital-related plans. Indiegogo’s team and culture will help her do that, she said.
“We value collaboration and sharing and people who like to win together so much,” Ringelmann said. “That’s the kind of people we attracted, and now we’re actually influencing other industries with that type of culture.”

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