No Bucks... No Buck Rogers. How to Raise $$$ from the Crowd
In this next sequence of blogs I'm doing a "deep dive" into crowd funding best practices. I'll discuss what I've learned about the hottest, newest way to raise funds online. Stay tuned, this is great stuff!
I first met Slava Rubin about a year ago in Munich, Germany, at the DLD Conference (sort of the European version of TED). He's a big-hearted, driven entrepreneur who in 2008, along with two friends, started Indiegogo -- one of the very early, very successful crowd funding sites.
"Today crowd funding is one of the hottest things since social media: A person with a great idea can find people who are equally passionate who can help underwrite it," said Rubin. It's the liberation of capital, a mechanism to underwrite big and bold ideas. It's also a source of capital that is growing exponentially. By the end of 2012 there are expected to be over 500 crowd funding sites generating $2.8 billion in funding -- a fivefold increase in just four years.
"The idea of crowd funding isn't really new," explains Rubin. "I would even go so far as to say that the Statue of Liberty was crowd funded. Joseph Pulitzer in the late 1800s was able to use his New York World newspaper to raise the money needed for the statue's pedestal -- there was about a 50 percent gap in funding it, and in his paper, Pulitzer urged the American people to donate to the cause."
"They got an average of 83 cents per contribution," continued Rubin. "Pulitzer ended up raising over $100,000 in six months from 125,000 people, which more than covered the completion of the pedestal."
Interviewing Slava in Manhattan, where he spends 50 percent of his time (the other half in Silicon Valley), I asked him to fast forward to today and the earliest days of Indiegogo, why they built it and what made it work.
"On the heels of the social media revolution, we got really excited to try Indiegogo as a whole new way of doing crowd funding. We sent 18 months planning the site," said Rubin. "Right after launching, we had strangers signing up and getting funding. Not our friends, not people we were connected to, but strangers using the site within weeks of its being launched and getting fully funded. We had zero marketing, virtually no money, at the time a horrible website, and still people were able to accomplish what they set out to do. Clearly there was something there."
The first project funded on Indiegogo was a movie, The Lily Play. "They only wanted to raise $10,000," Rubin said, "and they did it. Those final days before they hit their goal, we were rooting for them -- it was incredible to send this money to them." Since then, several movies have been funded -- including two that were award winners at this year's Tribeca Film Festival.
A notable project of a very different sort was the first "crowd funded baby," Rubin says. A couple who needed in-vitro fertilization to have a baby and couldn't afford the medical bills, having been turned down by insurance companies, turned to Indiegogo. At first they had tweeted about their situation, and the Indiegogo team, which checks the web for certain terms, got in touch with them and suggested they try Indiegogo to find funding.
"They raised $8,000 and they broke their goal," Rubin said. "And over 50 percent of the funds were from strangers." That particular project has had, perhaps, the greatest possible impact: "one life," Rubin said.
I asked Slava to describe the benefits of raising money on a his site. "There's five specific benefits we can offer entrepreneurs, artists and bold thinkers," he said. Here's the list he offered me:
1. You get to gauge demand and you get to mitigate risk: Does the world care about your project or not? If they don't, you may not want to spend the time developing it.
2. You get to test your marketing: Is this for young girls or old women, young boys or old men? The results you get really tell you a lot about your market segmentation.
3. You get more promotion: "More promotion than you could ever get on your own," Rubin said. "We get millions of page views every month, and you can get lots more exposure through Indiegogo."
4. You get data: This is "probably [the] most valuable thing you can get," Rubin said. "You get people's names, email addresses, physical addresses when they're willing to provide them. This is part of creating a community and creating a relationship. Instead of a one-time transaction, this is part of an ongoing thing."
5. You get the money: You get the funding, of course, in addition to the valuable items above.
At this point Indiegogo has more than 7,000 active campaigns. It gets millions of pageviews every day. It distributes millions of dollars every week to people participating in campaigns. "We are funding projects in virtually every country in the world. We're totally global," Rubin said.
So if you've been hiding under a rock and haven't heard about crowd funding, stay tuned… there's a lot more exciting (and very useful) information coming your way.
In my next blog I'm going to provide you with Slava Rubin's top-secret advice on the best way to get your Indiegogo project funded to launch your boldest dreams.
NOTE: As always, I would love your help in co-creating BOLD, and will happily acknowledge you as a "contributing author" for your input. Please share with me (and the community) in the comments below what you specifically found most interesting, what you disagree with and any similar stories or examples that reinforce this blog that I might use as examples in writing BOLD. Thank you!