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5 Secrets to Unlock Crowd Funding

In this blog, I'm continuing my look at Crowdfunding site +Indiegogo  and getting inside advice from my interview with its CEO & co-founder Slava Rubin.

I've personally raised hundreds of millions of dollars in donations and sponsorships over the past 20 years. Raising money for your startup is never easy, but it's the lifeblood for making your dreams real. The first step is usually finding friends, family or others who share your passion and vision. That's why I'm so excited about crowd funding... It changes everything. It's accelerating the velocity of capital and making it easier than ever to launch passion-driven endeavors.

Let's continue in this blog with my interview with Slava Rubin, CEO and co-founder of Indiegogo. A quick look at the top three funded projects on his site tells a fascinating story of diversity. One project is based on making a dream come true, another is based on social justice and the third backs a very geeky (albeit cool) piece of hardware... and they all blew through their initial funding goals:

"Let's build a goddamn Tesla Museum" -- $1,370,511 (161 percent over goal)

"Let's give Karen -- the bus monitor -- a vacation" -- $702,384 (14,048 percent over goal)

"BugASalt" (A gun that shoots houseflies with salt!) -- $577,631 (3,851 percent over goal)

The one I found most fascinating is the second, "Let's give Karen -- the bus monitor -- a vacation." This particular Indiegogo campaign has actually had the site's greatest exposure and showed just how potent and unexpected crowd funding can be.

This challenge concerned a 68-year-old bus monitor named Karen Klein, who was verbally harassed by a group of middle-school students heading home from their school in Greece, a town in upstate New York. The kids who perpetuated the bullying took a video of their actions and uploaded it onto YouTube.

"The video turned back on them," said Rubin. "A good Samaritan named Max Sideroff, who saw the video, created a campaign on Indiegogo to raise $5,000 to send the verbally abused bus monitor on vacation." The campaign promo, which featured the YouTube video, said this: "She doesn't earn nearly enough ($15,506) to deal with some of the trash she is surrounded by. Let's give her something she will never forget, a vacation of a lifetime!"

"Within the next 72 hours, the campaign was funded in every state in America and in 82 countries," Rubin explained. "They proceeded to raise over $600,000 in just those 72 hours." At this point, the campaign has raised over $700,000. "The cool thing is not the money, but the reach."

And that reach is both egalitarian and enormous: Indiegogo is open to everyone. "There is no vetting, no curation, no gate, no judgment," Rubin said. "Everybody should have an opportunity."

This campaign for the bullied bus monitor took off immediately -- people responded viscerally to the video of the woman being verbally abused and took advantage of the chance to help her.

Other campaigns aren't as obviously potent. To separate good campaigns from ones that aren't as effective, Indiegogo has created its own ranking system, the Gogofactor. "It's our own proprietary index to allow campaigns to be measured against each other," Rubin explained. It weighs benchmarks such as funds raised, number of contributions, updates and comments, sharing and the quality of the pitch. The higher the Gogofactor, the better placement the campaign gets on the site and, of course, the better its chances at success.

"So what's your advice on the best way to raise money on your site," I asked my friend Slava. Here are the top five things he recommends to be most effective on Indiegogo:

1. Have a good pitch and a video. Have a video as part of your campaign. "If you have a video you will get 114 percent more money than if you don't," Rubin said. The video should be engaging -- not selling or begging -- in which people speak about what they're trying to accomplish and what people can get in return. The Indiegogo site provides advice on crafting good pitches.

2. Be proactive. With four or more people on your team, you'll raise up to 80 percent more money than simply with one person, advised Rubin. Offer constant campaign updates: let people know what's going on and how you're feeling. "You want to keep your campaign fresh," he added. "You don't want to create the campaign and walk away and hope for the best." In fact, "If you have an update every five days or less, you'll raise four times more money than if you do an update every 20 days," said Rubin. "An update is like a micro-blog, sometimes nothing more than 'Thanks, Jerry and Bob, for funding us,' or 'we found out we'll get the lease for the store we want to open.' That sort of update keeps it fresh." And it's transparent -- people can see who's behind the campaign.

3. Find an audience that cares. In the beginning, your pitch won't attract attention, so it's important to get friends and family to help fund you. (The site offers help in social media integration, among many other tools.) When you begin to reach a benchmark of 20 percent, strangers will start funding you. And at the end of your campaign, there's often a spike as well. "Everyone wants to back a winner or help the campaign get to the finish line," Rubin said.

4. Choose the length of your campaign carefully. On average, campaigns with targets will hit that target on day 36 of a 47-day campaign, Rubin said. A campaign can run from one to 120 days, although shorter is better. Around 40 days is ideal. Campaigns get a boost at the beginning when it's new and at the end as they reach their deadline. Campaigns that are too long never get the final boost.

5. Campaigns should include perks. Some 93 percent of campaigns that have perks hit their targets. Perks can include a secret family recipe, a discount when the new business is open, a party or a dinner, advance DVDs or CDs of films or music, or limited editions of artwork. The Indiegogo website offers a host of ideas and approaches.

Indiegogo is only one of hundreds of crowd funding sites. When I asked Slava what he believes makes Indiegogo better than the others, he listed four main differentiators:

Easy entry: "We are totally open to any campaign from anywhere in the world, for any purpose. We don't pass any judgment," Rubin says.

Ranking system: The site's merit-driven formula Gogofactor shows that anyone with a good idea and a proactive approach can create traction.

Customer commitment and support: "Whether it's a great big campaign or a tiny one, everyone has an equal opportunity for education and support."

Flexible vs. Fixed Funding: Indiegogo offers flexible or fixed funding. Flexible funding allows you to keep all the money you raise, while in fixed funding you collect funds only if you meet your minimum goal.

In my next blog I'm going to outline Indiegogo's impact on jobs creation and its potential in the future of funding, even in the corporate world.

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! 
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26 comments
 
I am inspired from your story.  I have a micro enterprise farm to table garden project that is gathering steam in our community.  After reading your article, I am going to give it a crowd source funding try at Indiegogo..... thanks!
 
Is there a service where they help you raise money on Indiegogo?
 
I'm quite familiar with these sites and probably indiegogo and kickstarter are two of the best known. One of the positive things about sites like this is that it gives people who have a passion or a project they are passionate about the opportunity to see it realized. I have been to both sites several times. I think the person who first introduced me to them was Thomas Mai. The great thing as well is that it gives like-minded people the opportunity to actually become part of the production, who invest and many options are always offered in the way they can do that. I think it's a wonderful way to get a project produced and is a great way for someone who is just starting out to see their film or project get produced without waiting years for it to happen.

Ron Greenfield
www.aspectsofentertainment.com
Author of the forthcoming book, "Perspectives on Entertainment - Pursuing Our Passion"
 
Hi everybody
We used crowdfunding last year to fund the further growth of our bespoke suits-franchise startup. We used the swiss based site called c-crowd.ch and raised about 500'000.- Dollars. I agree on these points that you mentionned and would like to add 2 more points. If the team that is looking for funding allready has some people that wan to give money to the cause i recommwnd them to add this money at the beginning of the funding process that leople that don't know the team don't need to do the 1.st step and be the 1st
movers.
2. a part from the movie i also recommend using a professional grafic designer to enrich the written information you provide for the potential donors/ cofunders

Good luck to all crowdfounders!

Mathias Böhm
Cofuder SuitArt 
 
Hi everybody! Crowd funding is not a loan, correct? It is a form of donation, isn't it? I mean, you must only pay the website its commissions (if any), but funders cannot claim anything but the perks you decide to give them. Is it really like that? Thank you!       
 
Thank you for the detailed insights into what makes Indiegogo work. The details are what is truly needed when going forward with any plan. They always say the devil is in the details. I know understand how true that is. The timeline 40 days and the tipping point 20% was the best insight :)
 
My comment would be that there is a possibility that with crowdfunding it will be like with youtube, facebook etc., At the beginning og the hipe the above examples are stunning.  But a couple of years later you'll need to hire a marketing company to hunt for hits/rankings on these sites because it might become real popular.

Yesterday Karen would not have received any funding because nobody knew. Tomorrow she won't receive funding because she will be competing with some thousand similar cases and cannot afford time and money to invest into marketing for the marketing (for the marketing). Just as yesterday you did not have dozens of "friends" or "followers" overseas because you couldn't communicate with them in the first place. Today you don't have those friends because they can choose between 1b other friends and might only choose you if you really invest into your facebook site.

However there are examples where the technology of the internet has provided us with "just more" and not less. Amazon and Ebay are examples. They have just provided more choice, more information and a better price - not less of any of that. The relevant difference between Amazon and Facebook is (from my point of view) that on Amazon the buyer knows (approximately) what he/she wants to buy (1), then Amazon helps them find the right product amongst millions of products (the value added workflow) and then the buyer gets connected to the seller (1). So you could characterize this to be a "1 to 1 through a value added workflow" relation, which seems to be the area in which the internet plays to all its strengths.

On Facebook (or crowdfunding for that matter), today you look at a 1:1 or a 1:many relation, which creates amazing and completely unexpected results for the first movers/trend setters but gets less exiting when millions of users are signing up. What is missing here is the value added workflow that brings the ONE offer together with that ONE request - something that I believe the FANTASTIC website kiva.org has achieved. kiva.org provides a system in which someone who wants to help is guided through thousands of opportunities to lend money to 3rd world entrepreneurs until they find the one that matches.

So for crowdfunding I would recommend to invest into the value added workflow that finds the right investment for the right investor. Characterization of investors but also the investment, categorization as well as soft evaluations etc. might be key here. Only when each investment has nearly equal chance to find its "personal" investor regardless of videos, presentation, marketing dollars etc. - only then (this is at least my opinion) can you create an Amazon.com for crowdfunding....
 
Great comment Lutz.  As keen as I am for this idea, I've had some niggling uneasiness.  You articulate very well the importance of the value added proposition delivered by Amazon and Ebay.  Do crowdfunding sites have as compelling a proposition?    It will be interesting to see if your predictions for this model come to pass.  At the very least your critique may inspire such sites to evolve.
 
At the end... there will be allways the Private Capital option or the Grants options, as second option!!!
 
Lutz  possibly has pointed to an important  feature of "crowd-xxx" (inclding xxx = funding) considering first "one to one" (e.g. Amazon) versus "one to many" (e.g. Facebook) and refering then to kiva.org as an example of "one to some": You purchase a (known) good on (e.g.) Amazon; you use (e.g.) facebook to leapfrog to build relationships with persons "far a way"; but for crowd-funding you have to find the like-minded willing to bet some / their money on your project. Question: how to find among the "some" among the "many"?
 
 
I am about brainstorming how I can adapt this process to my research field.. these posts are always a mental stimulus..
 
Can the world economy at this time of recession be crowdfunded?Kiva.org's Premal Shah observes that"the power to shape economic opportunity belongs in each of our hands." 
 
I am fascinated by the whole crowd-funding phenomenon.  Having quite a bit more experience in corporate venturing, and incubators, the disruptive impact of crowd funding on innovation is only now beginning.  Traditional venture campaigns almost immediately force the founding teams to begin detaching themselves as these capital sources tend to focus on the exit.  The strength in crowd funding is the emotional and social support the new venture receives that is, in the business sense, almost nurturing.  The business essentially launches with a sense of community behind it.  Likewise, those ventures that cannot garner the support from crowd funding, should take heed and really examine whether the "message" is not getting articulated clearly, or is the idea just not sound.  Either way, crowd sourcing can help a team cut their losses early.  
 
+Peter H. Diamandis +Indiegogo  While I think it's fantastic that the vacation for the bus monitor raised over $700k (and I was a contributor - that video was horrible) - what happens to the extra?  Does she get it all?  Does she retire (essentially a permanent vacation) now?  While I don't know that there should be upper limits (and I'm glad in this case there wasn't) the effort to raise $5k quickly exceeded everyone's imagination.  In the case of the Tesla Museum, it was specified that extras would go to things needed after the purchase of the property (actual buildings, staff hire, exhibit creation, etc.), so we donors knew what was going to happen with the money.

My question is: would it be possible to have "too much of a good thing"?  What happens if someone is crowd-funded and can't handle the extra responsibility that comes with so much unplanned money?  Is that even something +Indiegogo is concerned about or should be?
 
+Thomas Quinlan It would be good to get a follow-up on the bus monitor's story. The last I heard, she'd planned to donate to charity (link: http://gawker.com/5921031/bullied-bus-monitor-on-plans-for-vacation-fund-money-donate-to-charity-buy-cars-for-grandchildren), but since that's essentially on her honor, I suspect we won't ever know for sure. 

I wonder if the "too much of a good thing" problem is more of an issue for prospective funders than Indiegogo... funder beware?
 
When it comes to the Gogofactor of an idea, what makes some ideas stick out from others? I feel like in order for an idea to be successful on Indiegogo, placement on the site is key, and therefore the idea must impress the site monitors. How can I present my idea in a way that it will receive a high Gogofactor?
 
 Here is a comment we received via email from Jim Rapier, President of Barrington Development Corporation.

Still have the same problem as before. We are attempting to raise US$ 10 million each for two companies, one will make available cheap electrical energy where the user is, and the other will tell a person what is going on in their body so they can be responsible for their own health. Both will be very large and profitable businesses and the benefits to this world will be huge.
 
They both use nano technology and there are similarities in the two businesses which is why there is a need to do both. The but is, we have  a great amount of money from angel investors already and have to protect the IP because they have the right to be protected. One has already produced a very sophisticated CMOS IC which is part of the IP.
 
When I look at the projects that Peter mentions, the sums are smaller and the crowds are apparently large. That just doesn't seem to work with our conditions. Does he have other suggestions.
 
+Benjamin Wilbur I once stumbled across a marketing firm that helps with Kickstarter campaigns. I've also been approached by friends and family to help with their campaign, because I have a marketing background. This trend is unavoidable if you ask me.
 
Crowd funding is a term that is becoming ubiquitous and generic, much like Kleenex or Big Data. There are different forms of crowd funding . Indiegogo and Kickstarter are among the best known. Both are donations and not investments and each has plenty of great stories to tell and thousands upon thousands of campaigns that don't reach their goals.
Nonetheless, their impact on fund raising is profound. The continued democratizing of capital is a real change in the markets.

What many do not understand is that crowd funding for equity is not in place yet in the US. A few countries, like Australia, do have crowd funded equity investments and have quite positive results to report. Whether or not the SEC releases rules to permit crowd funded equity under Title III of the Jobs Act is still unknown. I wonder why, when so many people are willing to commit funding for projects, charities and the like for no return on their equity, the SEC fears crowd funding for equity, or at least the opportunity for return on capital. Any profound ideas why?
 
I would be interested in seeing what happens when people create and host their own crowdsourcing websites.  I saw an application on GitHub which allowed people to "Kickstart Themselves" by creating their own personal crowdsourcing website that is not attached to any crowdsourcing company.

I working on my own Kickstarter campaign which will go live in a few days that is raising money for my Global Literacy Mobile Apps project.  The tips listed in this blog post are very helpful.  As a result of reading Tip #2 Be Proactive I am going to recruit people for my team that will help me advertise this campaign.

The Kickstarter website says that 30 days is the ideal length for a campaign.  I am curious if there is actually a discrepancy between the length of a Kickstarter campaign and an Indiegogo campaign and other demographic differences between these sites.

Marlo  
 
I think trying to find people that care about what you are trying to achieve in your project is one of the hardest parts of having a campaign. You think you have everything you need, a pitch, a video, images, and although you get a lot of support through retweets unfortunately very few are contributions to your campaign. Even if you have perks for $1. Not as easy as some people think unless you have a brand new invention that wow's everyone just from the idea alone.   
 
The most promising tool to help enable economic growth, job creation, and innovation is crowdfunding. Crowdfunding is one of the most viable means of funding new ideas, small business and job creation across the globe!   But its not easy if you don't have the right connections and approach... Influence is not everything you also need a very good STORY!  And you need a GREAT START! If you can't reach 30% within the first quarter of your campaign it will take very much work to reach your goals! 
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