Crowdfunding website Indiegogo offers investors insurance in case projects fail

 
Jessica Morris
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Crowdfunding website Indiegogo will trial an insurance option for its users (Source: Getty)

Crowdfunding website Indiegogo will trial an insurance option for its users, in case the projects they invest money in fail to materialise.

It's currently being tested on one project, a wearable band that helps manage stress called Olive.

Potential investors can pay the $15 (£10) "optional insurance" fee in addition to the $129 required backing, as reported by TechCrunch.

The new insurance feature is likely to help Indiegogo win against its main competitor Kickstarter. The latter is currently the most popular crowdfunding platform, as it's believed to be better at filtering out unrealistic projects and straight-up scams.

An Indiegogo spokesperson said in a statement to TechCrunch:

Indiegogo regularly develops and tests new features to meet the needs of both funders and campaign owners.

This pilot test is currently limited to this individual campaign.

Crowdfunding lets a number of individuals invest typically small amounts of money into a project. Websites such as Indiegogo and Kickstarter are a platform through which entrepreneurs can advertise their ideas to potential investors.

Critics suggest the sector lacks real regulation which leaves investors vulnerable to losses and scams.

Loan-based crowdfunding - mainly peer-to-peer lending - has been regulated since April by the Financial Conduct Authority (FCA). It announced the new rules in March this year.

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