WHAT does the rewards and donation-based crowdfunding sector look like today? Despite having a longer history than equity and debt crowdfunding, the fast-growth of platforms which offer perks and non-monetary rewards in return for investment doesn’t get so much media time.
Indiegogo, a US-based platform set up in 2008, has 16m visitors a month. It doesn’t offer equity stakes in companies – only gifts and rewards. A campaign creator can choose between a flexible or a fixed fundraise, and the amount they make can come down to which option they pick. Fixed offers an all or nothing deal – if the campaign doesn’t hit its target, then the money donated is returned. Flexible means funding is secured despite not reaching a goal, but Indiegogo will take 4 per cent if it is reached, and 9 per cent of whatever is raised if it isn’t reached.
Increasingly, the platform has been looking across the pond to Europe for business. I spoke to Anastasia Emmanuel, European director of technology and design at Indiegogo, about crowdfunding in the UK, and how the European market is developing.
Since going international, what have you noticed about European markets?
As it stands, a third of our campaigns now come from outside the US. I think the UK in particular has started to adopt more of a “US mentality” in its execution of crowdfunding campaigns. We see lean, agile teams understanding the importance of creating increasingly sophisticated campaigns and building a community of supporters ahead of the launch. Execution is key, and as the crowdfunding market becomes ever more crowded, it’s even more important to prepare strategically and launch a strong campaign.
We’ve seen widespread adoption of rewards-based crowdfunding across Europe. Can you talk us through some country-specific developments and the kind of products you’ve seen raising money?
The industries coming to the fore, and ways that campaigns are executed, vary quite a bit from country to country. Spain is a really interesting one to look at: it’s not surprising to see strong innovation coming out of the mobile sector. That’s been influenced by the longstanding Mobile World Congress, and the largest Internet of Things (IoT) meetup in Europe. And next week, Barcelona will also be hosting the biggest IoT world congress event, which reinforces the city as a European hub for showcasing talent.
As a result, we’ve hosted campaigns for great products like 3D Pocketcopter, the world’s smallest flying camera (and it was around before drones came onto the scene), and Wattio, which helps people manage and save energy. Spain is also a very design led country, and lots of the products that list on Indiegogo are simple but very useful – like the Closca fsoldable helmet. As the crowdfunding market develops there, and the execution improves, I think we will see a lot more in the “smart” connected space and design sectors.
Another place worth mentioning is Finland, where there’s a big trend in IoT, with a huge amount of technical talent wanting to produce and market their own products, since the decline of Nokia. You see things like the Oulu-based Asmo Charger, which automatically switches off when not plugged in. One of the most exciting products this year for me was Puzzlephone, the world’s first modular smartphone.
I should also mention Germany, because its established engineering community means you often see creativity and technical ability combined – and there are lots of crowdfunding projects coming out of the country, particularly in Berlin and Munich. Panono, a panoramic camera ball, raised over $2m (£1.3m). We also worked on a product called Dolfi – a hand-size device that cleans your clothes using ultrasonic technology.
We tend to associate crowdfunding, and alternative finance more widely, with London. Are any other European cities making waves?
Certain cities have built a very strong ecosystem for crowdfunding: Paris is a good example, and it’s popular in other French cities too. The market there has evolved quickly because there’s so much technical expertise available.
Last year, the French government made a change in financial policy to make crowdfunding startup friendly. There are 28 crowdfunding platforms active in France (Britain has 44 and Germany 20). The new regulation brought in a quality label for rewards and donation-based platforms, issued by the government, for those that hit a specified level of transparency and customer protection. For loan and equity-based platforms, special statuses have been created which don’t require minimal capital, and there are some rules on cost, information and risk.
There are also increasing numbers of VCs and investors emerging in the hardware space. All of this makes France one of the fastest growing crowdfunding market in Europe. I have been working on Buddy, a family robot, which has raised $600,000 in the past few weeks. Beautiful design is also strong in France – you just need to look at campaigns like the Nevo minimalist watch and Bionic Bird.
Can you tell us about some growth plans that Indiegogo as a platform has been working on?
Earlier this year, we created InDemand, which allows our campaigners to move seamlessly into taking pre-orders after their campaign has finished. We’re also launching pilot initiatives with retailers such as Amazon Launchpad, distributors and manufacturers to help streamline the process as much as possible for our campaigners. After all, crowdfunding is an important but small part of the journey of bringing a product to market, and we want to build sustainable businesses that could be the next Nest or Jolla.
Since the Securities and Exchange Commission (SEC) produced new regulation for equity crowdfunding in the States, is that a market you’re now looking at?
Our mission at Indiegogo is to democratise access to capital, and we’re encouraged by the new regulations, because they will enable more startups and small businesses to secure additional funding, while also providing strong investor protection. And yes, we are continuing to explore how equity crowdfunding may play a role in our business model.
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