My recent interview with Adam Chapnick on crowdfunding, the history of Indiegogo, and the value of engagement in campaigns.
Adam Chapnick, principal of the crowdfunding site Indiegogo, sat down with me for 10 minutes at the Grow conference in Vancouver, Canada to share his insights on business. Listen to the audio recording.
Indiegogo is the world’s largest open crowdfunding platform, where anyone from anywhere can raise money for anything at anytime, according to Chapnick, who in addition to his work at Indiegogo is also CEO of Distribber.
There are over 450 crowdfunding platforms according to a recent 2012 report on Market Trends, Composition and Crowdfunding platforms by crowfunding.org. Indiegogo and Kickstarter are leaders in the industry. 1
How did Indiegogo start?
It was started in 2008, when Danae Ringelmann and her cofounders, Slava Rubin, and Eric Schell saw an opportunity to help revolutionize the way that films were getting funded, with an eye towards applying that to everything in the world. Danae was working as an analyst in the entertainment industry and really saw that filmmakers were having a hard raising funds, and conceived of this as way to solve that problem. We started off in film and then opened it up to anything, anywhere. Danae first had the idea in 2006 and then launched in 2008, so we’ve been around for about five years.
Was there anything out there like Indiegogo at the time or were you creating something new?
Crowdfunding isn’t new. It goes back thousands of years of people pooling their money together to get a common desired outcome. The Statue of Liberty was a popular example of crowdfunding.
People sent in $10 to help put the pedestal in the bay where the statue could go on. Doing it the way we do online with the interface that we created, we were the first that we know of.
Why is crowdfunding so popular?
It works because it taps into a couple of revolutionary ideas.
One, it’s a whole new layer of commerce for people who are creating campaigns to connect with their customers, fans or audience.
In the old days, they had to make whatever their thing was. When it was done they would go to market, and they would say does anyone want this thing I made and they would hope that they had an audience. Now with crowdfunding, the same people can go and say they have a plan or idea … you can be part of that.
In the old way, when [people] went to market, and someone did buy, whether they wanted it a little bit or wanted it a lot … they all paid the same amount for the thing. Let’s say it would be $10. If I kind of want it, it’s $10, if I really want it, it’s $10, or if I can’t wait to have it, it’s $10.
In the new way, you invite everyone into the process. You say if you’re a little bit passionate, you can get the thing for $10 when it’s done. If you’re really you can give me $50, you’ll get the thing in the special edition, or you’ll get two of things signed by me, or some other experience that allows you to be more connected to me — the process, and some kind of endeavour you maybe always wanted to be part of but couldn’t be. It’s a very exciting way to unlock the value of the creative prcoess people do, and invite people who want to be part of it.
I was talking about the idea of being the “shadow artist”. The idea that people always wish that they could have tried something else, but they made a decision to be what they are for some good reason. For example, I’m a dentist, but I wish I had been a baseball player. If you’re a lawyer but you wanted to be a movie star, but you don’t want to be a movie star enough to start that career and do all the miserable stuff you have to do to become an actor.
But I have a movie on Indiegogo, if I say to a Lawyer, if you give me something like 500$, then I’ll put you in the film in a scene. If you always wanted to be a film maker, you can come to the set and be part of the crew or make certain creative decisions just for trading money. That’s really fun, because suddenly you’re part of a process — just for a weekend — in exchange for money, and that was never possible before!
In the evolution of the kind of campaigns that people started, have you seen a difference in how people are presenting them or where they are in their project?
It’s been amazing, thrilling to see how people evolve. When it started, it was very one dimensional – like, “We need money, thanks, see you later.”
People have started to understand that engagement has helped projects earn more money. We’ve shared a lot of data. If you go to indiegogo.com blog under “Insights”, there’s a huge number of analytics that share how you can be 1000 per cent more successful with your campaign. If you do X you’ll make 100 per cent more than if you do Y, things like that.
What we’ve seen is mostly around how people understand how to engage their audience. Both in their video, where a personal video has really helped. When people started doing personal videos instead of a still photo. It increased campaign by 122 per cent.
There are other incremental increases like that around Perks, perk levels, perk amounts, and how to offer them.
As for Updates, if you update 31 times in your campaign, you make 408 per cent more money.
People are understanding that and do it. We’re having amazing results. 2
Are there any areas that are better suited to start a campaign?
We’ve been stunned by the variety of projects, businesses, causes, and creative projects that have used it successfully. One of the fun things about being an open platform, is that we very much believe in not curating. We are about not knowing better than you what’s worth raising money.
We’ve seen incredible things get funded that we’d never have dreamed of. We had the first crowdfunded baby a couple of months ago. A couple who was unable to get pregnant got IVF that they crowdfunded, and people gave them money. It worked and they just had a baby ( which they did not name Indiegogo, but that’s okay! )
The Tesla museum, that’s happening right now. It’s probably about to go over a million dollars. A guy thought it would be cool to buy Nicola Tesla’s old laboratory and stop it from becoming a strip mall. Lots of people agreed and now he’s raised 970,000$ and counting. Indiegogo’s blog post shows an interesting infographic on the key data points of the campaign, including the campaign averaged 6,000$ per minute and that over 20,000 people contributed with an average contribution of 25$, the campaign still raised over 875,000$ !
In general, is the amount of money being raised becoming a lot more?
A lot more. We break our own records every couple of weeks. I think it’s only going to keep happening. So much of crowdfunding is still totally unknown to most people that would benefit from it. It’s thrilling to see how people discover and use it.
With amounts going up so much, how can you be sure that all the money is going to go to what they say it’s going to go to?
All crowdfunding is a contract between the funder and the project creator. We’ve found that because of the nature of the crowdfunding endeavour, that you have to go through your first circle before stranger will start giving you money. The data shows that between 20-40 per cent of any campaign regardless of it’s goal needs to be funded by first circle, which is people who know you, know of you, know that you’re a person and has interacted with you. It could be your facebook friends, twitter following, your family. Once that thresh hold has been reached, then strangers will start to give. We found that if you’re willing to screw over your best friend, your mother, your sister, your brother, and everyone you know, then yes you can let down a lot of people. That’s a very powerful deterant and we’ve found that very few cases of funders of being disappointed because project didn’t say what they would do.
Even though it will often will happen that maybe you predict that you can do something with an amount, where you weren’t able to do that. By being in communication with your funders, they’re very support and often will fund you a second time to help you finish that you misjudged.
Why are you at the Grow Conference in Vancouver, Canada?
The reason that we are at the Grow conference is because it’s amazing place where hundreds and hundreds of incredibly creative people are bringing projects, everyone of which is worthing of an amazing crowdfunding campaign. Literally every person at this conference would benefit from an Indiegogo campaign.
Canada is a very active country for Indiegogo. It’s a natural fit. We’ve had a lot of success stories out of Canada, and I suspect there’s only going to be more.
What is the future for Indiegogo?
The future is finding more ways that we can serve the people we are serving better. Do more things that create more success and higher amounts of funding and more engagement, so more people can have success stories with their crowdfunding campaigns.
1 There are over 450 crowdfunding platforms according to a recent 2012 report on Market Trends, Composition and Crowdfunding platforms by crowfunding.org site. Additionally I spoke with Catalina Briceno of the Canada Media Fund at Grow 2012, and she announced that they were publishing a report on “Crowdfunding in a Canadian Context: Exploring the Potential of Crowdfunding in the Creative Content Industries”, which can bedownloaded here. Indiegogo and Kickstarter are leaders in the industry. [to avoid repetition of “crunch”, I’m taking out “Crunchbase” and using the link for “10 million”.] Kickstarter raised 10 million in 2011. In 2012, Indiegogo raised 15 million, which is the largest amount of money ever raised for a crowdfunding company to date, according to Techcrunch
2 Prior to our interview, Adam Chapnick spoke at the Grow conference about the key ways to a successful campaign:
- Create engaging video
- Identify exciting perks
- Set up tight deadlines
- Make it a team effort
- Share your campaign on social media
- Start a PR roll out
What do these six actions have in common? They show that you are committed to your campaign and are investing time and effort to ensure it succeeds! Here is some advice on how to approach taking these six actions:
- Have a Pitch Video: Secret to a great pitch video? Show your face, tell your story, show what your money is going towards, have a call to action, and share your passion (but keep it under three minutes)!
- Offer Three or More Perks: Good perks are creative and generous. The two most essential perk amounts are the $25 perk and the $100 perk. For $25 a funder can explore the solar system, get a DVD and a personalized thank you note, or be immortalized on a brick in a community theater. For $100 contributors get invited to a Damien Rice and Chad Urmstrom concert and a Venetian artist designed t-shirt, 20lbs of pasture raised sustainable meat and an invitation to a Barbecue festival, or a t-shirt, hat and autographed poster.
- Update Every Couple of Days: Use updates to showcase progress, say thank you, keep your audience engaged, offer new perks, and share some press you’ve received. Post updates to your facebook, and e-mail them to people who haven’t contributed yet.
- Post 5 or More Media to Your Gallery: Media can include videos, picture images, or artwork and can be sent out via updates. Media builds an emotional connection between campaign and the funders and provides context for the campaigner’s motivations and commitment. Be sure to share your media on social media platforms too!
- Link to Your External Pages: If you have a personal website, Facebook page, Twitter feed, or YouTube channel, put the link on your campaign. Complimenting your campaign page with external online assets builds credibility, and enables you to tell a more robust story. It also helps you share your campaign more broadly and rapidly.
- Keep Your Campaign Less than 60 Days: Having a shorter campaign improves your buzz and virality. People are less likely to put off contributing if there is a sense of urgency about your campaign. Things to keep in mind regarding deadlines: How much time do you and your team have to run the campaign? How much money do you need and when will you need the money? What is the schedule of your outreach strategy?