You are not logged in. LOG IN NOW >

Crowdfunding 101: A User's Guide to Success on Indiegogo. It's All About Connections.

BY Sarah Lai Stirland | Thursday, May 1 2014

The Campaign for Local Power used Indiegogo to finance a successful grassroots drive to switch to municipal power

New developments in crowdfunding seem to hit the headlines on a daily basis these days, with new kinds of platforms opening up all the time.

Nevertheless, Indiegogo, one of the first platforms to have been established in 2008, is still going strong, with a fresh round of $40 million in Series B venture funding this January from Institutional Venture Partners, Kleiner Perkins Caufield and Byers, Insight Venture Partners, Metamorphic Ventures, and ff Venture Capital.

The funding from these backers means that the company is expected to grow exponentially. Kleiner's John Doerr said in a January interview with the Wall Street Journal that Indiegogo should distinguish itself from emerging competitors by focusing on the customer and emulating Android and YouTube's open platform strategy. This open approach matters, as you'll see from my recent interview with Indiegogo's Cause Director Bre DiGiammarino, because at the same time that it is growing a large global community, it is also enabling thousands of eye-opening and important niche projects that otherwise might not have gotten off the ground.

There are plenty of other reasons that nonprofits and social entrepreneurs should consider crowdfunding as another channel for fundraising. One is that the platforms are useful for testing ideas and communications strategies. For Indiegogo's part, it offers nonprofits a 25% discount on its fees, which for everyone else is nine percent if they don't meet their goal, and four percent if they do. Also, unlike Kickstarter, Indiegogo offers 'flexible funding,' meaning that fundraisers can collect what they have raised even if they don't meet their stated financial goal. That's not true for Kickstarter, which also doesn't allow political or cause-related campaigns on its network.

My own interest in the crowdfunding phenomenon for nonprofits springs from a brief encounter with Indiegogo Co-founder Danae Ringelmann at DENT, a conference that took place in Sun Valley, Idaho late March. Ringelmann was interviewed on stage by the sharing economy expert Jeremiah Owyang. After the interview ended, dozens of people in the audience approached Ringelmann for advice on fundraising techniques for their causes.

What struck me during that impromptu mini-seminar was the torrent of fundraising techniques and tactics that poured out of Ringelmann as she was mobbed with questions. One comment that stuck with me particularly: Ringelmann said that the most common mistake nonprofits make when conducting crowdfunding campaigns is that they blindly solicit money from the public without first examining the resources they already have in the form of their personal networks. They ought to make the most of the knowledge they have about the interests of those people in their networks, and then tailor their campaigns to appeal to those interests.

Successful campaigns, she said, generally receive 20 to 30 percent of their initial funding from friends and family before they receive money from strangers arriving at their campaigns through wider social media networks.

Listening in, I realized that much of the conversation would have interested techPresident.com's community, so I followed up for more details with DiGiammarino. Below is an edited Q&A, which took place in Indiegogo's offices in an old office building on Mission Street in SOMA.

Q: When would non-profits come to Indiegogo to fund a project outside of their normal funding sources, such as foundations?

A: I used to run a session I called ‘The Dog Ate my Grant Application: Crowdfunding for non-profits.’

I strongly believe that you can run a crowdfunding campaign at any time, and pretty much for anything, but what you need to be willing to do is put the effort behind it because running a strong campaign is not like winning the lottery, you put your project out there, and the world comes.

It takes a lot of effort to put together the whole story, to share what you’re doing with the whole world, and then to get the crowd to support you once you’ve gotten your initial support.

So, I’ve seen people do a crowdfunding campaign even before they launch a non-profit, when it was still just an idea in their head, and then get the crowd to give them the funds to do it. I’ve seen people do it as part of a pilot program. They tested their model in maybe one geography, and they’re ready to expand to others. So they’re raising funds from what they’ve proven to get to a bigger scale.

And then you also see non-profits who use crowdfunding at scale, and using it as a continuing piece for sustainability, either doing an annual campaign for their work via crowdfunding, or by having facets of their work use crowdfunding to sustain them. For example, KIVA has a partner page on Indiegogo, in which the KIVA fellows, who are volunteers, raise funds for the cost of their time abroad.

Q: Can you give me an example of a non-profit that crowdfunded itself before actually becoming one?

A: A good example is the App Camp for Girls campaign. It was a former developer who was at a professional developer conference. She looked around the room, and she realized that from her seat that she couldn’t see any other women.

So she decided that something needed to change, to encourage more girls to become developers. So she put up a campaign for App Camp for Girls, to teach girls how to code.

This campaign was to establish a location in Portland, Oregon, and they raised $50,000 very, very quickly, which was their goal to launch in Oregon. So she realized that there was a demand from the crowd even more than what she had imagined, so she encouraged people to contribute to suggest in the comments section where else she should launch.

So she’s now opened her Portland location in the summer of 2013, and is gearing up to have multiple locations in summer 2014.

Q: You're suggesting that crowdfunding is a way of determining whether there’s a demand for something, and whether people actually want to do something, as opposed to it just being a mechanism for fundraising. Can you talk a bit more about that?

A: Definitely. We almost find the word crowdfunding a misnomer, because the funding part is valuable. But there is so much more that is valuable about the process other than the funding part. It’s largely about finding out about who cares about your project, and how much do they care about it, what kinds of messages get through to them, and how they can be evangelists for you, and even getting feedback from them to inform your work as you grow.

Q: Can you tell me a bit about your role as Director of Causes?

A: Yes, so we tend to think of our work in three key categories, one of which is cause, and that’s really anything that’s moving the world forward in a positive way. It means that I have a large variety of types of campaigns that I work with, anything from a health campaign, to education, to politics.

It could be an individual raising funds, or a non-profit, or a social enterprise, or a company that is looking to do something with corporate social responsibility, and it’s all about sharing what works in those scenarios, and working with campaign owners to make them a big success.

Health and education are categories that I’ve focused on a lot lately.

Q: What are some of the successful political campaigns that have run on Indiegogo?

A: One of my favorite examples is the Campaign for Local Power, which ran in Boulder, Colorado.

There was some legislation coming up for a vote that was going to change some policy that was enabling local power provision. The campaign launched in part to raise funds to help support the campaign outside of online to help get the word out about the legislation.

But even more than raising the funds, it was more about a medium to get the word out about the legislation, and it ended up getting a lot of media both locally and I think nationally.

So that was quite an exciting example, and I do believe the legislation when it came up for a vote was actually held up, and that was a huge success.

Q: What are the things that distinguish successful campaigns from those that aren’t?

A: We say that you need to have a compelling pitch, an audience who cares, and an engaged promotion strategy. And we have best practices for all of those.

With respect to the pitch, having a video is a very good idea because campaigns with videos have more than double what campaigns without videos raise. The key thing that we find about those videos is that they should be personal, so if they share your story, or the story of somebody who cares about your work very deeply. So a person to person connection. So you also need to frame your pitch very clearly on what you will do with the funds raised, and what impact it will have, so there’s a transparency piece to it as well.

For the audience that cares, the neat thing about crowdfunding is that it enables you to appeal to a wide set of stakeholders. So think about people who will care because they know you as a person, or because they care about the purpose of what you’re doing, or they have passion for what you’re doing, and they want to participate in it. People like to feel that they’re part of something that’s bigger than themselves, or they like the perks. So you really need to think about all four of those audiences in creating your campaign.

For the third part, the promotions strategy, we’ve found that it’s important to really be engaged with your community. So think ahead of time on how you can the word out on what you’re doing, and then launch with momentum.

Ideally, we suggest raising at least 30 percent of your campaign goal within 48 hours of going live, because that can help you gain traction with the secondary network of friends of friends. And then when the campaign is live, treat it like a blog, come back to it, post updates on milestones you’ve reached in the campaign, share stories of the impact that you’ve had through your work. Just keep that conversation going with your community.

Q: Why should I use Indiegogo if I want to raise funds in politics or the non-profit world? Why shouldn’t I use the platform Rally, or something else?

A: Since Indiegogo was founded in 2008, literally thousands of other platforms have popped up, and many of them are very topic specific, whether it be by subject, business model, or geography. Indiegogo remains the world’s largest and most open crowdfunding platform. We have millions of people visiting it every week, and millions of dollars flow through it. We have campaigns and contributors in over 190 countries and territories. We are very open, no gatekeepers approach. Campaigns can launch anytime, anywhere.

All of that said, that gives us few key advantages, one of which is the size of our community. So all of that said, that gives us several huge key advantages, like the size of our community, so the most opportunity is enabled through Indiegogo because of the many people who are part of the community who care about the projects.

We’ve also been able to develop the best-in-class knowledge pieces, so we can share with you what works. We have a whole insights team who’s dedicated to looking at the data and figuring out what works. We have, for example, our online Playbook, which shares step-by-step best practices that we have found over time.

We also have our really amazing customer support team, which we call our “Happiness” team, who respond within 24 hours to any e-mail sent to support@indiegogo.com. They’re really fantastic. Those are the key reasons.

There are other more specific reasons as well, like you can receive your funds even if you haven’t hit your goal. That’s flexible funding versus fixed funding, where you don’t receive any of the funds if you don’t meet your goal.

We work with a payment processor called First Giving. They are a non-profit facilitator, so they verify the non-profit status if they raise funds for their non-profit on Indiegogo. They distribute the funds to them – sometimes even as the funds are being raised.

So let’s say there’s a campaign that launched to raise $50,000 to get 50 kids to go to camp. They’ll still be able to send the kids to camp even if they only raise $25,000. They’ll just send 25 kids to camp.

We have a higher fee for campaigns that have not hit their goal, because we want to encourage people to hit the goals that they picked. So our fee is nine percent if you don’t meet your goal. Four percent if you do, but we have a 25 percent discount for non-profits, so it’s 6.75% if you don’t hit your goal, and three percent if you do.

Q: Danae said that you had coaches or something along those lines …

A: We have a couple of online coaching resources. One is the Playbook, but we also have different handbooks for different sectors. We have a Film handbook, which actually came out yesterday, a Cause handbook, and a Hardware handbook. We also have our subject area experts, so I’m the cause director. We have different directors in the different topic areas.

We also have campaign specialists in the different areas. So we have a Cause campaign specialist who will look at any campaign who asks her to review it. She’ll give you very specific feedback for your campaign to help you launch with success, and then she’ll be a point person for the rest of the campaign.

Q: How do you get in touch with them?

A: Just e-mail me, or cause@indiegogo.com, or Bre@indiegogo.com, and we’ll pass it along.

Q: Is there a extra fee for this?

A: No, not at all.

Q: Can you tell me a bit about the role of the Insights team, and how they impact the process at Indiegogo?

A: Sure. So Indiegogo has always been very data-driven. As an Internet company, we have access to a lot of different kinds of metrics, but one of the examples of their work would be that datapoint that I mentioned: The fact that if you run a campaign with a video, you’d raise twice the amount than a campaign without video.

That’s an example of a statistic that our insights team has pulled out. Here's another one: Something like 90 percent of the campaigns that hit their goals have perks.

Q: Can you tell me a bit about the GoGo Factor, and how it impacts campaigns? How should the existence of the GoGo Factor impact the way I structure my campaign?

A: The GoGo Factor is a measure of social engagement, taking into account how much the world is engaging in your campaign, and we see that it applies across campaign areas.

I think the recent Tisch Multiple Sclerosis Center is a great example. They’re raising money for a clinical trial.

Their earliest community helped them get to a third of their goal right away when they launched. And then people started to share the fundraising appeal. People started to share it on blogs on specific topic areas, as well as by people who knew someone with MS, or had it themselves. Word really got out, and ultimately, that campaign raised over $300,000 from over 900 contributors. Their goal was $300,000, and they ended up raising more than $317,000.

Because they had all that initial momentum, they were ultimately featured on our homepage, and our social media networks, and I believe they were also in our newsletter, and they got a lot of momentum from us, and that continued the momentum.

The idea behind the GoGo Factor was that anybody should have the chance to achieve their dreams, rather than having us determine who should be promoted. We wanted the world to choose what they wanted to promote. It’s like Google’s Page Rank in that it’s an algorithm to determine what we should feature highest.

Q: In her talk, Danae said that she thinks crowdfunding enables long-tail kind of projects, very specific, niche projects. What kind of obscure cause-related projects has Indiegogo funded?

A: Well, it’s probably does do that because it builds connections that were hard to make before Indiegogo was founded. Some of them which probably aren’t as obscure anymore are for example, R.I.S.E. Yoga, which is a program to bring yoga to kids in school. They ran a great campaign to raise over $20,000 to expand their work to bring yoga to more kids.

Now this isn’t necessarily a model that would appeal to traditional foundations. But people in today’s world who have experienced the value of yoga are excited to help to bring that to kids. So that really helped them to catapult them to the next level of work, and they’re now doing another offline initiative that involves giving yoga lessons at a discount to people if you contribute, and that helps their campaign.

Another example of the long tail is in the health space. We had, for example, a researcher whose sons have Black Bone Disease, which is a really rare disease, and he ran a campaign to research this disease.

The campaign was not only to raise funds, but it was also to find out who else had this disease because they needed to recruit people who had the disease for the clinical trials. So they raised $98,000, and they were able to move ahead with their research.

Q: What are the top mistakes that fundraisers make on Indiegogo?

A: It could be an easy route to repurpose content that you already have. So maybe you have a beautiful video that you’ve made for a gala event, or an interview with a founder, but if it isn’t content specific to your campaign, it isn’t the right content to use exclusively, because people who engage in crowdfunding are looking for that connection. So if they don’t feel it, or they feel like they’re getting an advertisement, or they feel that they’re getting something that was made for something else, they’re not making the connection.

So that is the number one: Not personal enough, and repurposed content.

The second, I would say, is not integrating it enough into your existing strategies.

So for example, the Parkinson’s Institute did a fantastic job of integrating their campaign into their existing plan. So towards the end of 2013, they’d already decided as a team, across the company, the board, the staff, the leadership, that they wanted to open up their donor base to additional generations of people.

So when they got the offer from [venture capitalist] Bill Draper to contribute $100,000, instead of just accepting that contribution offline, they integrated it into an Indiegogo campaign. That was the perfect integration, because it helped them to reach a younger generation of donors.

Editorial note: In addition to Bill, the project managers made YouTube videos of Bill's son Tim Draper, daughters Polly and Becky, and granddaughter Jesse. The videos shared their experiences of encountering the disease through their mother and grandmother, and Bill's wife Phyllis Draper. They were able to leverage their high-profile social media connections to amplify the $100,000 donation into $554,000

So it was fully integrated. It was able to get the full attention of the Parkinson Institute development director, as well as the board of directors, as well as the donor base. So the campaign was fully integrated as a core piece of its end-of-year campaign rather than a side project that didn’t get the attention that it needed.