5 quick fire tips for crowdfunding on Indiegogo
In an exclusive interview with Startups', Indiegogo's UK & European director Joe Hughes shares advice for businesses raising money from the crowd
Launched in 2008, rewards-based crowdfunding platform Indiegogo is now a key player in the alternative finance sector, helping entrepreneurs to raise investment and showcase their products to a global audience.
With the San Franscisco-founded site having generated more than $1bn across some 700,000 crowdfunding campaigns in the past nine years, it’s little wonder that Indiegogo has, for many start-ups eager for an equity-free injection of cash, become the first port of call.
Speaking exclusively to Startups.co.uk during an Indiegogo workshop, Joel Hughes, UK & European director of Indiegogo, offered up some simple tips for start-ups considering raising finance from the crowd…
Use your product as the reward
If you’re pursuing the reward-based crowdfunding route – as opposed to equity-based platforms like Crowdcube – you’ll no doubt be wondering what to offer as incentive to get armchair investors to back your campaign.
Hughes’ advice is to keep your campaign simple and gimmick free, and to give prospective backers a physical product in exchange for their investment.
“The best type of reward is the product, as far as we’re concerned. The majority of the biggest campaigns we see in the UK, Europe and the US are crowdfunding for a particular product. They may well have started crowdfunding during a prototype stage, but ultimately, they’re crowdfunding because they need to validate the product and prove that there’s demand from their audience. It’s a massive pre-sale opportunity.
“The last few years it has shifted and more campaigns are coming onto Indiegogo with a fully working prototype. Whereas four or five years ago, you would have seen more businesses at concept stage.”
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Remember that crowdfunding is open to everyone
Hughes believes that crowdfunding represents a great opportunity for a more diverse range of entrepreneurs to raise finance – including those who have failed with previous ventures.
“It’s nice that we’re seeing more female entrepreneurs coming to Indiegogo now. That’s something our founding partners have really pushed for. There’s also a really good age range as well, and people who have had setbacks previously.”
Don’t be afraid to ask for help from crowdfunding experts
For start-ups still unsure how viable or effective a crowdfunding campaign would be, Hughes says there’s an easy solution: ask for help.
“My number one piece of advice would be to reach out to us for support. One of the things that makes us really different as a platform is the support we give.
“To new start-ups, we’ll tell them whether they’re at the right point to crowdfund and, if they’re not, we’ll absolutely tell them to go away and do some more prep and come back.”
Don’t hold back because of Brexit
With Article 50 triggered in March, the UK has begun the two-year process of leaving the European Union. With the only certainty being uncertainty, should start-ups put their crowdfunding ideas on hold? And will Brexit cause complications for businesses using Indiegogo?
No, according to Hughes – who says start-ups need not worry:
“At the moment, I don’t think [crowdfunding] will change much at all. One of the biggest changes I’m sure we’ll see are the fees and associated costs that a crowdfunding campaign will have, such as the costs of shipping a product to a global market. Nobody knows what it’ll look like.
“It’s a slightly nervous time for businesses, but it’s slightly exciting as well.”
If at first you don’t succeed, come back and try again
While there might be a tendency to think you can simply launch a reward-based crowdfunding campaign and wait for the investment to start rolling in, Hughes reveals that the reality is very different. In fact, many businesses fail to hit their target or don’t raise any cash whatsoever:
“People under estimate just how much hard work goes into launching and running a campaign on any platform.”
So, is failure at the first attempt to crowdfund a sign of start-up failure? Not for Hughes, who strongly asserts:
“Plenty of people will fail first time round, and ultimately after a bit more preparation, marketing and pre-launch marketing – they’ll do a good job second time round.”
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