Indiegogo CEO: This Is a Very Exciting Time
By Laurie Kulikowski - 04/03/12 - 6:00 AM EDT
SAN FRANCISCO (TheStreet
) -- Dun-Well Doughnuts
of Brooklyn, N.Y., Walk in Love
clothing store of Lancaster, Pa., and tech company Satarii
of Belmont, Calif., are three examples of small companies that had successful crowdfunding
campaigns to raise money for their business on Indiegogo
Indiegogo launched in 2008, originally to help independent filmmakers raise money. The next year the crowdfunding site expanded its platform to all industries. Today it boasts as the leading international crowdfunding campaign vehicle.
As President Barack Obama prepares to sign into law the Jumpstart Our Business Startups Act, or JOBS Act, which includes a measure to allow businesses to raise equity investments through crowdfunding platforms, Slava Rubin, CEO and co-founder of Indiegogo, says his company is ready to comply with the new law.
"This is exactly how government can catalyze job creation, encourage the entrepreneurial spirit and maximize the possibilities of online crowdfunding platforms like Indiegogo simply through cutting regulations - and at zero cost to taxpayers," Rubin said in a statement. "We're excited how this bill will democratize fundraising and as demand develops for equity crowdfunding we expect to enter that space."
caught up with Rubin to get a better understanding about crowdfunding companies like Indiegogo.
How will the new law change your business?
Indiegogo has been around since 2008 and now we're distributing millions. We allow anybody to raise money for absolutely for anything. We have many examples of for-profit small businesses using Indiegogo to raise capital. Offering profit will bring in a whole new wave of funders.
We'll check with our customers but ... the SEC will write the regulations of what is needed to happen. It's hard to change until I know the actual rules. That said we are looking forward because this is a very exciting time.
What do you say to those critics who worry about fraud and abuse in the crowdfunding system?
There are four reasons why anybody funds anything. 1. They care about the person, cause or idea. 2. They want the perks, the product or the experience they
get in return for the funding. 3. They want to be a part of a community. The fourth is for profit. Right now Indiegogo services the first three reasons dynamically and anybody can raise money. The fourth is illegal in America.
If this law passes they will be then be able to offer investing through crowdfunding. At the end of the day the reason why this legislation
has bipartisan support is because this is about jobs. We see that there are millions of dollars of examples on Indiegogo of for-profit companies getting funded.
I don't need a law for me to worry about fraud. To be a company that is good for the world we need to worry about fraud anyway. We have over four years of history showing that we are very vigilant around fraud like eBay
and PayPal. Will some fraud happen in the system? Absolutely. It is in our best interests to ensure that is mitigated. Our top
priority is customer happiness.
How does Indiegogo make money?
We allow anybody in the world to create a campaign for absolutely positively anything. They then set their campaign up with their funding option - fixed or flexible funding. We then charge 4% when you've hit your target. (Campaigns that do not hit their target are charged more.)
Where is Indiegogo's competitive advantage?
Since we launched in January 2008 we now have over 300 competitors. There is a new competitor in crowdfunding virtually every day. We even have competitors funded on Indiegogo. Our competitors differentiate themselves by country, by vertical -- meaning by health only or film only -- by business model. To us, none of that really matters. What matters is the funder. And the funder thinks in disposable income, so we just focus on having an open and acceptable marketplace.
What will we see from Indiegogo going forward? Any thoughts of an initial public offering?
You'll see more of the same commitment to our customers to help raise the most money that they could and help discover more campaigns to fund. I personally have used Indiegogo four times to raise money for my own causes. As far as an IPO, it's hard to comment. We're just focused on one customer at a time.
-- Written by Laurie Kulikowski in New York.
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