Indiegogo has played a key role in the crowdfunding game since its inception when Danae Ringelmann, one of the co-founders of the platform, told the New York Times that she got the idea to “democratize funding” after seeing her small-business-owner parents struggle for years to find capital, till recently when the company announced a partnership with GoFundMe meant to bring more transparency to the industry.
In particular, Will Haines, Vice President, Product & Customer Trust at the Pittsburgh-based crowdfunding marketplace, pointed out in a blog that after 10 years, crowdfunding is all about community and trust. And for this reason, the community has to be protected.
In this story, there is nothing new I mean the fact communities are the real added value of any innovator looking for launching their project. For instance, Ethan Mollick expressed this concept a few years ago in his article published by the Harvard Business Review The Unique Value of Crowdfunding Is Not Money — It’s Community.
On a very personal note, this is why I was inspired to dedicate my doctoral years to the investigation of the behaviour of the crowdinvestor, as this article recently published by Business Horizons confirms. But this is a different story.
Community and trust: the backbone of the industry
Back to Indiegogo, one of the positives of this story is that the company went through self-criticism that we do hope would constitute an inspiration for other players in the market. “Candidly,” writes Haines in a blog post, “we have not always lived up to our backers’ expectations. Matching the ethos of the late 2000s, Indiegogo was founded as an open platform where anyone could raise money for almost anything, with little restriction. However, I’ve learned that “open” is not what our community wants. Crowdfunding is not shopping — people generally understand that now — but it also shouldn’t be a leap in the dark. And it certainly can’t be scamming. Our community of backers is the reason that anything happens on Indiegogo, and they are counting on the platform to be a safe, trusted space to engage with innovation.”
In other words, “Community and trust are the foundation of what makes crowdfunding work. Without them, taking the risk to get in early on a great idea doesn’t make sense. The risk has to be worth it, and backers need the tools to make an informed decision.”
So, what is the company doing to address possibly the biggest issue in the industry? One of the main moves is represented by the Crowdfunding Trust Alliance. “With our friends at GoFundMe, we have co-founded the Crowdfunding Trust Alliance to regularly share industry trends and best practices. We’re excited to work with the largest players in our industry and look forward to expanding the alliance to other reputable crowdfunding platforms.”
More in general the new course of the company has been designed to protect both the entrepreneur and the crowdfunder from malicious behaviour. For example, they decided to expand the Trust & Safety team. Also, they created an Internal Review Board to oversee our most impactful Trust decisions. Additionally, they launched a Guidepost Program, meant to ensure that entrepreneurs only launch on Indiegogo when they have a viable plan to deliver. Last but not least, a Trust Loyalty Program that “will highlight new campaigns from entrepreneurs with a track record of success and tailor our vetting to match the historical risk level of these entrepreneurs.”
Positioning as a market leader hoping to partner in future with new platforms, all these moves signal that crowdfunding is going to change rapidly. If they will be successful to generate interest involving other key players we will likely enter soon a new era of crowdfunding. It remains however a doubt on how to preserve that inclusive spirit that made crowdfunding an innovation in the fundraising industry.