How Indiegogo and Title III Are Eliminating Gatekeepers

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Indiegogo | Slava Rubin LinkedIn blog post | Nov 5, 2015

Indiegogo equity crowdfunding

Before we started Indiegogo in early 2008, a select group of elite gatekeepers were responsible for determining which ideas were “good” and thus deserved funding. In our personal and professional lives, my co-founders and I saw again and again that only people who had connections to venture capitalists, or easy access to lines of credit could bring their ideas to life. Countless ideas were left unfunded for all the wrong reasons.

We believed that all ideas deserve a shot at success, so we created an open platform where the crowd gets to decide which ideas get funding.

Through our rewards-based model, backers receive perks when they contribute to a campaign. Perks offer tangible proof to backers that their contributions were essential to a campaign’s success, which reinforces the spirit of partnership that makes Indiegogo special.

Our mission to even the playing field has had a tremendous impact over the past 8 years.  For example, less than 10% of VC funds are invested in female-led companies, while at Indiegogo almost 50% of contributions go to teams led by women. And it’s certainly not just female-led companies that benefit from Indiegogo. Misfit was able to validate the market for their discreet wearable fitness tracker which is now available through major retail outlets, and Canary was able to disprove the VCs who initially doubted them by raising almost $2M on Indiegogo instead.

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Misfit and Canary are just two of many that have collectively gone on to raise over $500M in institutional investments after the success of their Indiegogo campaign. Most recently Yota Devices (the makers of YotaPhone) raised a whopping $100M from Chinese investors. Indiegogo is increasingly proving itself as an incubation platform, and the demand for the ideas funded on our platform is clear. We want to continue to support our campaigns beyond crowdfunding, as they continue to grow and scale, and one of the options we are considering is an equity-based model.

Although we currently use a perks-based model, when we initially began thinking of ways to bypass the gatekeepers to capital we wanted to give funders the opportunity to invest in startups by purchasing equity stakes. Much like the traditional VC model, it would allow backers to share in the profits of the young companies they were most excited about, but our model had a unique twist. It would enable the crowd to decide which ideas were worth funding, and partake in both the risks and rewards. Unfortunately, because of the Securities Act of 1933 “regular” people, or unaccredited investors, could not play a direct role in investing in and building companies. Instead, we came up with a solution that has since become the industry standard.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country.  NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada.  Learn more About Us or visit www.ncfacanada.org.

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