Indiegogo Bucks Trend Toward Niche Crowdfunding

12/11/12Follow @tanseyverse

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count their donations as tax deductions. Fractured Atlas’s other participating crowdfunding site is RocketHub of New York. Kickstarter, which prohibits fundraising for charitable projects, is not a partner.

Fractured Atlas clients raised $310,000 through Indiegogo in 2010, and more than $1.3 million in 2011, Huttler says. Its Indiegogo tally to date for 2012 is more than $1.7 million, or about 15 percent of the total funds raised by Fractured Atlas clients this year.

As private companies, Kickstarter and Indiegogo don’t report their revenues. But Kickstarter keeps a running online tally of the money raised and offered. Since its April 2009 launch, more than 2.5 million people have pledged in excess of $430 million.

However, Kickstarter distributes money to clients only if they meet their pre-stated fundraising goals. If they don’t, they receive nothing. The success rate is about 43 percent, or about $371 million in “successful dollars” Kickstarter’s fee on those 33,589 successful projects is 5 percent. The site now has about 3,056 active campaigns.

Indiegogo charges 4 percent to clients who meet a pre-stated funding target. But the company’s more popular option, called Flexible Funding, allows campaigners to receive the money pledged even if they don’t reach their target. Under that option, Indiegogo’s fee is 9 percent. (Campaigners must choose the option they want before they start fundraising.) The company says it’s currently distributing at least $2 million per week to campaigns; it won’t comment on how long distributions have been at that level, or how much the company distributes in a calendar year.

More than 100,000 campaigns have been launched on Indiegogo since it began in 2008, and over 6,000 campaigns are currently raising money on the site, the company says. The number of campaigns hosted in 2012 was more than three times that in 2011. Clients raised more than triple the amount of money in 2012 compared to the total for 2011, according to Indiegogo. The average contribution is $70.

The top fundraiser on Indiegogo was Matthew Inman, who reaped nearly $1.4 million in September for a museum in honor of Nikola Tesla, the prolific inventor. It is the only Indiegogo campaign to raise more than $1 million, according to company records.

Supporters of crowdfunding campaigns on Indiegogo and Kickstarter receive “perks” or rewards for their pledges depending on the amount they give. These range from a simple thank you card to a Pebble watch for those who had pledged $99 or more.

Indiegogo may soon widen its tent in another way by adding a new alternative to perks-based crowdfunding, Ringelmann says. Crowdfunding campaigners will soon be able to offer equity stakes in their enterprises under provisions of the federal JOBS (Jumpstart Our Business Startups) Act passed by Congress in March. Indiegogo supported the Act, and has been tracking the progress of SEC regulations being formulated to govern equity crowdfunding. Depending on the terms of the final SEC rules expected early this year, Indiegogo may become an equity crowdfunding platform, Ringelmann says.

“We want to provide all options,” she says.

Bernadette Tansey is a freelance journalist based in Berkeley, CA. Follow @tanseyverse

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