Investing in return for an equity stake in the company is a particular avenue that has never been open to the crowdfunding community. This method of potentially profitable investment has previously been reserved for accredited investors only.
Despite this, Indiegogo has still managed to successfully launch over 200,000 funding campaigns, sourcing investment in return for gifts and discounted products. But the lack of equity investment options has perhaps meant that a large sector see this form of funding as unappealing.
This is set to change in 2015 as an impending law change will allow Indiegogo to offer equity in return for investment, something which its co-founders have for a long time been planning preparing for.
Indiegogo Vs Kickstarter
The appeal of the Indiegogo platform is certain to escalate dramatically once the door is opened, and it will offer further advantages to investors and entrepreneurs for the use of Indiegogo over the Kickstarter platform.
Currently, Indiegogo offers entrepreneurs and visionaries the funding they have been pledged, even if they don’t quite reach their target figure. Kickstarter don’t. This has led many of the best projects to opt for Indiegogo instead of its rival. Now, potential investors are also likely to be drawn towards Indiegogo as the appeal of returns on investment proves decisive.
Although Kickstarter has a very real community feel (many of the projects and their appeal doesn’t stretch beyond Facebook friends), Indiegogo is perhaps a slightly more ambitious platform in that they are constantly looking to evolve their service to increase its reach, and place some of the most compelling and innovative new start-ups in front of the biggest possible audience.
While equity investment is not a guarantee of profitable returns, the very possibility that it could be is sure to bring in from the cold those who are unwilling to part with their hard-earned money in return for a free gift.
Kickstarter releases Stats
Popular US-based crowdfunding platform, Kickstarter, has made its funding stats available on its website, and the results show just how far a good idea and a strong web-community can take a project. The mission of Kickstarter to “bring creative projects to life” is certainly being accomplished if the stats are anything to go by, and despite non-equity funding having a limited appeal – in so far that serious investors would perhaps choose a different path – the Kickstarter business model has seen 198,400 projects launch on the site.
In return for funding, fans of the project receive rewards or gifts rather than equity, and the target for each launched project is usually their own direct friend circles on social media. The idea of patronage funding is nothing new, in fact for centuries artists and musicians have sought funding from their friends, fans and followers, but Kickstarter projects benefit from the fact that now the world is their stage, not just the venue or art house where they exhibit their work.
Kickstarter employs an all-or-nothing approach to funding, meaning that if the project falls short on their target amount, they get nothing.
Here are the funding statistics for Kickstarter and its launched projects:
Total amount pledged to projects: $1,473,009,015
Total successfully funded projects: 77,116
Total Unsuccessful projects: 117,145
Success Rate: 39.7%
Total backers: 7,689,600
Repeat backers (one or more projects) 2,306,363
12% of the projects launched on the site didn’t receive one pledge, but perhaps the most telling statistic is that the number of repeat pledgers exceeds 2 million people. This is proof that if an idea is good, and the pitch is strong, there are huge numbers of people willing to get behind it.
What Kickstarter provides is a platform and a guaranteed audience, the rest is up to the creator and their idea. In the digital age, the opportunity of sourcing investment has been opened up to anybody with a working internet connection, the result of which sees more new and innovative products and creations being brought to market annually than at any time in the history of mankind.
The full, in-depth Kickstarter statistics can be viewed here.