{"id":23261,"date":"2014-10-10T18:00:53","date_gmt":"2014-10-10T22:00:53","guid":{"rendered":"https:\/\/thestoryexchange.org\/?p=23261"},"modified":"2021-04-23T17:07:26","modified_gmt":"2021-04-23T21:07:26","slug":"danae-ringelmann-indiegogo","status":"publish","type":"post","link":"https:\/\/thestoryexchange.org\/danae-ringelmann-indiegogo\/","title":{"rendered":"How Danae Ringelmann Came Up With Indiegogo"},"content":{"rendered":"

Indiegogo<\/a> is having a good year. In January, the crowdfunding platform raised $40 million<\/a> in venture capital. This summer, it released its first mobile app. And most recently, it saw one of its clients, Hour of Code<\/a>, which is trying to make computer science widely available in schools, raise more than $4 million in a campaign that is still running. The donors include Mark Zuckerberg.<\/p>\n

The success is particularly sweet for Danae Ringelmann, 36, who says she got the idea to \u201cdemocratize funding\u201d after witnessing her small-business-owner parents struggle for years to find capital. \u201cThey never could actually get a loan,\u201d she says. They \u201cnever got a break, never complained, were always loyal to their employees and never cut corners in running their business.\u201d Ringelmann became even more frustrated when she worked on Wall Street after college and realized how difficult it was for \u201clittle guys\u201d like independent artists to find money.<\/p>\n

She came up with the basic concept for Indiegogo \u2014 an offline platform where anyone can raise money for an idea or a project \u2014 and fine-tuned it at business school at University of California, Berkeley, where she met her co-founders, Eric Schell and Slava Rubin. They convinced her that using the Internet would be a better approach, and they introduced Indiegogo in January 2008, the same year Ringelmann graduated.<\/p>\n

On the site, anyone \u2014 an entrepreneur looking to raise money to create a new product, for example \u2014 can create a campaign, share it through word-of-mouth or social media. In return for the money raised, entrepreneurs and businesses can reward supporters with products and \u201cperks,\u201d such as t-shirts or coffee mugs. What they cannot do yet is take equity investments; the long-delayed rules for equity crowdfunding are still awaiting final approval.<\/p>\n

Indiegogo takes a 9 percent cut of the money raised. If a stated goal is met by a fixed deadline, the fee drops to 4 percent \u2014 a policy, the company says, that encourages campaign owners to set reasonable goals and promote aggressively. (The company declined to disclose its annual revenue.)<\/p>\n

These days, Indiegogo has hosted more than 250,000 campaigns in 224 countries and territories. And its name \u2014 along with that of rival Kickstarter<\/a>, which launched in 2009 \u2014 has become synonymous with the crowdfunding movement.<\/p>\n

In the beginning,\u00a0Ringelmann\u2019s challenge was explaining the crowdfunding concept \u2014 in fact, the term did not yet exist. She says says she\u2019s not sure who coined it: \u201cI just woke up one day and someone started calling us that.\u201d Early on, the only people who used the site were friends, family and Berkeley classmates. \u201cOutside of that world, it was undiscovered territory,\u201d she says. \u201cIf I had to define success as people giving us positive feedback, I would have given up.\u201d<\/p>\n

But the financial crisis that began in 2007 was something of a lucky break for Indiegogo: It created more of a need for alternative forms of financing. At the same time, people were getting more comfortable with established online payment systems like PayPal and social-media platforms like Facebook.<\/p>\n

To get the word out, the co-founders introduced the site at the Sundance Film Festival, and Ringelmann spent the first few years speaking at film, music and other events. \u201cWe worked our butts off to get our first customer success, and then second customer success and third customer success,\u201d she says. \u201cEvery time we had a success, we\u2019d take that story and tell it to inspire other people.\u201d<\/p>\n

Those case studies, she says, were the most effective marketing tool the company had in terms of convincing skeptics that it was possible to raise money on the Internet. The next challenge, somewhat ironically, was raising money from investors. Ringelmann says she had saved up enough money to live without a salary for a year, as she and her co-founders anticipated they\u2019d be able to secure funding by the fall of 2008. \u201cThat was the beginning of what I like to call \u2018the dark period,\u2019\u201d she says. The Indiegogo team was rejected by 90 investors.<\/p>\n

Ringelmann says she wore the same pair of jeans for three years to save on costs. She was joking, but she did give up her social life \u2014 \u201cI wasn\u2019t going out to bars every weekend and going out to Napa on winery tours\u201d \u2014 and she moved back home and borrowed money from her mother. One co-founder, Schell, took on freelance work. The other, Rubin, who handled most meetings with investors, stopped telling them how many times they had been rejected.<\/p>\n

It wasn\u2019t until March 2011 that Indiegogo won its first $1.5 million round of financing. It did not attempt to raise money on its own platform. \u201cAs the first open crowdfunding platform,\u201d Ms. Ringelmann said \u201cwe were still trying to prove that using Indiegogo and the Internet was a great way for artists, entrepreneurs and causes to raise money.\u201d<\/p>\n

Ringelmann suffered a loss when her father passed away in October 2008. Losing his insight made it difficult for her to continue for a while \u2014 he had been a believer. \u201cHe was very upset about how a few people on Wall Street were driving the economy down,\u201d she says. \u201cIt gave me motivation to fix finance.\u201d<\/p>\n

Ringelmann says she knew Indiegogo was going to make it when a successful campaign<\/a> in 2011 helped an African humanitarian named Pastor Marion, known as the Schindler of the Congo, raise enough money for a kidney transplant. It was one of the first campaigns where the founders didn\u2019t know the person trying to raise money. \u201cIt really touched me personally,\u201d she says. \u201cI hadn\u2019t thought about saving someone\u2019s life. It showed it was really working.\u201d<\/p>\n

Other well-known Indiegogo campaigns included money raised for a bus driver<\/a> who had been bullied; a couple<\/a> who needed expensive IVF treatments to have a child; and Ubuntu Edge<\/a>, a smartphone that raised $12 million but missed its goal of $32 million.<\/p>\n

In 2015, Ringelmann anticipates the challenge of adjusting to the rules of equity crowdfunding, which she expects the Securities and Exchange Commission to issue in the new year. The rules would permit crowdfunding start-ups to lure supporters with equity stakes, not just perks. It will add a layer of complexity, but Ringelmann is happy to see it happen.<\/p>\n

Before crowdfunding, she says,\u201cwe always had to rely on other people making decisions of what things get made. Now we can all participate in that decision-making.\u201d<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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