Welcome to Startups Weekly, a unique take on this week’s startup news and trends that puts the human first. Subscribe here to receive this in your email. Indiegogo, a pioneer in the crowdsourcing movement, said this week that it would begin more rigorously reviewing crowdfunding projects on its site.
According to The Verge, the firm established an internal review board to supervise and analyze the most risky campaigns on its site, as chosen by its donors. To maintain credibility, this board can prohibit owners from initiating campaigns or simply enforce larger terms of service.
The company has formed an arrangement with its main competitor, crowdsourcing platform GoFundMe, to build a new organization dedicated to best practices and weeding out undesirable actors. Here is an important passage from Kim Lyons’ story:
“To be honest, we haven’t always met our supporters’ expectations,” said Will Haines, Indiegogo’s vice president of product and customer trust. There were minimal constraints for would-be entrepreneurs seeking funding from like-minded supporters when the firm debuted in 2008. However, more than a decade later, Haines claims that “open” is not what the crowdfunding community actually wants.
I will be honest; I was shocked this did not receive more notice on Twitter (despite my best efforts). While I am not in the business of speculating on why that is, I do have the luxury of asking folks about their feelings, retweets and all.
“What does Indiegogo’s new attitude entail for the larger crowdfunding market?” was my first inquiry to the crowd the ecosystem based on openness, flexibility, and the ability to transform scribbled ideas into actual things. As a result, I solicited opinions from the public!
Republic, a crowdfunding site that just secured a $150 million Series B round, is not a direct rival because it concentrates on equity crowdfunding campaigns rather than the rewards-based and donation-based crowdfunding that Indiegogo specializes in. Kyle McCormick, Chief of Staff, describes his organization as “a totally different beast” because of this.
“While we may share users with sites like Kickstarter and Indiegogo, we’re chasing a different component of that user’s wallet: their investable assets, which they intend to profit from.”It would be very irresponsible not to check for fraud (at the very least),” he added.
Due to its emphasis, Republic may be obliged to have a more controlled platform, but McCormick claims the business is “far from the most curated player” in the industry.
As a result, either before they try to crowdfund, the majority of startups collecting money through Republic already have momentum, from venture financing or accelerator signals.
“How can we offer quality in a scalable way?” McCormick admits there are still issues with this methodology. How can we help venture-backed businesses without mimicking venture capital’s gender and race biases? Everything we think about on a daily basis.”
Gumroad was founded by entrepreneur Sahil Lavingia with the goal of becoming an online marketplace for producers to purchase and sell digital items. “Manually assessing each creator goes against the mentality that underpins the enthusiasm behind the creator economy and speeds up the shift to Web 3.0 — neither of which helps Indiegogo,” said Lavingia, who collected money for Gumroad through Republic.
“The creator economy is about giving a new generation of artists and entrepreneur’s access to finance that they previously couldn’t acquire,” he explained. “However, it’s possible that invisible forces are at work here, pushing their hand.
Fear of failing might be one of the elements at work. When I interviewed Indiegogo CEO Andy Yang a few months ago, my colleague Brian Heater pressed him on failures or bad projects that disappointed people. More trust and safety measures, according to Yang, are on the way.
We have had many failures on our platform, with projects that have not fulfilled or just ghosted their supporters, and we are not ashamed of it. That has been a key emphasis for us over the last two years, in terms of what we can do in terms of trust and safety.
It all begins with education, ensuring that backers realize that crowdfunding is not the same as purchasing. It is prominent on our checkout page, but Amazon and other corporations have educated customers to believe that if they click a button, they will have it in two hours.