The Kickstarter competitor is requiring campaign starters to be more transparent and may even send collection agencies after the most errant
Call it IndieNogo.
San Francisco-based crowdfunding platform Indiegogo has instituted new policies to make campaigns hosted on its website more transparent. Henceforth, whether you’re seeking a cash infusion to make a Japanese knife collection or produce a portable food grill, Indiegogo is requiring you to provide information on the project’s current status. Campaign starters will also need to provide their backers with monthly updates.
Indiegogo previously made providing such details voluntary, but its Trust and Safety team is now charged with enforcing the new regulations. The idea is that increased transparency will make would-be backers more likely to contribute. “It’s important that backers understand the risks associated with the product and what stage the company is in,” an Indiegogo rep tells Moneyish. “This ensures that [campaign] owners are completely transparent after funding.”
For instance, many backers were frustrated by the paucity of updates offered by Coolest Cooler, a funky ice chest that triples as a stereo speaker and electronics device charger, between the closure of its campaign and actual delivery. The Portland-based device makers—who raised $13 million off Kickstarter, the crowdfunding market leader—were even investigated by Oregon’s Department of Justice for delivery delays. It has since dispatched tens of thousands of coolers, but the plan is to prevent such instances from occurring.
Of course, chipping in to help create product on the likes of Indiegogo or Kickstarter is different from buying something off a store rack. Companies that raise money via these platforms are often experimental and by default prone to failure—and many backers recognize this. About 20% of all newly created companies in the United States, for instance, fail within the first year.
Indiegogo has long had policies that encourage campaign managers to refund part of backers’ cash, or offer some substitute if they’re unable to complete a project. “If we got to 100 percent, it wouldn’t be crowdfunding anymore,” Indiegogo chief exec Dave Mandelbrot told the Verge. “Those risks are always gonna exist. Otherwise people are just preordering or buying.”
Indiegogo has also recently taken steps to combat cases in which campaign starters take the cash and disappear. While it previously blacklisted such operators, it’s now sending debt collection agencies after some of the errant. The nine-year-old website says that it doesn’t keep track of how many such instances take place, though a Wharton study of crowdfunding practices suggests that 10% of projects funded via this method fail. When that occurs, the odds are 9-to-1 that you won’t get your money back.
Consider iBackPack, a proposed smart bag that charges electronics it holds and provides a portable wireless internet signal. When its funding campaign closed in 2015, over 4,000 backers had shelled out $720,000. But iBackPack’s Indiegogo page is rife with angry commentators claiming they’ve not received their promised backpacks, or indeed any information. iBackPack’s website has since gone down.
There’s also Dragonfly Futurefön, which purports to be a hybrid smartphone-laptop-tablet device that runs both Windows and Android OS. CNBC even called it a “winner” in the crowdfunding sphere. Over 4,200 backers paid out $726,000 for the FutureFön—some for up to $800 a pop—and many say they haven’t heard from the makers. Futurefön’s Indiegogo funding page hasn’t been updated since July 2016, when one of the campaign runners wrote: “Together we have experienced triumphs, delays, successes and failures, but what is most important is that through it all we have persevered and never let this dream die.”
One backer who feels burnt is Ileen McCutcheon, a resident of Austin, Tx., who contributed over $300 for the iBackPack and even did some freelance work helping its creator, Doug Monahan, find models for a photoshoot. “I thought it was a good idea so I got one,” she tells Moneyish.
But she hasn’t heard from the Monahan, who she says only paid her half the promised rate for her freelance work, since. “I didn’t know at the time it was a scam or else I wouldn’t have spent my own money,” she says. “And then, no more Doug!”
Indiegogo tell Moneyish it’s in the processing of sending collection agencies after the two projects. Their respective campaign operators didn’t return requests for comment.
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