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Crowdfunder Indiegogo Raises Own Big-Time Funding

Jan 28 2014, 4:22am CST | by

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Crowdfunder Indiegogo Raises Own Big-Time Funding

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Crowdfunder Indiegogo Raises Own Big-Time Funding

Slava Rubin is more than just the founder and CEO of Indiegogo, the would-be global leader in crowdfunding. As he promotes campaigns raised over his platform, Rubin also acts as part missionary, part mascot. Three months ago, I caught up with him after he appeared onstage at Chicago Ideas Week to raise money for an embattled Chicago public school’s boxing program. Since then? “It’s been nonstop madness,” Rubin tells me. For January alone, that’s meant three trips to San Francisco and stops at the Consumer Electronics Show, Davos and Sundance, where an Indiegogo-funded movie won a prize.

Rubin’s latest madness is raising a large funding round for his own six-year-old company. Indiegogo has raised $40 million in a  Series B funding round to push its mobile product and grow internationally.

“We are getting a bigger round than typical because we generate more revenue than typical,” Rubin says. Institutional Venture Partners led this round alongside another of Silicon Valley’s large firms, Kleiner Perkins Caufield & Byers. John Doerr, general partner at Kleiner Perkins and the firm’s senior figure, comes on as an advisor.

How much is that revenue? On that Rubin becomes vaguer. Indiegogo has claimed the mantle of “world’s largest crowdfunding platform,” competing with Kickstarter and Crowdtilt, which raised its own $23 million Series B last month. The company has 85 employees in three offices and now supports five currencies and four languages, but the company prefers to use its platform stats as its growth metric, boasting 1000% growth in funding amount over the last two years.

Indiegogo had raised a $15 million Series A from Khosla Ventures and return investor Insight Venture Partners. MHS Capital, Metamoprhic Ventures and ff Venture Capital re-upped their stakes.

The company hopes it will prove the most flexible and open platform in the crowdfunding field, spanning the core use cases of its “1,000 or so” competitors it faces globally, according to Rubin. (IVP partner Jules Maltz called it “the Android of crowdfunding” in the company’s release.)

But Kickstarter remains arguably the name brand in crowdfunding, known primarily as a source for hardware projects like Pebble, which raised $10 million in 2012. And Crowdtilt is the latest crowdfunding darling, backed by Andreessen Horowitz and catering to smaller, more casual raises.

That competition helps to explain Indiegogo’s major fundraising–and also why Rubin is flying around to keep people buzzing about his platform’s success stories, like the Sundance entrant, “Dear White People,” and a recent campaign for the Jamaican Bobsled team that helped raise over $55,000 to get that team to the Olympic Games in Sochi. (Even that campaign was an example of the many options in the crowdfunding space: Another effort on behalf of the Jamaicans on Crowdtilt raised nearly $130,000, $30,000 of that a transfer of alternative currency Dogecoin raised over

So how does Indiegogo work right now? Someone comes up with a project that needs public money to get off the ground, sets up an account and launches on the site with perks for contributing at a certain amount. Unlike Kickstarter, Indiegogo users have a choice on whether their funding is returned to contributors if the project fails to meet its goals. In that event, Indiegogo charges 9% of the raise. Finished campaigns get 5% back for a 4% fee total, which a project manager can also lock in under an all-or-nothing structure. More fees will hit you with a 3% processing fee for credit cards and $25 bucks to wire money for non-U.S. raises. Non-profits get a 25% discount.

Those uses can be creative, like a full-page ad taken out by supporters of protests in Turkey last year. But the company’s next major opportunity could be an aggressive push into equity crowdfunding later this year. That process, which would allow unaccredited investors to use crowdfunding principles to invest directly in startups, is currently under review by the SEC. “We’d have to know the rules when they come out,” says Rubin. “We will look to experiment and we can evolve as needed.”

In the meantime, Indiegogo could be worth several hundred million dollars now as a leading bet in the space–valuation off the deal was not disclosed and Rubin declined to comment beyond “I think your guessing is wonderful.”

Rubin’s much more vocal about the opportunity for the whole sector, comparing crowdfunding in 2014 to social networking’s maturity back in 2004. “We are part of a massive movement,” the chief executive and pitchman says. “This will go down as the decade of funding.”

Follow me on ForbesTwitter and Facebook for more tech coverage in startups, ad tech, enterprise software and venture capital.

Source: Forbes


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