Indiegogo, one of the world’s most popular crowdfunding platforms, has just announced that it will release a new product called “Outpost” that allows companies to integrate the platform into their own websites. Firms can use crowdfunding to raise capital for socially-driven projects, gauge demand for new products, or work with the crowd to develop their products. The key question to ask is “what will be different?” since firms can already partner with Indiegogo to crowdfund projects and contests. Unlike Kickstarter, Indiegogo is open with very few, if any, don’ts. So what companies are crowdfunding already?
Philips, the consumer electronics company, is the most well defined example of an established firm crowdfunding via Indiegogo to date. These two partnered for the Innovation Fellows Challenge where customers, students, and professionals were asked to contribute new product ideas centered around “living well, being healthy, and enjoying life.” Indiegogo provided the platform while Philips drove the contest with a full time marketing team and something close to $100K in cash prizes. In exchange, Phillips received the right of first refusal for future investment in projects.
This was a great first attempt at harnessing the power of crowdfunding for corporate use, but it’s not the ideal model. The goal was to balance customer demand validation for new products with existing corporate development structures inside Philips – they did this well. The campaign itself, however, was only moderately successful: 200 user submissions led to 34 Indiegogo campaigns and of those only 5 made it to the final round. Of those top ideas, none appear to be groundbreaking for Philips’ customers. Moreover, I interviewed a member of the Philips team who agreed that, while they were generally pleased with the results, there were things they might do differently next time such as more support and training for idea submitters.
As Indiegogo and crowdfunding-savvy firms continue to experiment, it should be interesting to watch. Moreover, as federal and state governments tweak their policies on equity crowdfunding things should get quite messy before the dust settles.
Chris Kluesener, Open Innovation Central