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Indiegogo, one of the first startups to capitalize on the crowdfunding movement, will begin to take a closer look at crowdfunding campaigns on its platform, announced this week.
The Verge says the company has created an internal review committee to oversee and evaluate the riskiest campaigns on its platform, as determined by its community of supporters. This council can ban owners from launching campaigns or simply impose broader terms of service to ensure legitimacy. The startup has also formed an alliance with its main rival, the GoFundMe crowdfunding platform, to create a new entity for best practices and remove bad actors.
Here is a key excerpt from the story of Kim Lyons:
“We simply haven’t always lived up to the expectations of our supporters,” said Will Haines, Indiegogo’s vice president of product and customer trust. When the company launched in 2008, there were few restrictions for aspiring entrepreneurs looking to raise money from like-minded supporters. But Haines says “open” isn’t what the crowdfunding community really wants now, more than a decade later.
I’m not going to lie, I was a little surprised it didn’t get more attention on Twitter (despite my best efforts). While I’m not in the business of theorising why, I have the luxury of asking people questions about their thoughts, to hell with retweets. My immediate question to people was, “What does Indiegogo’s new position mean for the broader crowdfunding market?” After all, the ecosystem is all about access, optionality and the transformation of shoddy ideas into real products. So, I’ve crowdsourced some thoughts!
Republic, a crowdfunding platform that recently raised a $ 150 million Series B, is not a direct competitor because it focuses more on equity crowdfunding campaigns than Indiegogo’s specialty of crowdfunding based on awards and donations. Chief of Staff Kyle McCormick says this makes his company “a very different beast.”
“While we can share users with platforms like Kickstarter and Indiegogo, we’re looking for a different part of that user’s portfolio: their investable assets that they hope to make a return on. Not checking for fraud (at the very least) would be deeply negligent, “he said. Republic may be forced to have a more moderate platform due to its focus, but McCormick said the company is” far from being the most curated player. ” in the space.
As a result, most companies that raise through Republic already have momentum, through venture capital money or the accelerator signal, before trying to fund crowdfunding. McCormick admitted that there are still challenges with this model: “How can we deliver quality in a scalable way? How can we support venture capital-funded companies without reflecting gender and race bias in venture capital? All things we think about every day “.
Entrepreneur Sahil Lavingia built Gumroad to become an online platform for creators to buy and sell digital goods. Lavingia, who raised money for Gumroad through Republic, said that “each creator’s manual review goes against the ethics that upholds the enthusiasm behind the creator economy and accelerates the transition to Web 3.0, neither of which goes to advantage of Indiegogo “.
“The creative economy is about allowing a new set of artists and entrepreneurs to access the capital they have historically been unable to obtain,” he said. “But maybe there are invisible forces at play here, forcing their hand. The forces could be the fear of failure. My colleague Brian Heater, who interviewed Indiegogo CEO Andy Yang months ago, pushed the executive into bankruptcy or shoddy campaigns that disappoint users. Yang hinted that further confidence and security measures would come.
We have had our number of failures on our site, of campaigns that have not been fulfilled or simply, the campaigns have overshadowed their supporters, and we admit it. For the past couple of years, this has been a focus for us on what we can do from the standpoint of trust and security. Start with education, making sure lenders understand crowdfunding isn’t shopping. It is very visible on our payment site, but once again Amazon and other companies have trained people, just click a button and I will receive it in two hours.
The argument in favor of Indiegogo’s new constraints is therefore that the lack of moderation has burned users in the past, and since it is difficult to launch a project, why not keep everyone at a higher level?
An early stage entrepreneur thinks the move to have more guardrails around campaigns is ultimately a guarantee of quality and a traffic boost. If the only campaigns that make it to the site, in the end, are those that are aggressively pre-checked, Indiegogo is creating a signal for consumers. It could create hype around selected ideas and help them achieve their funding goals. “For me, it’s not about ‘risk’, but about consumers not being overwhelmed by optionality,” they said during direct messages.
Ultimately, my question led to further questions about how moderation can lead to less accessibility, the importance of quality assurance with modern investors, and, ugh, how Web 3.0 fits into all of this (send one study guide my way). It seems fair to think of Indiegogo’s move, although not yet revolutionary, as another sign that people are rethinking the way we invest and exchange money.
In the rest of this newsletter we will talk about new data on funding for female founders, a very cheerful startup you need to know, and the economy of new banks. As always, you can follow me on Twitter @nmasc_ or send me a direct message on Instagram @natashathereporter.
The founders are making a sustained return from a business
New data from PitchBook shows that the The gender gap in fundraising for startups is closing, slowly. Companies founded by women raised $ 40.4 billion through 2,661 transactions in the first three quarters of 2021, nearly doubling the 2019 total by $ 23.7 billion and more than 10 times the 2011 total of $ 3.6 billion.
Here’s what to know: While funding for female founders is far from fair and far from fair, the increase in funding comes after a disappointing drop in 2020. The contrast makes the growth even more noteworthy, and I’d say it’s due to a change in who should be a decision maker when writing checks. Let’s talk more about tail winds and our broader thoughts on numbers in the latest episode of Equity.
Oh, do you want more numbers?
And the start of the week is …
Chipper Cash! The fintech company, one of the most valuable private startups in Africa, was recently valued at over $ 2 billion for its money-handling services. Sam Bankman-Fried FTX cryptocurrency exchange platform led the round. The investor said they believe Chipper “will make the transfer of money as simple as a text message and accelerate the adoption of cryptocurrencies in Africa and beyond.”
Here’s what to know: The startup recently partnered with Twitter to help support the social media platform’s new Tip Jar integration, joining established companies like PayPal, Patreon, GoFundMe, Cash App, and Venmo. Chipper Cash is also making great strides outside of Africa, offering people from Europe the ability to send money to its other markets.
Neobanks needed this
Nubank, a notorious new bank we’ve been following for years, unveiled its F-1 last week. Alex and I have been analyzing the numbers behind huge consumer-centric fintech. And there was some solid and efficient evidence to look into.
Here’s what to know: The new metrics could show that new banks are finally leaving their investment phase – spending a lot of money to make a lot of money – and towards a world of more stable and recurring revenue. Other consumer banking IPOs in the pipeline include PicPay, which filed a $ 100 million IPO on the Nasdaq in April, and Chime, which raised a $ 750 million G-Series in August and will reportedly go public by. March 2022 with a valuation between $ 35 billion to $ 45 trillion.
Do you need more Nu?
As some of you may know, I am a co-host Equity, a podcast on the numbers and nuances behind tech headlines, with my colleagues Alex Wilhelm and Mary Ann Azevedo. We hit a new download record this month, so we send a big thank you to the millions of people who spend part of their days with us.
I don’t do this often, but if you like the podcast I’d like you to continue Podcast Apple and give it a rating and review. It’s free (!!!) and it means a lot to our rickety little team.
For the whole week
Seen on TechCrunch
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I wish you a happy Diwali and late Sal Mubarak,