Danae Ringelmann, Co-Founder, Indiegogo & Top 50 Influential Woman in Tech
Danae Ringelmann co-founded Indiegogo to democratize fundraising. Passionate about helping artists and entrepreneurs embrace crowdfunding, Danae speaks often at conferences. Recent speaking engagements include SXSW, MAD Hong Kong, TED, Big Omaha. Fast Company Magazine recently named Danae one of the Top 50 Most Influential Women in Technology.
Prior to Indiegogo, Danae was a Securities Analyst at Cowen & Co. where she covered entertainment companies including Pixar, Lionsgate, Disney, and Electronic Arts. Danae also focused on cable network, NFL, newspaper and hedge fund clientele while at JPMorgan's Investment Bank and Private Bank. In the wake of 9/11, Danae co-produced a concert reading of Incident at Vichy, an Arthur Miller play addressing the politically charged topic of racial profiling.
We spoke to Danae about the benefits of democratising investment; about moving from Wall St. into entrepreneurialism; and how a one-night theatre production led her to change the world of finance.
TNW: How did you come up with the idea for Indiegogo and then arrive at the decision to turn your idea into a reality?
DR: Back in 2006, before the word “crowdfunding” existed, I joined forces with my co-founders out of a mutual frustration for how unfair and inefficient fundraising was for an independent business, artist or charity project.
A daughter of two small business owners, I had witnessed my parents self-finance -- or “bootstrap” as entrepreneurs like to say -- their brick and mortar business for over 30 years.
Despite steady growth, more than 50 loyal employees, and a reputation of integrity throughout the SF Bay Area where I grew up, not once could my parents get a business loan to make the much-needed investments to grow the business beyond single digit margins. Why? Instead of spending their free time at the country clubs and business networking events to develop strategic relationships with “money-people,” they came to my sister’s, brother’s and my basketball games, piano recitals and school plays.They never missed a family dinner. As self-employed parents, it was a trade-off they made; a trade-off I believe they shouldn’t have had to, had access to capital been based on objective performance earned through growth and customer and employee satisfaction and not subjective relationships earned through “face time” and special favors.
I quit Wall Street. While I had entered the world of finance to change finance, it took leaving and starting a company to actually change it, for good.
I went to business school at UC Berkeley to launch a company that would democratize finance. It was there that I met Eric Schell – a technologist – who himself had faced fundraising challenges for a Chicago-based self-financed theater company on which he sat on the Board. Excited to fix finance, he brought in his good friend Slava Rubin – a technology strategist – who had concurrently met intense frustration in his own personal attempts to raise money for cancer research, as his father had died of cancer when he was a young boy. When we all met, sparks flew – literally. With their technology backgrounds, they convinced me the only way to democratize finance would be to use the one meritocratic tool out there – the Internet. So within a few weeks, the three of us co-founded Indiegogo. In January 2008, we launched Indiegogo with a perks-based model that we had developed on a white board in my kitchen one late night. This model was an experiment, yet it has since become a pillar-model of the crowdfunding industry.
Our mission was (and still is) to empower people across the world to fund what matters to them. Since our launch, we haven’t looked back.
TNW: What did you find most difficult, and most enjoyable, about the leap from corporate career to entrepreneurship?
DR: What I found most enjoyable in starting a company was the freedom to think, experiment and work outside the box in a passionate pursuit to solve not just a problem, but an injustice that had seeped into the nook and crannies of every industry and every country on this planet - the inequality of finance. So when I quit, my world expanded over night. I went from chasing news as a financial analyst to making news as a financial disruptor. Neither one is better or worse, but for me, I learned that I have to be part of a solution to find meaning in my work, and thus happiness.
It's no wonder I found comfort in the arduous road of entrepreneurship and pain in the cushiony path of Wall Street.
In crowdfunding, you're successful in raising money if you have a brilliant idea, and enough customers, supporters and fans who agree and are willing to vote with their wallet.
Thus, success is not in the hands of one arbitrary decision-maker who may or may not share your non-financial goals. This is the root of the inefficiency and thus unfairness that has plagued finance since money was introduced into society.
For people who want to raise money for a business, social project or creative idea via crowdfunding, an additional benefit is market validation. In addition to the money itself, campaign owners garner the social and financial proof they need to know they're working on an idea that the world actually wants. If they raise no money, they learn the world actually doesn't want it; so a "failed funding" campaign is actually a success, as it saves the individual from wasting their time and personal funds on an idea that was never going to see the light of day.
The market validation continues to benefit the campaign owner as a successful crowdfunding campaign often attracts traditional financiers (investors, foundations, distributors) for amplification capital. After dozens of venture investor rejections due to “high market risk,” a successful $25,000 crowdfunding campaign for this mobile accessory device finally proved enough market demand for the venture investors to move forward with an angel investment. Similarly comic blogger Matthew Inman’s $1.4 million people-powered crowdfunding campaign to build a Tesla Museum earned the New York State Government’s confidence in the project’s public interest and thus $850,000 in matching government funds to further the endeavor. Traditional financiers across all industries – entrepreneurial, creative, government and non-profit/cause – are benefitting from crowdfunding’s incubatory nature. It’s simply lowering the risk of potential investments by proving market demand.
As such, we’re creating a true incubation platform for the world. By offering a mechanism where businesses, social projects, and creative ideas in need of funding, rise to the top algorithmically and automatically rather than subjectively and manually, crowdfunding is quickly proving itself to not only be a new and robust alternative form of funding, but also an efficient market validation and “de-risking” mechanism that traditional financiers will soon, not be able to live without.
TNW: How does Indiegogo differentiate itself from other crowdfunding sites?
Our philosophy, mission and model are what make Indiegogo completely unique. In our mission to democratize finance and empower the world to fund what matters to them - whether that's a book, a trip across the world or a new local bakery - we don't believe it's our right to decide who has the right to raise money and who doesn't. Therefore, our equal opportunity model
1) is inclusive
2) is meritocratic
3) is global
4) rooted in customer happiness and
5) offers multiple funding frameworks. No other platform compares.
Inclusive: We don't have an arbitrary application process. No one gets rejected. There's no waiting. We don't weigh in on how "good" or "worthy" of an idea you have. If you have an idea that you believe is worth funding, you have every right to try on Indiegogo. You can create a campaign and start raising money immediately. Everyone has an equal opportunity for success on Indiegogo.
Meritocratic: Just as we don't pick and choose subjectively who can use Indiegogo to raise money; we also don't subjectively pick and choose who we promote. Campaigns are promoted algorithmically and automatically, and thus objectively. We've developed the gogofactor - an algorithm that measures the activity of a campaign and the responsiveness of the community - the two factors that should matter in success. Every campaign has a gogofactor. The higher the gogofactor, the higher their placement, discoverability and promotion on Indiegogo. Once again, success is in the hands of the campaign owner and their community, no one else... not even Indiegogo.
Global: To empower the world, Indiegogo needs to work across the world, which is why we've been global since Day 1 in 2008. All you need is a bank account to start raising money, and a credit card, paypal or ability to do a bank transfer to fund. Indiegogo has campaigns in every country of the world, and we can be viewed in three languages: English, German and French. We offer fundraising in four currencies (USD, UK Sterling, CAD and Euro) and offer local payment options across US, Canada and Europe. More are coming soon.
Customer Happiness: Yes, the rumors are true. Indiegogo has a "Customer Happiness" team. Our team is composed of eager coaches to support any campaign throughout its life. If you submit a question, you get an answer in 24 hours, no matter where you are in the world. We also have a Data Science team that mines our site for data insights that reveal success factors. For example, campaigns that have a video in their pitch raise on average 114% more than campaigns that don't. We publish all these insights and give them away to our customers for free to help optimize their success.
Fixed & Flexible Funding: Finally, many campaign owners choose Indiegogo because we offer two funding options: “Fixed Funding” where money can only be collected if the entire goal is met and “Flexible Funding,” which allows people to keep the money that they raise, even if they don’t reach their funding target. Most other crowdfunding platforms only support “Fixed Funding.” We offer both, as every campaign is a little different. Often people choose Flexible Funding, so they can put the funds raised to work even they don't reach their goal, while others choose Fixed Funding when they can't move forward on a project unless a minimum amount of funds is achieved.
TNW: Are there certain types of startup close to your heart which you especially like to see receive funding from Indiegogo?
DR: What a tough question! This is akin to asking parents who their favorite child is! Well, I don't have a particular category as I'm a human being like most funders on Indiegogo, the ideas and projects we love are diverse. No one wakes up in the morning with the goal to only buy music, only go to coffee shops or only plant community gardens. People are beautiful and complicated, l as our interests range.
So if I had to pick a favorite, I would say it's all campaigns whose leaders are using Indiegogo to really go after their dreams - whatever that may be.
Whenever I meet a customer who’s really go for it in life, I’m inspired and can’t help wanting to support them. Drive is infectious. One customer I met recently has been working on a renewable energy solution that uses the recurring flow tides as way to create energy from ships lifting up and down. 20 ships connected to this technology could power half the energy requirements of San Francisco - my home town. The reason I love this campaign - Nautical Torque - so much, though, is the fact that this technology was something this young man had worked on with his father for many years. Unfortunately, his father recently passed away, so he's using Indiegogo to continue the work of his father’s and make sure he shepherds his father's vision into reality, while saving the planet at the same time.
TNW: Do you know roughly what percentage of businesses who successfully raise funding on Indiegogo are female founded?
One of the Indiegogo stats I'm most proud of is the fact that 42% of campaigns that reach their funding target on Indiegogo are run by women.
Let’s put this into perspective: although 41% of small businesses in the U.S. are owned by women, female-owned businesses only make up about 3% of the companies that receive venture funding, meaning that women are approximately 5 times more successful when crowdfunding on Indiegogo than when raising capital through traditional means.This is a great example of how Indiegogo is democratizing finance and making sure that women are on a completely level playing field with men.
TNW: What are your top tips for entrepreneurs looking to raise funds with Indiegogo?
DR: "Don't wait for perfect" as I mentioned above is a big tip I hope every entrepreneur embraces. You can't solve problems in your head. You have to get out into the world, test problems, try solutions, fail and do it all over again until you get it right.
Many people mistake entrepreneurs as people with brilliant ideas. They're not. Ideas are a dime a dozen. What makes someone an entrepreneur is their relentless execution.
So my next tip is: "Action Speaks Louder than Words." Unfortunately the world still has biases. When a man and a woman are given the same task, folks aren't surprised by the man's performance, but they are by the women's. Science and research prove this. (Watch "Leveling the Playing Field" talk by Professor Shelley Correll on LeanIn.org.) So remove the guesswork, and prove performance with action and traction, not promise. When decisions are made objectively, women benefit as much as men. When bias drives decision-making, women lose out. So ask potential investors, partners, and others who are considering working with you to lay out their objective criteria for selection; then show the data that maps to that criteria.
TNW: What would you say to potential first-time investors who are considering looking for businesses to invest in on Indiegogo?
DR: Currently, investment on Indiegogo is illegal due to Securities regulations written over 80 years ago, but financial contributions in exchange for perks is legal, and substantiates the crowdfunding model Indiegogo pioneered. Ironically, due to the success small businesses have had with crowdfunding on Indiegogo and some great work by several individuals passionate about legalizing equity crowdfunding, President Obama's administration took notice and helped get the JOBS Act passed last year. Regulations are being finalized this year, and hopefully equity crowdfunding - which enables people to invest in projects on platforms like Indiegogo - will be legal soon. That said, for contributors interested in funding campaigns on Indiegogo, I recommend asking yourself, what do you care about and who do you care about. Crowdfunding is inherently social. People fund people, not just ideas. Indiegogo will send you emails on what your friends have funded, as well as others in our newsletters. If a campaign catches your interest, but you don’t know the campaign owner, reach out to them and engage in dialogue.
Start small, and see how it goes. Before you know it, you’ll realize your future reality is in your control. There’s little that’s more empowering than that.
TNW: Can you give us a couple of examples of female founded businesses who raised funding via Indiegogo and are now achieving great success?
DR: One of the most creative campaigns I’ve seen on Indiegogo recently was a campaign that raised £109,510 to open a Cat Café in London. This is a place that people can come to relax with a hot cup of tea, read a good book and play with cats all at the same time. For some people - i.e. people who don't like cats - this campaign didn't appeal to them one bit. But for cat lovers in London who aren't allowed to have their own cat in their apartment - this was brilliant. The beauty crowdfunding on Indiegogo, is that every niche community has the right to exist and fund what matters to them. And since Indiegogo doesn't judge, we were able to empower the cat-loving community of London to start this Cat Cafe. Now that the project has been funded, the café can finally get off the ground and will become a reality for its funders.
Another female-founded business that caught my eye was raising funds on Indiegogo to manufacture LuminAID, an inflatable, solar light, with the mission to make lighting accessible and affordable for everyone. After raising 5 times their funding goal of $10,000, the project has finally launched and the founders’ dream to bring lighting to the world is fully underway.
Lastly, I love The Muse campaign. The Muse is a headband that reads your brain activity. Whether you have a meditation practice or you're a neuroscientist doing research, The Muse is an incredible tool to help you. The fun fact about this campaign is that the campaign owner learned she had a customer segment she never imagined. After her campaign that raised $287,472 to fund her initial production run, she learned that parents of children with cerebral palsy were huge funders. With that information, she's now equipped to launch The Muse in a far more effective and relevant way.
TNW: Is there anything we haven’t asked you, but you would like to share with our community?
DR: It's been an honor to have started a company that allowed me to marry my passion with my work, and work with over 55 other amazing team members doing the exact same. The saying: "you don't work a day in your life if you do what you love" is really true. I have had hard days, long days, and emotional days, but I wouldn't trade any of them for a lifetime of meaningless days. My wish for everyone reading this article is to find what you love and go do it.
Chances are you'll be starting an Indiegogo campaign soon to go fund it. Good news, if others love it, they'll fund you too. So the time is now. Go fund what matters to you.
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