Indiegogo has announced that it is fundamentally changing the way it does business. The crowdfunding platform is going to shift from an open platform to a more closed model. Before this shift, anyone from anywhere in the world could easily raise money using Indiegogo without too many restrictions.
But starting now, any campaign will be closely reviewed manually before it goes live. According to Will Haines, the vice president of product and customer trust at Indiegogo, the decision to shift to a closed platform has largely been influenced by trends in the market.
Haines notes that when Indiegogo launched in 2008, most users were in love with the open system. But more than a decade later, things have changed. As a result, the crowdfunding community “does not want an open system anymore.”
After all, backers who use the platform to fund exciting new opportunities want transparency and openness. They want to know that they are putting their money in worthy ideas that have been screened for fraud or other vices. Indiegogo also notes that in addition to the screening, the company will aim to work closely with entrepreneurs to ensure they have the information and the skills needed to bring their products to market.
So far, the crowdfunding platform has tested the screening on a small number of campaigns. The aim is to roll out the plan to all campaigns in the coming months. The platform has also announced the appointment of a new review board. The board will be responsible for assessing some of the riskiest campaigns on the platform and providing recommendations on the way forward.
The board will also have far-reaching powers. They can even ban a campaign completely without any option for appeal. If the board determines that illegality has been committed in any given campaign, it will also have the duty of reporting the culprits involved to the necessary authorities. Despite this, Indiegogo says that the screening process will be very consultative.
There won’t be any unilateral decisions. The board instead will communicate constantly with campaign owners to try to resolve issues cordially. It's only when these diplomatic measures fail that further action will be taken.
Indiegogo maintains that its biggest asset is the crowd. These are the people that use the platform to fund campaigns. For this reason, the platform says that it has to do whatever it takes to protect the crowd. Besides, the platform has seen massive growth in the number of backers using its platform.
In fact, between 2010 and 2020, the number of backers on Indiegogo has increased by nearly 5,500%. Despite this, Indiegogo says that it does not want to disenfranchise entrepreneurs seeking funding. There have been many innovative businesses that have raised money through Indiegogo.
While the screening is necessary, the fact that the platform wants to make it consultative enough is a sign that it wants to keep entrepreneurs coming. Indiegogo says that it will continue to explore new and innovative ways to crack down on fraud on the platform.
