ENT 650

Entrepreneurial Finance

Crowdfunding with Indiegogo

By Tina Jones

Indiegogo is a crowdfunding platform established in 2008, where innovative entrepreneurs meet investors.  Indiegogo is one of the leading crowdfunding platforms for tech products, but also has opportunities to connect with other innovative ideas as well.  While there are many crowdfunding platforms, many choose Indiegogo because of their support and exclusive partnerships available to help boost your campaign.  They also have tools to help you before and after crowdfunding.

The entrepreneur will take their concept and present it to the backers on the platform through a campaign.  These backers will invest in your product.  A successful crowdfunding effort will also make it possible to receive larger-scale funding from a bank or venture capital firm.

Creating a Campaign

Create Campaign Page 
 Produce Pitch and Pitch Video
 Draft Pitch with images and Graphics
 Determine your campaign length and goal
 Outline your perks
Set Up Payment Process 
 Choose a payment type
 Set up your payment
 Verify bank account setup
  
  

Fees

Indiegogo charges a 5% platform fee.  The fees are collected from the funds you raise.  In addition to the platform fee, the payment processor charges a fee for processing the payment.  The fee in the United States is a 2.9% + $.30 transaction fee. 

How long will the process take until the money arrives and can be used?

A disbursement to your bank account will be made 15 business days after your campaign ends.  Indiegogo has two funding structures: fixed and flexible.  With either of these structures, your funding will be sent 15 days after your campaign ends.  If you raise more than $1,000 in currency, Indiegogo will automatically hold 5% of your funds to use for refunds or chargebacks. 

What is allowed on Indiegogo?

  • For-profit campaigns
  • Campaigns benefitting nonprofit organizations or nonprofit beneficiaries
  • Campaigns for products
  • Anything within “Community Projects” that is not a personal cause
  • Educational campaigns in the Tech and Innovation category

 Are there any restrictions?  

No funds can be released or accepted to any entity or person that is subject to blocking by the US Government.  For example, the Office of Foreign Asset Control restricts sending money or doing business with Iran. 

Reporting Requirements

A W-9 is a form that US based owners will fill out.  This will be used to provide information for the 1099-K form.  Funding is reported on a 1099- K form.  This form will report the gross amount of your funding.    The amount does not consider the credits, cash equivalents, discount or refund amounts.  If your campaign did not reach $20,000 and 200 contributions, Indiegogo will not provide tax documentation. 

Resources

How may we help you? (n.d.). Retrieved September 14, 2020, from https://support.indiegogo.com/hc/en-us

(PDF) Crowdfunding: An Innovative Approach to Start Up … (n.d.). Retrieved September 14, 2020, from https://www.researchgate.net/publication/311994951_Crowdfunding_An_Innovative_Approach_to_Start_Up_with_Entrepreneurship

(PDF) Crowdfunding: An Innovative Approach to Start Up … (n.d.). Retrieved September 14, 2020, from https://www.researchgate.net/publication/311994951_Crowdfunding_An_Innovative_Approach_to_Start_Up_with_Entrepreneurship

(PDF) Crowdfunding: An Innovative Approach to Start Up … (n.d.). Retrieved September 14, 2020, from https://www.researchgate.net/publication/311994951_Crowdfunding_An_Innovative_Approach_to_Start_Up_with_Entrepreneurship

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