Yes you can be scammed due to the lax rules, on the other hand you could fund a very legitimate and worthwhile cause or project. In return you may receive a discount if it’s a product, public acknowledgement or credit for your donation.
For non-profit organizations the rules are a little more strict. However for individuals wanting donations the site works partly on faith that the other person is honest and that they are who they say they are.
However in this article I will provide a review based on my own and others experience and show you how not to get scammed. I also explain.
- What is Indiegogo and how does indiegogo work
- The Pros and Cons of Indiegogo
- How to tell if someone is legit
- Tips & Tricks to Increase funding if you’re crowdfunding yourself
- Some Indiegogo scams
- Indiegogo Alternatives
How does indiegogo work?
Indiegogo is a crowdfunding site and is designed to be a launchpad for entrepreneurial ideas. It allows you to fund a project or venture by raising money from a large number of people who each contribute a relatively small amount.
Because there are millions of visitors to their site every month there’s a lot of potential visitors who could donate to your campaign.
Indiegogo was founded in 2008 in San Francisco and was one of the first companies to offer crowd funding. It’s designed to provide a quick and easy method to give people the resources and power to bring their ideas to life.
It can be a great platform for entrepreneurs, inventors, activists, artists and those who need charitable help. And yes, sometimes you also get the less worthy personal causes and the occasional scam. However there are ways to reduce the likelihood that you’ll become a victim.
Indiegogo doesn’t just offer crowdfunding, but also help with marketing and promotion. This helps you build a fanbase, collect feedback and promote your story.
It also offers fulfilment and manufacturing support — including partnerships with Amazon and Brookstone. You can also track your campaign performance in real time and communicate with contributors via the Indiegogo mobile app.
While they don’t provide as many safeguards against fraud as some crowdfunding sites, they do claim to provide fraud-detecting algorithms and community reporting tools.
Generosity.com is also owned by Indiegogo and is targeted towards individuals and non-profit organizations, for charity, medical treatments and expenses, through fundraising.
However they don’t have any platform fees which means a larger percentage of your money goes to the cause. It’s been used from everything from helping cancer patients to pay bills to helping students with tuition.
However there’s also going to be a higher number of less worthwhile causes and scams.
For non-profit organizations they at least require legitimate information such as the non-profit’s official business name, Tax ID, Social Security Number.
All this information must be consistent and match and cannot be changed after donations begin. This at least makes it a little harder for fraudsters to scam you than individuals posing as people who need help.
Unlike some crowdfunding sites that allow all-or-nothing, indiegogo offers two funding types: Flexible Funding (keep what you raise) and Fixed Funding (all-or-nothing). I recommend Flexible funding as you get to keep whatever you earn even if you don’t reach your goal. You can always create another goal or milestone later.
While you don’t have to use PayPal funding, a project funded via PayPal is usually less risky as they’re more likely to offer refunds than other payment methods. This can give you peace of mind if you’re worried about funding a project that isn’t legit or wasn’t worth it. PayPal tends to side with payers rather than receivers of money. This means less risk for you.
If you’re the one receiving funds rather than providing them there’s fewer rules you need to follow compared to some other crowdfunding sites. This can make crowdfunding quick, easy and more streamlined. However it can also make it more open to fraud.
Scams and Frivolous Causes
The Indiegogo site itself is not a scam, just some of the people who use the site. Some of the campaigns created will be for frivolous causes and illegitimate. You need to do a little research before funding a project.
If you do fund a project via PayPal you will be hit with the PayPal 3% to 5% fee which adds extra costs. However this is offset by the benefits mentioned above.
Indiegogo takes a 5% cut from contributors donations whether the project or venture is legitimate or not. However generosity.com which is also owned by Indiegogo does not have any platform fees.
How to not get Scammed
Strong social media presence
Indiegogo provide social media integrations and onsite messaging. If the person asking for funds has a strong social media presence and plenty of friends, plus they’re the same people depicted on their social media page, this is a good sign they’re the people they say they are. You could befriend them on Facebook or message them. Ask them about the project or venture.
This still doesn’t mean their cause or project is legit or will work out, but at least you have a better idea of who they are.
Indiegogo allows people to tell their story and explain why they need funding – the problem and the solution. This is where you have to use some common sense and determine for yourself whether their story is credible. Someone who’s genuine will usually take the time to fill out this part explaining the why, how, where, who and when. They will provide details about themselves, their team and important events or people that shaped their project.
If they provide enough details, this can be used by yourself to do some extra research and discover whether it’s truly genuine or not.
Always try to find out who is running the project, campaign or business idea, because at least then it’s easier to hold them to account.
I will give you some specialized knowledge on how to do some quick research on a project or person before funding them. It’s a technique I used to find out whether someone was using stolen images from an unrelated source.
Google Reverse Image Search
Do they have a profile pic of themselves or the product? If so there can be a quick and easy method of discovering whether they are using a fake profile pic or product image they’ve copied from another site.
If they are legit then chances are the same profile pic on Indiegogo appears elsewhere on the web and reconfirms who they are.
How to do a Quick Google Reverse Image Search
Copy one or more of the images that appear on their profile page:
Go to images.google.com
Copy or upload the url of the image by clicking on the following icon:
Google will scan the entire web and find other sites that use exactly that same image. It’s a great tool.
Do they include a video and a prototype
If they have a video of the persons involved and they’re the same people depicted on their social media pages then this is a positive sign they’re genuine. Also does the video provide a prototype of the product explaining and detailing how exactly it will work.
How to Receive more Funding through Indiegogo
Make yourself Trustworthy
Indiegogo provide social media integrations. Add your social media account, even if it isn’t a business account related to the project or venture. Adding links to your social media account from your indiegogo profile page makes you appear more legitimate.
If you use Facebook don’t turn on all the privacy settings and let people know that you can message them via facebook. If you own a Facebook account that mentions the project or venture and you have plenty of friends or supporters this makes you appear more legit.
- Campaigns shared on Facebook raise 200% more than other campaigns.
- Sharing on Facebook is the most important thing you can do.
- Friends and family will not only donate, but will likely help spread the word further
- If your friend were raising funds for a project, wouldn’t you want to know?
- Reach more people, faster
- Your friends care
Write a Story
Indiegogo allows people to tell their story and explain why they need funding. This is the heart of your message and is where you explain exactly what the cause is for, presenting the problem and proposing the solution. It should be factual and come across as meaningful and authentic explaining right at the beginning who’s involved, what it entails and why you should support it.
Try and share a personal story that they can relate to. Make it compelling, engaging and explain the benefits of the business, invention, activity, event or cause. It’s also where you explain any perks or benefits to those who donate. For example a freebie, a discount when the product is released, or just credit.
At the end ask them to share your campaign with others using the social media icons at the bottom of the story and thank them for helping out.
• Put the most important information first.
• Tell a compelling story, and keep it short.
• Explain exactly why you are raising money.
• Share details about yourself, your team, and important events or people that shaped your project.
• Build trust with a specific budget breakdown.
• Spelling and grammar are important, so be sure to proofread.
• Break long text into sections with headings.
• Include pictures of your perks in the pitch text. They add personality and help break up lots of copy.
I recommend you get a friend or relative to read through your pitch and tell you honestly how it comes across.
Include Images and/and or a Video
Images paint a thousand words and can help quickly build a story and present a compelling reason to donate. It also ads authenticity. If you create a video consider including the people involved and make it compelling and entertaining. You could always pay a professional to help make it with you.
- Be about 1 to 3 minutes long that gets to the point and expresses your goals and intentions.
- Make the first ten seconds of your video count as first impressions are important.
- Star in the video yourself to make it appear more genuine and personal.
- Give contributors a sneak peek of the project, product or film.
- Use a good voiceover and some music to set the tone for the video.
- Invite your audience to join in your journey and make them feel a part of it.
- End with a call to action as this increases conversions
Heres a good example:
Perks & Perk Strategy
• Make perk names and descriptions clear.
• Ensure you can fulfil perks and still complete your project.
• Call out the urgency of perk availability related to the length of your campaign. Use words like “limited edition,” “exclusive,” and “early-bird.”
• Consider your perk pricing strategy — offer a $25 perk and a $100 perk to incentivize funders with varying disposable incomes.
• Be reasonable with your perk prices. Offering a magnet and mug for $500 or a t-shirt for $1,000 wont encourage contributions.
• If you are running a Flexible Funding campaign, keep in mind perk fulfilment in the event you don’t hit your goal.
• Will you be able to fulfil backers even if you don’t meet your goal? If not, you should switch to Fix Funding
• Make sure to set clear Shipping Costs, by country and region, when creating your perks.
Update your Story if your Reach your Goal
If you reach your funding goal consider updating your story thanking those who have donated and post an update to reflect a new goal or objective and what the extra money will pay for
The Initial Funding is the most Important
The initial funding is most important because it gives you legitimacy. If new visitors can see that others have trusted you with their money they will be more willing to trust you with their money and donate themselves.
The initial funding gives your fundraiser campaign momentum and can be used for marketing and press releases.
Therefore you should try and raise funds from your existing community, friends and family first and you will then find it easier to build momentum and raise more money afterwards.
Break the project into smaller parts
If you have a large project or venture that requires a lot of funding consider breaking it down to more than one fundraising campaign. Proving your success with one will help build credibility for the next one.
Most of the scams you here about on Indiegogo didn’t set out to scam from the beginning but just didn’t succeed or were set back with so many delays the product never came to fruition.
Here are some of the most notorious and convincing scams to appear on Indiegogo.
Skarp Laser Razor
Originally started on Kickstarter it raised more than $1 million from thousands of backers, before moving to Indiegogo. It was supposedly going to revolutionize shaving by using a laser to remove hair rather than a razor.
This was until the company claimed that they didn’t have a working prototype and it appears that the project was based on pseudo-science and didn’t even have a working prototype.
Tip: Best not to fund a project if there is no working prototype
IBackPack seemed legit and maybe it was a real concept in the beginning. It was designed to charge, store and help provide hotspots for iPhones on the go and provide plenty of storage space.
They provided plenty of information, charts and diagrams and even plenty of videos. As a result it was very successful, raising more than $720,000 from Indieogogo alone, only for it to vanish, including their Videos.
Their excuse was that they ran into problems such as finding safe charger batteries but others claimed this was a lie.
FND films was a popular comedy group from Chicago who raised more than $75,000 from hundreds of investors. No Film was produced except ironically a movie called “It’s All Good” about Indie filmmakers who scammed money through crowdsourcing and blew it on partying.
Triton Gills is another product funded through Indiegogo that was supposed to allow users to breathe underwater, by extracting breathable air from water. However this sounds too good to be true and it was. The creators admitted to misleading their backers after Digital trends exposed the pseudoscience behind the product
The good news is that Triton have re-funded around $900,000 to Indiegogo backers and admitted that they mislead their backers. However they still claim that they will eventually deliver on their promise.
Indiegogo has a 3 star rating from consumeraffairs
This isn’t bad considering that it tends to be those that are scammed who are most likely to write a review in the first place. If you still don’t trust indiegogo here are a few Indiegogo Alternatives.
Please provide your own experiences below and any alternatives you recommend.