Crowdfunding has become an indispensable tool for entrepreneurs looking to raise seed capital for a new venture or product. Now crowdfunding sites such as Indiegogo and Kiva want to help entrepreneurs keep the momentum going long after their funding campaign is finished.
Indiegogo, which pioneered the crowdfunding market back in 2007, has launched a marketplace that allows people to buy products that have been successfully crowdfunded, whether on Indiegogo or elsewhere. Unlike crowdfunding campaigns, where backers must wait—often months or even years—for the products to be produced and shipped to them, Marketplace items are available right away.
Blurring the Lines
The move is a natural for Indiegogo. The rewards-based crowdfunding platform is already used for pre-selling products, and its executives have long talked of supporting entrepreneurs through the entire lifecycle of their products, from funding and pre-orders through ongoing sales.
“Over the last few years, you’re seeing more of a consolidation and collapse between what is a campaign, what is pre-order, what is commerce, and where is the distinction between where one starts and where one ends?” Indiegogo cofounder Slava Rubin has said.
In addition, many consumers flock to crowdfunding sites to discover new and interesting products that they won’t find elsewhere.
Indiegogo’s Marketplace builds on earlier steps by the company, such as a partnership with Brookstone to bring products funded on Indiegogo to the retailer’s 200 stores as well as its web site. In 2015, Indiegogo launched InDemand, which lets entrepreneurs continue accepting funding and orders from backers after a campaign has finished.
Marketplace further blurs the lines between crowdfunding and ecommerce, and puts Indiegogo on a collision course of sorts with etailers such as Amazon, which features products from startups on its LaunchPad site.
Indiegogo is not the only one thinking this way. New Jersey-based Kickfurther was launched in 2014 to allow more established brands to raise money for inventory from customers and fans. Under the Kickfurther model, individuals help buy the inventory as well as sell it, earning profits from sales.
And crowdlending site Kiva recently launched a partnership with eBay to showcase products curated from Kiva borrowers on a dedicated section of popular ecommerce site.
The Kiva merchandise lineup is decidedly different than the gadget-heavy goods of Indiegogo. The initial pilot of the Kiva U.S. Marketplace features ten Kiva entrepreneurs (pictured above), with products ranging from handmade-in-America cutting boards to flip flops made from car tires saved from scrap heaps in Indonesia. Based on the results of this initial pilot, the Kiva team will evaluate whether to extend the marketplace to include other entrepreneurs in early 2018.
“The Kiva U.S. Marketplace is beautifully aligned with Kiva’s vision to empower small business owners with social capital—business advisors, brand ambassadors, supporters and in this case customers, as well as financial capital,” says Jonny Price, the Founder and Director of Kiva U.S.
Price compares Kiva’s 1.7 million lenders around the world to the role played by venture capital firms. “When a VC firm invests in a tech startup, they provide funding, but also access to connections, marketing opportunities, and customers. Our hope is that when a Kiva lender—we call them “Microangels”—lends $25 to a Kiva borrower, they might similarly support that entrepreneur by ‘liking’ their business on Facebook, visiting their restaurant and writing a nice Yelp review, or becoming their customer in the Kiva Marketplace.”
Indosole, which makes flip flops from used tires in Indonesia, is one of the first Kiva borrowers featured on the marketplace. Founder Kyle Parsons (pictured at left, above) started Indosole in 2009 with a $5,000 loan from Kiva. After repaying that, he went on to receive a second loan for $10,000 and a third loan for $30,000 to upgrade the Indonesian factory and buy supplies.
For its part, Indiegogo encourages any “new and innovative physical products” to apply to be on Marketplace, whether or not they were crowdfunded on Indiegogo. The site will market the products on its site and newsletter, collect orders and process payments—for a reported 10% to 15% fee. Fulfillment is up to the producer.
To kick off the marketplace, Indiegogo has created a holiday-themed online ‘pop-up’ store, GoGo Pop-up, featuring favorites and special deals—all guaranteed to ship by the holidays.