Indiegogo introduces a Shipping Guarantee, withholding money from firms until shipments are made
Campaign operators won't get any money until shipping is confirmed.
Major crowdfunding platform Indiegogo introduced a new program called Shipping Guarantee this week. Under the new program users are promised that a ship-by date will be met "or your money back".
Speaking to The Verge about this update, Indiegogo chief revenue officer Julie dePontbriand said "Indiegogo is building on the promising results of our initial test programs with an expanded Shipping Guarantee initiative." Programs like these — limited insurance for crowdfunding supporters, you could say — have been done by Indiegogo in experimental form since 2018, but Indiegogo seems determined to make it a mainstream platform feature.
Ms dePontbriand went on to confirm several key details, including campaigner eligibility requirements for launching products within final manufacturing stages and a proven track record of past successful campaigns. She also explained that operators who fail to meet their obligations beneath the Shipping Guarantee initiative could forfeit their Trust Badge, and no campaign will receive your payment from Indiegogo until a shipment has been made.
As crowdfunding in general stands, we at Tom's Hardware want you to remember that crowdfunding a project is not a guarantee of receiving a finished product. Backing a crowdfunded project is akin to an investment; you believe in the project and want it to succeed. You are not purchasing a retail product.
That said, Indiegogo does at least seem to be making efforts to make crowdfunding a little bit less risky for the end users of the platform who are paying campaigns (and by extension Indiegogo itself) through this Shipping Guarantee initiative. Since your money doesn't enter the hands of campaign operators until shipping, Indiegogo can simply refund it to you immediately on the condition that the ship-by date is not met.
The only real downside of this feature in this form is that some crowdfunding junctures actually do seem to need "money up front," so the use cases for the Shipping Guarantee initiative really are limited to campaigners who already have a product prepared for manufacturing and have done it before. The Shipping Guarantee initiative somewhat lessens the "investment" side of crowdfunding, particularly for smaller campaigns.
But for established companies and teams who like to rely on crowdfunding to get an already-complete or near-complete product released, like many Mini PCs and Handheld PCs we've covered, the Shipping Guarantee initiative should be a welcome feature that provides more peace of mind to the supporters ensuring the crowdfunding goal is reached.
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Christopher Harper has been a successful freelance tech writer specializing in PC hardware and gaming since 2015, and ghostwrote for various B2B clients in High School before that. Outside of work, Christopher is best known to friends and rivals as an active competitive player in various eSports (particularly fighting games and arena shooters) and a purveyor of music ranging from Jimi Hendrix to Killer Mike to the Sonic Adventure 2 soundtrack.
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TheSecondPower Isn't the point of Indiegogo that a startup can use future sales as starting capital? Now Indiegogo will be almost useless unless the company already has capital. Although maybe it could be used to convince investors to invest.Reply -
edzieba Reply
Yep, Indiegogo have reduced themselves to an unnecessary pre-order middleman. If you take preorders yourself, you receive 100% of the up-front funds, but if you go via Indiegogo you not only have them taking their cut, but you don't even get the funds you need!TheSecondPower said:Isn't the point of Indiegogo that a startup can use future sales as starting capital? Now Indiegogo will be almost useless unless the company already has capital. Although maybe it could be used to convince investors to invest. -
nightbird321 Reply
It means that if a campaign advertises a ship by date, it needs to be realistic. If the product is so far away that the campaign has no idea, they have to present it as such and ask for money for R&D (maybe applying funds to the final product when it is out). It's also fine to over-estimate and deliver early.TheSecondPower said:Isn't the point of Indiegogo that a startup can use future sales as starting capital? Now Indiegogo will be almost useless unless the company already has capital. Although maybe it could be used to convince investors to invest.
It only prevents people from throwing out a random date to get funds and with a high miss rate = high scam rate = reduces investing. -
nightbird321 Reply
If you are that confident in your product, pre-orders is what you should do. Crowdfunding sites allow you to gauge interest in your product before you put too much into it, and also you can have milestones other than promising product delivery and ask people to help fund.edzieba said:Yep, Indiegogo have reduced themselves to an unnecessary pre-order middleman. If you take preorders yourself, you receive 100% of the up-front funds, but if you go via Indiegogo you not only have them taking their cut, but you don't even get the funds you need! -
TheSecondPower Reply
That makes sense to me.nightbird321 said:It means that if a campaign advertises a ship by date, it needs to be realistic. If the product is so far away that the campaign has no idea, they have to present it as such and ask for money for R&D (maybe applying funds to the final product when it is out). It's also fine to over-estimate and deliver early.
It only prevents people from throwing out a random date to get funds and with a high miss rate = high scam rate = reduces investing. -
Oleksa I think it's right. Fundraising can show you how engaged your audience is and how much money you can expect to raise. And if you don't have your own funds for investment, you can go take a loan from a bank and take responsibility for it. And when you deliver the products, you can cover the debt with the funds raised.Reply
I don't see any deterrence or worsening of the situation for small companies.
It's just about preventing fraud.
Although it would be possible to make charges without delaying funds, it is necessary to clearly indicate this and warn users about the risks.