Like its famous counterpart Kickstarter, Indiegogo is a site dedicated to new and innovative products which the general public can crowdfund to make a reality. Crowdfunding is very different from shopping online, and there can be some risks involved that need consideration before handing over your money. So, here’s our guide on whether you should buy from Indiegogo or not.
What is crowdfunding?
As the name suggests, this is when people get together, pool their money, and make something happen. This could be raising money for a charitable cause, as you’d see on the likes of GoFundMe, or to help creators complete an album, book, movie or device which would otherwise never get a chance to be made. Indiegogo falls into the latter category, making a fantastic place to find unique products.
If I buy something from Indiegogo when will I get it?
Technically, you don’t buy things from Indiegogo. That’s why it’s different from other sites, in that the products you back don’t actually exist yet, at least not outside of a workable prototype. Instead you’re investing in the company or creator in order for them to produce the product on a larger scale, with the side benefit of receiving the item itself.
There are various tiers, which differ on each campaign, but the gist is you can invest in the standard product, special editions, or get a large discount for being one of the first to back to project.
So, why is that different to shopping on Amazon? Well firstly, as the products are not in full production, there can be long delays until you receive them as the manufacturing process is sorted out. This means they don’t make an ideal present for someone, as you could end up waiting months or even years to receive the finished item.
Secondly, and this is the big consideration, as you’re investing in essentially a start-up, there is the normal risk involved where the product may never actually make it to market. Over the years there have been a number of examples where well-meaning creators have run into problems during the manufacturing phase, be it things just not working properly or costing more to produce than initially thought, causing the project to descend into financial trouble and eventually bankruptcy.
In those cases, it usually means that investors (i.e. you) end up with nothing.
Can I get a refund if a project fails to deliver?
This is where it gets a bit complicated. Indiegogo states that ‘Backers contribute to campaign owners, not to Indiegogo’ but there are a few instances were refunds can be issued. These can occur before any of the criteria listed below are met;
- The contribution funds were disbursed to the campaign owner;
- The campaign ends;
- The perk(s) is “Locked”, which means the campaign owner has indicated the perk(s) is ready for shipment, or “Shipped” by the campaign owner
So, if you change your mind during the campaign, you can get your money back, but after that there’s a good chance that Indiegogo has released the money to the creator and then you’ll need to deal with them directly. While this doesn’t necessarily mean that your money is lost, once the manufacturing process is underway the chances that your money hasn’t already been spent is probably quite low.
One thing to make a note of when initially reading the description of a campaign is whether it says Fixed Goal or Flexible Goal next to the target amount.
If it’s the former, then your money will be taken only if the project manages to get enough backers to reach the target goal by the end of the campaign. The latter is less enticing, as it means that any money raised will be passed to the creators at the end of the campaign. The reason this isn’t so good is that with less money available, the chances of the product being delivered is not as high as when fully funded.
Should I buy from Indiegogo?
While there is a small element of risk, and it is small as the vast majority of projects are completed and delivered to backers, Indiegogo remains an excellent place to find new, exciting products that could be the next big thing or just fill a need you didn’t realise you had.
The thing to keep in mind is that you might have to wait a while for the item to arrive at your door, and on rare occasions it may never appear at all. With that caveat, it’s wise to be sure you only spend money that you can afford to lose, but hopefully that won’t be the case.
You can find out more about buying from Kickstarter too.