Indiegogo's founders intentionally declined early investment offers, planning to use initial traction to secure a better valuation. This high-risk strategy backfired when the 2008 financial crisis hit, demonstrating how market timing can upend even a sound fundraising plan.
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Indiegogo's co-founder explains that the concept of "runway" doesn't apply to a bootstrapped startup living on savings. Instead of a dwindling cash reserve, the limit is the founders' personal willingness to continue investing their own time and money.
While facing constant rejection from VCs, co-founder Slava Rubin used TweetDeck to monitor organic user conversations. Hearing strangers discuss how Indiegogo was positively impacting their plans provided crucial validation and the motivation to ignore investors and focus on customers.
Co-founder Danae Ringelman’s idea for Indiegogo stemmed from her emotional response to seeing an older artist desperately seek funding from her, a junior analyst. This personal experience with the unfairness of capital access became the company's core mission.
Indiegogo intentionally launched by focusing only on the film industry, using it as a beachhead market to prove their model, similar to how Amazon started with books. This niche focus was a strategic choice before expanding to all categories, which ultimately unlocked massive growth.
The founders leveraged their connection to Berkeley's business school as an institutional resource. This provided a no-cost environment for research, development, and testing, allowing them to vet and refine the business concept before launching.
The founders delayed institutional funding to protect their long-term brand strategy. This freedom allowed them to avoid paid ads, which a VC might have demanded for quick growth, and instead focus on building a more powerful and sustainable word-of-mouth engine first.
Venture capital can create a "treadmill" of raising rounds based on specific metrics, not building a sustainable business. Avoiding VC funding allowed Donald Spann to maintain control, focus on long-term viability, and build a company he could sustain without external pressures or risks.
When founders invest their own money, it signals an unparalleled level of commitment and belief. This act serves as a powerful 'magnetic pull,' de-risking the opportunity in the eyes of external investors and making them significantly more likely to commit their own capital.
The founder advises against always pursuing the highest valuation, noting it can lead to immense pressure and difficulties in subsequent rounds if the market normalizes. Prioritizing investor chemistry and a fair, responsible valuation is a more sustainable long-term strategy.
Founders mistakenly believe large funding rounds create market pull. Instead, raise minimally to survive until you find a 'wave' or 'dam.' Once demand is so strong you can't keep up with demo requests, then raise a large round to scale operations and capture the opportunity.
