Richard Branson is a very big businessman: founder of the Virgin music company, Virgin Airlines, Virgin Galactic, and other parts of the Virgin Group. But with an investment this week in Indiegogo, he took an interest in the smallest of entrepreneurs.
Indiegogo is a notable player in the area of crowdfunding, which lets the public put up money for very small-scale entrepreneurial efforts. On it, people can sponsor the development of everything from electronic gizmos to summer camps.
Over 7,000 funding campaigns are active at any moment, with more than 30 percent of them beginning outside the United States. Fundraising efforts extend beyond businesses as well, to political campaigns, humanitarian projects, and other efforts.
The idea appealed to Branson. He joined a handful of high-profile businesspeople who invested an undisclosed amount in Indiegogo shortly after the company announced a $40 million second round of funding in January.
Other new investors include Max Levchin, CEO of financing startup Affirm and co-founder of PayPal; Megan Smith, a vice president at the Google X "moonshot" program; Maynard Webb, founder of Webb Investment Network and chairman of Yahoo's board; Tim Draper, founding partner of venture capital firm Draper Fisher Jurvetson; Dan Benton, CEO of hedge fund Andor Capital Management; Hans Morris, managing partner of VC firm Nyca Partners and former president of Visa; and former Drugstore.com CEO Dawn Lepore.
In other words, Indiegogo did some crowdfunding of its own -- but from a very select crowd. It's a strong endorsement for a new way of launching businesses, one that doesn't involve so much pressing of banks and relatives for loans. That doesn't mean it's free money, though -- people seeking crowdfunding funds still must attract potential sponsors and persuade them to shell out cash.
After Indiegogo announced the investment, Branson discussed the move with CNET News' Stephen Shankland.
Q: Why did you choose to invest in Indiegogo?
Branson: As a young entrepreneur, I had the same trouble getting funding that today's innovators, artists, and humanitarians face -- except they now have Indiegogo, which I certainly would have tried.
Why does Indiegogo interest you compared with Kickstarter, which many see as the bigger company in the area? (Kickstarter has raised more than $1.1 billion so far.)
Branson: Indiegogo is global, flexible, and easy to use.
If crowdfunding had existed earlier in your career, what, if anything, would you have used it for?
Branson: My first companies: they couldn't have gotten going without the help of my mother and aunt.
In crowdfunding overall, it seems pretty common that entrepreneurs get into trouble from overpromising. As crowdfunding grows, will there come a point when the average buyer will grow disenchanted with the process?
Branson: That's a challenge that all entrepreneurs face, regardless of where their funding comes from. The fun of Indiegogo is that people can discover projects that they are really passionate about and then play a role, big or small, in making it happen.