Mid-interview, I suddenly hear babbling noises come over the line.
“Sorry, I’m here. I’m just holding a baby while another one watches cartoons in the background,” Julie Kronstrøm reassured me.
In addition to being a full-time entrepreneur, Julie is a single mother to three kids. That’s certainly a feat by itself, but why am I interviewing her for Electrek?
Because along with her brother Christian Adel Michael, Julie crowdfunded over $21 million selling electric bicycles in two campaigns on Indiegogo, and I want to know how. And why. And… what!?
Indiegogo and Kickstarter are the two most popular crowdfunding sites on the internet. Crowdfunding is the process of raising money for a venture via small contributions from many backers, as opposed to large investments from a select few.
People often associate crowdfunding with soliciting handouts to create some weird gizmo. And in the early days of crowdfunding, that was largely the case. However, crowdfunding has evolved significantly since those early days.
Indiegogo CEO David Mandelbrot believes that the concept is often misunderstood. As David described it to me:
“In a way I think crowdfunding is a misnomer, because so many of the companies that are using a platform like ours are not actually doing it to get funding. They are really using it as part of their strategy to go direct-to-consumers to sell their products. I think it’s interesting to look at a platform like Indiegogo more as a direct-to-consumer sales channel than it is really a funding source.”
In other words, the times are changing. Today it isn’t as much about crowdfunding as it is crowdselling.
Crowdfunding electric bicycles is about pre-selling, not funding
That distinction is important, because it is a big reason why Indiegogo has proven to be such a popular platform for pre-selling electric bicycles.
In fact, in recent years Indiegogo has been used to pre-sell a number of personal electric vehicles, such as electric skateboards, electric go-karts and electric scooters. Over 38,000 backers have pledged almost $25 million on the platform to bring 18 different electric vehicle projects to life.
The success of electric bicycles and other electric vehicles on Indiegogo isn’t a coincidence. These products are finding a home on the platform for a few reasons.
Cutting out the middle man
One of the biggest advantages that electric bicycles have found on Indiegogo is the ability to cut costs by circumventing the traditional route of selling through bicycle shops.
In Julie’s case, not only did she avoid having to secure and manage hundreds of dealers across the world, but she didn’t even have to produce her “Mate X” electric bicycles until she knew how many had sold.
By cutting out cost and complexities normally associated with selling such large products, entrepreneurs like Julie can offer better prices to consumers. Those prices can’t be matched by traditional retail methods.
In addition to the advantages of direct-to-consumer sales that Indiegogo provides, it also offers a platform for building communities. That allows entrepreneurs to be more reachable and accountable to their customers. Through messaging and comments on Indiegogo campaigns, customers can talk to each other as well as to the entrepreneurs running the campaign.
For expensive products like electric bicycles and other EVs, this personal touch can help reassure customers. When customers raise questions or concerns in a public forum, entrepreneurs are more likely to respond, creating more public transparency.
The community aspect is also a large part of the reason why brands return to Indiegogo multiple times.
Two years ago, Julie raised over $6 million for her first electric bicycle, the Mate. At that point, some might wonder why she would need to return to crowdfunding for her second bike. However, Julie described how leveraging the power of the community on Indiegogo made the most sense:
“The case for us for coming back is the closeness you have to your end-consumer, the market reach that Indiegogo provides and the ability to wait for full production until you see how many bikes you have pre-sold. Sure, we could have gone to an investment company for our second electric bike or even our first, but we really do believe that this is a very interesting way to connect directly with consumers to get their feedback and to get a larger market reach. Also, when you are campaigning it’s a special month, so as entrepreneurs it’s quite exciting to do it this way, because you feel like you’re running this sprint, you’re getting immediate feedback, you’re engaged in an ongoing conversation with your end users about your project, and there’s a lot of excitement that provides a lot of energy for us.”
Special assistance from Indiegogo
Another important reason that electric bicycle projects so often succeed on Indiegogo is because of the help they receive from the company. Just because someone is a good entrepreneur or a good engineer does not mean he or she is a good marketer. Indiegogo has a special strategy team that works with large-scale projects to help them succeed.
As CEO David Mandelbrot explains:
“We have a team that we call ‘campaign strategists’ here at Indiegogo that actually work with our larger campaigners to help ensure that they are successful throughout the campaign. They’ll consult directly with the entrepreneurs. They’ll help the entrepreneurs with their pitches, with perk selection, they’ll provide ideas for how to continue to drive momentum throughout the life of the campaign.”
Basically, they’re the crowdfunding dream team. Considering that Indiegogo profits by collecting a percentage of the revenue raised by campaigns on their platform, it’s in the platform’s best interest to help campaigns succeed in every possible way.
And because electric bicycles and other EVs are often high-dollar items, the campaigns can quickly rack up revenue of six or seven digit figures. For such campaigns, Indiegogo pulls out even more stops, such as working with the campaigns on custom photography for their homepage as well as email marketing to help spread the word for passionate backers.
In addition to polishing up campaigns, Indiegogo’s strategy team uses a data-driven approach to eek out every bit of potential from their campaigns.
Alana Jesse is the Director of Campaign Success at Indiegogo. The team she manages pulls out all the stops to help big campaigns grow even bigger. As Alana explained to me:
“We have a dedicated team of professionals who work one-on-one with our savviest campaign teams to maximize their success on the platform. Before a campaign launches, we provide feedback on their product positioning and creative content to help entrepreneurs best convey their story. We also provide best practices on launch strategy, from building an audience before launching to launch timing. Once a campaign launches, we leverage our tools, analytics, and experience to provide ongoing strategic advice and responsive feedback throughout the campaign. Raising funds for a product on the internet can be difficult and daunting, especially for first time entrepreneurs. Furthermore, there are a large array of myths and misconceptions out there about how to best go about doing it. Our approach is to use data-driven insights and past case studies to dispel these myths and build a roadmap for success.”
Alana also provided further insight on why electric bicycles and other light electric vehicle projects are drawn to Indiegogo:
“Electric vehicles are a great example of a product category ready-made for the Direct to Consumer (DTC) business model. Crowdfunding is really just a newer, better way to pre-sell a product directly to your future customers (or backers). For EVs specifically, their higher than average price tags, as well as the saturation of different products in the market, make them perfect to go direct to consumer using crowdfunding. A crowdfunding platform allows them to pre-sell directly to their future customers, while providing a level of transparency and history that allows them to more effectively drive awareness and build trust with backers than if they were to go it alone.”
Electric vehicles building momentum on Indiegogo
The more successful campaigns there are pre-selling e-bikes and other electric vehicles on Indiegogo, the more the platform is becoming a standard sales channel in the e-bike industry.
This has helped spawn something of an “if you build it, they will come” situation. More and more e-bikes and EVs are finding their way to the platform than ever before.
As explained to me by the team behind Saigo, a “sport utility e-bike” currently pre-selling their electric bicycles on the site:
“After years of accumulation, many e-bike enthusiasts have gathered in the Indiegogo platform, so we had a pool of potential investors already there.”
Even large electric vehicle companies want in on the Indiegogo action
In a way, Indiegogo is something of a great equalizer. Whether a single entrepreneur or a large company, both have access to the same platform.
NIU is a good example of the latter. As the largest electric moped/scooter company in China, Indiegogo might seem like an odd choice to begin pre-selling their new electric scooters worldwide. But just like the companies that have come before them, NIU wants to leverage the community aspect as well as the marketing reach of Indiegogo.
Interestingly though, NIU has taken a different approach to pre-selling their highly acclaimed scooters. They are using Indiegogo to collect €100 ($118) deposits towards their scooters. Customers will pay the remaining balance for the scooter upon delivery in January of next year.
In addition, they are using Indiegogo as a method to provide further incentives for customers. Customers who place a deposit using Indiegogo get approximately 10% off the price of their electric scooters as well as €300 worth of bonus equipment and accessories. These types of incentives take advantage of the wide marketing reach of Indiegogo to reach customers that the company might not otherwise have access to.
But what about accountability?
Entrepreneurs have found that Indiegogo provides many benefits for selling electric bicycles. However, there’s always been one major drawback: accountability.
E-bikes and EVs are expensive, and there’s no way to provide a 100% guarantee for customers that the entrepreneur will successfully produce and deliver the products they pre-sell.
However, Indiegogo has taken a number of steps to improve accountability and help customers feel at ease.
As the CEO explained:
“We’re very aware of the issue of accountability. Crowdfunding, unlike purchasing a product, does have certain risks. First and foremost, we’ve taken really strong steps to ensure that backers are very away of the risks. In addition, we’ve taken a number of steps to make it easier for backers to asses the risk associated with that campaign and to minimize that risk. For technology campaigns, we require the entrepreneur to disclose to backers the stage that they are at in development. If they haven’t reached a working prototype stage, we will limit the amount of exposure the campaign gets on our platform, and we will require the entrepreneur to disclose that they don’t yet have a working prototype.
On the other side, if they are already in manufacturing, we will validate that to ensure that they are actually at the stage they claim. In addition, we partnered with Arrow Electronics, the largest electronics components distributor in the US, to do design consulting with the entrepreneurs in order to validate that their product is actually manufacturable. That service is offered for free to entrepreneurs on Indiegogo. If Arrow validates that the entrepreneur has a reputable manufacturing plan, bill of materials, etc, then that is indicated on the Indiegogo campaign page.”
Essentially, entrepreneurs get free design and manufacturing consulting, while backers benefit from third-party validation. This method is even more important for large and technical products like electric bicycles. Third-party validation can help ease the minds of potential e-bike buyers, especially when considering that the time between the pre-sale and delivery is often many months.
What does the growing Indiegogo model mean for consumers?
As an increasing number of e-bike and other EV projects come to Indiegogo, consumers will continue to benefit from the lower prices and better transparency that the platform has created.
The biggest issue for consumers has always been accountability. However, as CEO David Mandelbrot explained, Indiegogo has made great strides to help backers reduce risk.
Crowdfunding itself continues to grow and evolve, and larger companies are continuing to join the mix, further legitimizing the practice. NIU’s electric scooters are a great example. Ninebot Segway also uses Indiegogo for their EVs. Don’t be surprised to see other large companies hopping on board as well.
The dollars raised and the number of EV projects on Indiegogo has never been higher. Who knows what the future holds? We could be seeing a number of interesting and affordable new electric vehicles on the platform in the near future. And as successful as Julie’s second electric bicycle campaign was, raising over $12 million, I wouldn’t be surprised to see a third bike in the lineup either.
But what do you think? Could you see yourself buying an electric bicycle or other EV from Indiegogo? Let us know in the comments below.