Crowdfunding’s second generation is product innovation.
Over the past five years, crowdfunding has become an increasingly popular way for budding entrepreneurs to launch and grow their businesses. Today, San Francisco-based fundraising platform Indiegogo announced a new platform called Enterprise Crowdfunding that is tailored specifically to large companies looking to launch and market test new innovative products.
To be sure, corporate juggernauts like General Electric are not turning to crowdfunding for the money. They want feedback. People who become early “investors” in a product are inherently committed to being involved in a product’s development. The sell is that crowdfunding investors provide better market research than if the company were to go out and pay top dollar to test a new product. It allows large companies to get a sense of whether there is demand for a product before it goes into large-scale production.
“Crowdfunding is an extremely disruptive, new way of going to market that blends market research and product development,” said Natarajan Venkatakrishnan, director of GE’s innovation subsidiary FirstBuild, in a statement announcing the Indiegogo news. FirstBuild has already run two crowdfunding campaigns on Indiegogo. “With Indiegogo, we were able to build a customer base for our products before investing in manufacturing.”
FirstBuild is hardly the only large company that has turned to crowdfunding to test new innovative products. Toy giant Hasbro recently used Indiegogo as a tool for designing and developing a card game called Irresponsibility.
Indiegogo’s new Enterprise Crowdfunding platform, available to Fortune 1000 and Global 500 companies, will provide large businesses strategy, support and analytics specifically designed for their campaigns. There is a full-time four-person staff at Indiegogo dedicated to the new effort, but other Indiegogo customer relations staff will also be available to large corporate clients.
Indiegogo declined to offer specific pricing information for Enterprise Crowdfunding, but it did say that prices will be different for each client.Related: Why This $34 Billion Company Is Dipping a Toe Into Crowdfunding