It’s every investor’s worst nightmare: you pay for a reward crowdfunding campaign and then the item you signed up for never materialises. Previously, investors weren’t protected and would have to take on the hit, but not Indiegogo is now seeking to find a solution, which will also go some way to encouraging people to invest in projects.
Although the company started a pilot last year, it has decided to roll out the scheme on a couple more projects, taking a staggered approach so the more the item costs, the more the insurance. So far, it seems the insurance will be offered at rates between 10 per cent and 20 per cent of the product’s value.
The Olive campaign offered this Perk Insurance for $15 on top of the $129 stress management wristband, although only three people signed up for the extra reassurance.
Now Indiegogo is testing the scheme on higher-value items, with the campaign for the Sondors Electric Bike offering Perk Insurance for $120 to insure the $600 perk level. Indiegogo is also offering the extra on the Bluewire Bluetooth headset call recorder, costing $20 on top of the $170 perk.
Presumably, Indiegogo wants to see whether the cost of the insurance and proportion of the overall value affects the number of people signing up for the insurance and is expecting to find more people sign up for the higher-cost insurance on higher-value items such as the Sondors Electric Bike.
Indiegogo said it has set aside $500,000 for the insurance plan, which it will run itself and CEO Slava Rubin explained to TechCrunch it thinks testing the pricing levels was an important part of offering the enhanced service.
The Perk Insurance will apply if the product has not been shipped (or updates are not issued) to investors in the timeframe set up in the campaign.
