Want to start a new business? It can be pretty easy if you have the capital to kickstart your business. But if you have an idea and no money, what do you do? Well, crowdfunding could be an excellent option for you.
Crowdfunding has become a trendy alternative to traditional sources of startup capital. This has decreased the reliance of small businesses on conventional sources of money, including investors, business loans, and venture capitalists.
To put it simply, Crowdfunding has changed how businesses raise money. While big companies once had to rely on banks and investors to fund their projects, crowdfunding has opened up new opportunities for entrepreneurs to get more money for their startups.
Like everything else in business, choosing the right crowdfunding platform is hugely important for your fundraising campaign. In this article, we’ll mention several crowdfunding platforms below which are worth checking out, complete with their pros and cons.
Kickstarter is a place for creators to share their projects and seek funding from people who wish to support their project or backer. When using Kickstarter, the process of giving money to projects is called a pledge.
For backers, it's a place where you can support creative ideas and inventions and get something in return. You can support any project ranging from films, games, and music to art, design, and technology.
If you want people to fund your project on Kickstarter, there are three basic steps to do it.
Kickstarter is powered by a unique all-or-nothing funding method. Projects must reach their funding goals within the allotted time to receive any money. If they don't reach the goal, no money changes hands.
According to Statista, as of September 2021, almost 20.5 million people had pledged their monetary support towards over 544,000 projects launched on Kickstarter (completed or not). Furthermore, over 6.9 million people had backed more than one project on the crowdfunding site.
5% fee on funds raised and 3% on payment processing. All or nothing.
Patreon is the world's leading membership platform that provides a way to receive funding directly from your fans. Patreon is a crowdfunding site that has over 6 million active patrons.
It is a platform that allows artists and musicians, writers, and more to monetize their work efficiently. Patreon allows fans to pay any amount of money every month monthly fee in exchange for exclusive experiences and behind-the-scenes content.
The platform supports a network of more than 210 thousand creators, including some well-known names such as Jeff Wittek, You're Wrong About, and The Tim Dillon Show.
The creator sets the subscription price and features, and patrons can upgrade or downgrade their subscription at any time. While setting it up does require some effort from the creators, it promises to return 110% of every dollar paid towards creating content.
The payment structure is simple – Patreon takes 2.9% plus $0.35 per new patron.
Fundable helps you raise capital for your business. The company has two funding paths: rewards-based and equity-based. If you are a consumer-facing business looking to get $5,000 or less, you should go through the rewards-based funding path.
On the other hand, if you have business-to-business or B2B businesses looking to get $50,000 or more, you should take full advantage of the equity-based funding path.
The first step when you want to raise money is to start your profile. Just tell the company a little about what you're looking for and upload some documents. Then, Fundable does a deep dive into your business model. They go over the product, market size, and other important factors for raising money.
Fundable recognizes that B2B and B2C businesses operate differently, so they haven't painted all the companies with the same brush. However, some companies need more than just capital to succeed despite all this.
Some want mentorship, and others want to work with an experienced investor who can help grow their business.Fundable empowers entrepreneurs to do more than just raise funds; it also helps them to seek mentors.
The site offers rewards or equity in return for financial support, but with a price. It’s free to create a company profile, but you must pay $179 a month to fundraise. In addition, 3.5% + $0.30 per transaction is charged for payment processing.
GoFundMe makes it easy for individuals to fund their dreams and aspirations. From medical costs to education expenses, there are many causes that people want to support. As part of your crowdfunding campaign, you can set a goal, a deadline, and even come up with rewards to entice people to donate.
Whoever you are and whatever you’re doing, GoFundMe has plenty of options for taking your campaign to the next level. Launched in 2010, GoFundMe has become one of the most popular platforms for users to raise money for a personal cause.
The fundraising site has raised over $5 billion for people worldwide and has gained support from all 50 U.S States — from individuals looking to pay their rent to entrepreneurs hoping to start a new business.
The fees for GoFundMe are low and affordable. There is no platform fee, only a 2.9% transaction processing fee for each donation. This also includes a 30¢/donation fee for all networks.
Unlike GoFundMe, SeedInvest has a fully developed online profile and application process. If you’re serious about your business and want to raise funds for large-scale growth, SeedInvest gives you a chance to pitch your ideas to the people who can help you get there.
You can raise funds from high-net-worth individuals and professional investors on SeedInvest. Businesses on this site must be pre-screened by the SeedInvest team, but that doesn’t mean you’ll have to wait for approval.
The application process usually happens the same day or within 24 hours of applying. Plus, once you’re approved, your listing goes live immediately. SeedInvest provides a platform for startups and small businesses to raise up to $2 million online from accredited investors.
The online investment platform focuses mainly on early-stage companies that typically raise between $100,000 and $1 million, with high-growth potential.
If you decide to go with SeedInvest as your crowdfunding provider, you’ll also have to pay a 7.5% placement fee of the capital raised in your campaign.
Indiegogo is one of the great crowdfunding sites designed to help get businesses and charities off the ground. If you've ever considered crowdfunding your cause, product, or business, Indiegogo could be a good place to start raising money.
Indiegogo has carved out a unique niche in the crowdfunding space by catering to a wide range of campaigns, including businesses and individuals. For example, Indiegogo’s flexible funding model lets campaigns keep their funds even if they fall short of their goal.
On the other hand, campaigns that choose fixed funding have to hit their goals, or they won’t get a single dollar. With over 800,000 backers for more than 100,000 projects, Indiegogo has a reputation for helping entrepreneurs achieve success from all walks of life.
This platform is one of the best crowdfunding places to bring your product or company to life.
Their 5% platform fee is one of the lowest in the industry and can be reduced to 2% if you attract your backers. If you want to raise money for a charity, use GoFundme, which is the sister platform of IndieGogo.
Wefunder is an equity crowdfunding platform that helps startups and small business owners raise money to kickstart their projects while offering people the opportunity to invest in budding companies. Equity crowdfunding can get venture funding without giving away the store.
It's an excellent way for both startups to get the money they need to start up and investors to make sure their money is going towards profitable businesses. Entrepreneurs with real ideas and solutions can use Wefunder to raise capital while building their businesses. At WeFunder, investors can fully engage with startups, with the opportunity to provide mentorship and guidance and financial support.
Wefunder has two primary goals for entrepreneurs and small businesses: giving angel investors an outlet to support small businesses and giving founders access to the funds necessary to put their business on its feet. Furthermore, companies that list themselves on Wefunder can gain access to several perks.
These benefits include a free online platform for fundraising and a free Wefunder Professional Account that provides companies with the tools needed to manage their investment campaign and keep investors in the loop at all times.
In addition, new companies can benefit from other tools created by Wefunder — such as social media promotion, press release distribution, and help with raising your company's valuation.
You’ll be responsible for 7.5% of your total fundraising at a flat fee, as well as any payment processing fee that may apply.
Ulule is the best crowdfunding platform in Europe, and it's well known for its kindness to project creators. The site’s mission is to help good ideas come to life, and it lists more than 30,000 projects ranging from political campaigns to ecological projects. Ulule is an excellent choice for entrepreneurs looking to raise funds for creative or sustainable endeavors.
As a creator, you can set up a project with a goal, and if you don't reach the goal within the given timeframe, the donations are refunded to your backers, meaning you'll never be charged any fees.
While there are a lot of crowdfunding platforms, Ulule stands out from the competition because of its special treatment of its creators. The platform offers international crowdfunding in an easy-to-navigate interface, and they provide support to help you fundraise.
With their rigorous approval process and easy-to-use technology, they're able to provide high success rates for project creators.
CircleUp helps companies raise capital by managing an online equity crowdfunding platform that connects investors with consumer goods startups. It provides the most up-to-date data available and allows users to research new companies at all stages of development easily.
With a proprietary technology system called Helio, CircleUp can predict how much funding a company will need for success, crucial for founders and accredited investors. CircleUp is one of the best crowdfunding sites that helps startups in the consumer goods space secure capital through credit and equity crowdfunding.
Its technology uses a proprietary algorithm that helps predict the next big breakout companies with untapped potential. To streamline the financing process, it offers free consultation services to guide businesses through the often-confusing journey from start-up to IPO — so they can stay on track and grow their business.
Crowdcube is a fundraising platform for entrepreneurs to present their business to the public, raising money using equity. It's designed to help entrepreneurs make better-informed decisions during fundraising by assisting them with realistic targets, a sensible valuation, and a compelling pitch.
What makes Crowdcube unique is the way it opens up access to investors. If you’re launching a start-up, you can rely on your customer base to support further growth as investors. With Crowdcube, you can raise funds for a new venture without an overpriced broker or bank loan.
Crowdcube is the best way to raise investments as fast as possible. With access to the thriving pool of investors and an easy-to-use platform, you can pick the amount you want to expand and fill your funding round in weeks. And you can do it all without paying steep payment processing fees or having to deal with bank transfers.
Crowdcube doesn't charge fees for listing your business on the platform. However, a success fee of 7% on the amount you successfully raise and payment processing fees that apply.
If your business is part of the creative industry like arts, music, or film, Kickstarter is a great platform to connect you with a wide variety of potential patrons. However, if you're trying to raise money for something personal or cause-related, GoFundMe is a good option as it doesn't have all or nothing requirements.
Crowdfunding is not free money, most platforms will charge a small fee for using their service, and some will also take a cut of your revenue. You also need to give your donors timely updates on helping you and how the funds are being used.
Yes, Crowdfunding is legal in all countries at the moment.
There are many ways to raise money for your startup without going through traditional venture capital.
If you're not looking to burn cash, crowdfunding is a great option. You can raise funds you need to expand or launch your business (without burning a hole in your pocket).
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