Crowdfunding is one of the ways to find investors and raise capital to fund your business. If you are an investor, it is also one of the ways to make money online. You can define it as the process of raising money for a cause or project from a group of people. Both individuals and small businesses can raise money from crowdfunding.
You should know the three types of crowdfunding which is also how investors make money before you join any site. They include debt crowdfunding, equity crowdfunding, and reward crowdfunding. Debt crowdfunding is where you receive financing in the form of a loan with a given period to clear it. Some people prefer it over a bank loan because the process is faster.
Reward crowdfunding is where you will send your supporters a product sample or small gift for a given contribution. Lastly, equity crowdfunding is where you will give a portion of your business to those who provide funding.
There are many crowdfunding sites available and it can be time consuming to find the right one for you. We have compiled a list of the best crowdfunding sites for businesses to help you compare them better. You should consider factors such as the type of crowdfunding, if it is an All or Nothing site, and the fees the site charges. An All or Nothing crowdfunding site is one which releases the funding only when you reach your campaign goals.
The best crowdfunding sites include:
- Kickstarter : Best Overall Crowdfunding
Kickstarter is one of the best overall crowdfunding sites. It is an all or nothing site which means you only get your funding when you meet the campaign goals you set. Kickstarter does not charge you to register or start a campaign. However, they will charge a 5% fee on the finances you raise and you will also pay a transaction fee ranging between 3% to 5%. You will also ned their approval before you start a campaign.
Once you raise the funds, you will have to wait for 14 days before you can access them. Kickstarter has helped many individuals raise over $5billion in over 180,000 projects since it launched in 2009.
Indiegogo is a crowdfunding platform and a marketplace for community projects, creative works and tech innovations. There are two types of campaigns on Indiegogo. Your campaign could be fixed or flexible funding.
A fixed funding campaign is similar to all or nothing model. You will create a fixed target amount and if you fail to meet this amount, Indiegogo will return all the funds you had raised to your donors. Moreover, they will not charge you any fees if you fail to meet your goal in a fixed campaign.
On the other hand, a flexible funding campaign is where you will get the amount donors contribute even if you fail to meet the target amount. Indiegogo will charge a 5% fee for all flexibl funding campaigns and fixed campaigns that meet their targets. Furthermore, they charge a processing fee of 3% and 30 cents for every transaction.
You will need to set a minimum fundraising goal of $500 for any type of crowdfunding campaign on Indiegogo. So far, entrepreneurs have raised more than $1billion in over 650,000 projects.
You may have come across a GoFundMe fundraiser on social media for a charitable cause or emergency. GoFundMe has hosted many successful campaigns such as Time’s Up Legal Defense Fund which raised $24.2 million and the Las Vegas Victims Fund which raised $11.8 million.
You get to keep everything you raise because GoFundMe does not use the all or nothing model. However, you will pay a processing fee of 2.9% and GoFundMe collects 30 cents from every donation you receive.
Crowdfunder is a community of over 200,000 investors and entrepreneurs. It is a platform that uses equity crowdfunding. This means you will give a certain share of your business to the investors. So far, the platform has raised over $150 million.
Crowdfunder has three main subscription packages. They include the free plan, the starter plan which costs $299 per month, and the premium package for $499 per month
Experiment is a platform where investors fund scientific discoveries. They focus on projects that promise to push the boundaries of knowledge. It could be fossil evacuations or historical study. Experiment is better than university grants because the latter charges 50% to 60% in overheads.
You can start a project on Experiment for free. However, once you reach your funding goals, Experiment will charge a processing fee of 3% to 5% and 8% on your campaign.
Patreon is a platform that writers, musicians, artists and more. Your fans will pay a membership fee for behind the scenes content and exclusive experiences. The fans will choose the subscription fee. So far, the platform has helped raise over $350 million.
They charge a 5% fee on all successful payments. They will charge payment processing fees on a monthly basis. Furthermore, you may have to pay payout fees for moving the funds to your bank or PayPal account.
Fundable is a platform that offers reward and equity crowdfunding. The rewards program lets you raise up to $50,000. The equity program lets you raise between $50,000 to $1million. Fundable will charge $179 per month for your campaign but you can join the platform for free. Moreover, they will charge 3.5% and 30 cents per transaction.
Crowdfunding is one of the ways to get funding to start run, or scale your business. There are many platforms available and you should consider various factors before you select one. Such factors include the fees the platform charges, the likelihood of a successful campaign, if the platform funds a specific niche, and more.
Do you know of any crowdfunding sites for businesses we may have left out? Let us know in the comments below.