Crowdfunding websites are showing enormous growth and getting more popular to entrepreneurs.
Aside from raising capital, there are other benefits you can get in using crowdfunding websites. The crowdfunding community is vocal. They’ll give you authentic feedback about your products, which you can use to improve them. They invest in your story and see themselves as part of your journey.
Crowdfunding sites can help you gain and build loyal customers, too. Here you can pre-sell your products before bringing them out to the market.
Most importantly, crowdfunding sites help you draw out potential partners and investors. It gives you the opportunity to expand your professional network.
Before you navigate the ocean of crowdfunding, there are things you need to consider first. This includes your project goals, the platform you’ll use, and the crowdfunding model that fits your needs.
There are four crowdfunding models; reward, donation, debt, and equity.
Donation crowdfunding is designed for charitable and social projects. It lets people give money to support a good cause without expecting any return.
Reward crowdfunding is probably the most popular crowdfunding model. This type of funding is mostly used for creative projects. Donors and investors are being rewarded with gifts, such as credits on the book, free copies of the album, or discounts on merchandise.
In debt crowdfunding, investors will fund your project and you’ll pay the whole amount plus interest. The rates are often better than what banks offer. On the other hand, equity crowdfunders will ask for shares or small stake in your project for return.
Indiegogo lets you create free campaigns online for projects, business, or personal events.
It offers two campaign options; fixed and flexible. Fixed funding is an all-or-nothing type of funding, meaning you need to hit your goal to receive the pledged funds. Flexible funding allows you to keep all the money you raise, regardless of your goal. The site also requires a 5% platform fee.
You can repay your donors by assigning perks once your campaign is funded. Perks can be updates on your projects, original editions of your works, and other merchandise you offer.
Kickstarter is the best crowdfunding site for creative projects. This site follows an all-or-nothing model, and it charges a 5% funding fee.
Like Indiegogo, you can give rewards to your donors. You can also post updates on your campaign page to inform them about your progress.
Experiment is a platform for funding scientific discoveries. You can raise funds for projects that concern physics, biology, computer science or political science. All projects are reviewed and scientifically approved by the Experiment team.
Experiment follows an all-or-nothing model. If a project is fully funded, the site charges a 5% platform fee.
True to its name, this site allows you to create any kind of campaigns. You can raise funds for your creative projects, vacation, even a birthday party. You can also share your campaign to Facebook and other social media sites to spread the word.
Fundanything runs on an all-or-nothing model. It charges 9% of the funds you raised, but if you meet your goal, they’ll give you a 4% refund.
Funderhut focuses on communities, small businesses, non-profit, and individuals. You can choose between a fixed project and variable project. If a fixed project doesn’t meet its goal, the funds are returned to the donors. For variable projects, you can keep the funds regardless of the amount raised. Both projects charge a 5% for reached goals.
Funderhut also offers coaching to help you boost the success of your campaign. This service charges a 12% fee.
Patreon allows all creators to get paid by running a membership business for their fans. This is best for photographers, artists, podcasters, writers, designers, dancers, and actors. Creators must produce regular content since the patrons or fans pledge a monthly amount. There is no limit on posting your content to the Patreon site.
Once you started your page, fans can pay you a subscription amount of their choice in exchange for exclusive offers. It can be a phone call, special discounts, or copies of your work.
Patreon charges 5% transaction fees. You also retain the 100% ownership of your work.
RocketHub lets you create a project campaign whatever your niche is. It can be about art, science, or social causes. It also allows you keep the funds you raise even if you don’t reach your goal. However, if you reach your goal, there is a 4% fee. If you didn’t meet the goal, the charge is a 8% fee.
According to studies, 845 of companies funded by the top 15 VS firms all had male founders. Only 4% had female entrepreneurs.
Plum Alley aims to solve that problem. Plum Alley is a crowdfunding site specifically created for women entrepreneurs. The site is currently interested in consumer, enterprise, education, healthcare, marketplaces, media, technology, and wearable tech.
Debt Crowdfunding Sites
Kickfurther is a popular crowdfunding site. It can help you grow with inventory fundraising from your buyers and fans. When you sell your inventory successfully, you pay your backers. You can set the interest rate that you will pay to your backers as well.
Lending Club connects borrowers with investors through its online marketplace. It can give personal loans of up to $40,000. It also offers business loans of up to $300,000 for small business owners. To be eligible for a loan, your credit card score must be at least 650.
Funding Circle lets you take your business further by providing loans of up to $500,000. Loans are payable for five years. To qualify, you need a credit score of at least 620 and must be in the business for two years.
RealtyShares can help you finance your real estate project in as little as 10 days. It can provide business-purposes loans secured by conventional residential properties and commercial properties. After applying online, you’ll be pre-qualified in 24 hours or less to submit documents for underwriting.
Equity Crowdfunding Sites
Circle Up has been helping early-stage consumer brands connect with leading investors since 2012. Around 240 startups have raised funds in Circle Up. It charges 5% from the funds you raise.
AngelList is one of the oldest and most popular equity crowdfunding sites. Uber and Thumbtack are just a few of the startups that used this site to meet investors. There are no fees to pay to use this site.
Crowdfunder has helped raise capital for thousands of companies from its network of 12,000 VCs and angel investors. Once your deal is live, you’ll be able to connect with investors. It also offers a fundraising coaching, where they’ll help you optimize your deal.
Fundraising starts at $399 per month.
EquityNet is another old crowdfunding site that has helped businesses raise $200 million from private investors. It also lets you raise small amounts of money, which is suitable for small businesses. You can use the site for free, but if you want to avail of their extra features, you can get a paid subscription. A paid subscription starts at $300 a month.
Did you use a crowdfunding website for your startup? How was your experience? Tell us in the comments.
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