Crowdfunding is increasingly growing to be a strong alternative to traditional ways of finding investment and finance. By expanding the range of possible investors, crowdfunding is levelling the playing field for entrepreneurs from all walks of life. For a small business owner, it offers both a simpler means of finding funding and a great way to gauge just how much of a market there is for your latest idea.
Hopefully, you’ll have already read our previous blog explaining the best way to crowdfund a business idea. If not, you should check that out first, here. Now we will take a look at where to go to get your funding.
The number of crowdfunding sites grows bigger each day as more people look to join in on the rising trend. With this ever increasing pool of options, we wanted to offer a look at some of the bigger and better names out there. There are a whole lot more out there, so feel free to go searching for other options, but this list will give you a good range to choose from for your first project. If you have heard of a crowdfunding story in the news, it is likely to have been funded through Kickstarter. It is certainly the most popular and most successful crowdfunding site. So much so, in fact, that people will often refer to “Kickstarting” rather than crowdfunding.
This recognition is possibly Kickstarter’s biggest strength. With an audience such as Kickstarter has, you can make sure your project gets the most exposure possible to give it the biggest chance at success. It has seen nearly 9 million backers support over 88,000 successful projects, raising a total of nearly 2 billion dollars. If you are looking simply for the biggest resource, Kickstarter is certainly your best bet.
Kickstarter is open to a wide range of projects. It has seen virtual reality headsets, smart watches and even potato salad reach and exceed their funding targets. As long as a project will result in the development of a product or idea and does not offer equity or financial incentive you can launch your project. Kickstarter takes 5% as a fee and projects are all-or-nothing, meaning you need to meet your goal to get any funding. You also need to bear in mind backer rewards for your overall funding target. Much more focused on business projects than Kickstarter and a great source of finance for start-ups. Fundable includes a similar backer reward programme to Kickstarter but also offers a more traditional equity option for accredited investors connected to the site. This makes Fundable a more viable option for higher value funding targets. For instance, Bitvore have used the equity funding to raise over $4.5 million to fund their business. To date, it has seen $189 million committed to funding projects.
Rather than taking a percentage of funds raised, Fundable charges a flat fee of $179 a month to use its service. This means it is, again, likely to be a better choice for anyone looking for larger amounts from their campaign. Just like Kickstarter, projects are all-or-nothing, so you will only receive funding if you can beat your targets. MoolaHoop offers a reward-based crowdfunding site specifically for female entrepreneurs. This site was founded in July 2013 to counter the disparity in investments and lending that exists between male and female led small businesses.
Like Kickstarter, campaigns are run as all-or-nothing, making it more suited to smaller campaigns and specific products rather than more general funding. But MoolaHoop has the added benefit that the 5% fee is only applied for successful campaigns. This is a great level of extra security for your crowdfunding project. Seedrs is much closer to traditional investment than some of the other, more popular crowdfunding sites. Whilst businesses set up campaigns in the same way as in the other sites above, the funding is gained through investments made in exchange for equity. This can be a big commitment for a small business to make, so you should make sure you are happy to offer so much in exchange for this financial support.
Campaigns on Seedrs are, once again, all-or-nothing. Like MoolaHoop, the fees for using the service only apply if you succeed with your campaign, though the fees are a little higher at 7.5%. Another site that aims for a more traditional model of investment, Crowdfunder operates a little differently to the sites listed above. Rather than setting up a project that others can contribute to, you set up a company profile which Crowdfunder uses to direct you to suitable accredited investors. This may narrow your field in terms of who can invest, but it ensures you are put in contact with the best possible backers to help you grow seed capital.
The different set up of their crowdfunding model means that projects of Crowdfunder are not all-or-nothing and you negotiate investment and payment offline directly with investors. It also means that fees are subscription based rather than a percentage of money raised. $299 a month will let you use Crowdfunder’s service.
Once again, this is not an exhaustive list. Other sites, such as Indiegogo and RocketHub are notable examples that offer similar services to the ones above. Also, with the number of sites growing each day, you should keep an eye out for newcomers that offer the perfect set up for your project. Pay attention to the points listed in our how to on crowdfunding a business idea and you cannot go wrong in choosing your perfect site.