The 7 Best Crowdfunding Sites of 2020 by Stacey Nguyen

TL;DR - Some of the best crowdfunding platforms are: Kickstarter, Indiegogo, Causes, GoFundMe, and CircleUp.

Helpfulness - 4

Tags - crowdfunding, crowdfunding platform, startup financing

Questions answered:

  • What types of crowdfunding are there?
    • How does reward crowdfunding work?
    • How does debt crowdfunding work?
    • How does equity crowdfunding work?
  • What are some of the best crowdfunding platforms and why?

Summary:

  • With reward crowdfunding, founders raise funding by reaching out to backers who receive a small gift or product sample if they pledge a certain amount
  • With debt crowdfunding, founders receive a loan and pay it within a specific time frame (much faster than a bank loan)
  • With equity crowdfunding, founders give a portion of their company ownership to their backers.
  • Many crowdfunding platforms take processing fees and a small percentage of fundraisers’ overall earnings
  • A few crowdfunding platforms use an all-or-nothing model; fundraisers only receive funding if they reach their target fundraising amount.
  • Best crowdfunding platforms overall:
    • Kickstarter
      • Generally for tech and creative entrepreneurs
      • Has raised over $5 billion with over 182,000 projects funded since 2009
      • Users set a goal, a time period, and a small gift for their donor for each level of money raised per individual
      • Uses an all-or-nothing model
      • Fee: 5% & Payment charge: 3 to 5% per transaction
      • Waiting period: 14-day
    • Indiegogo
      • Generally for tech and creative entrepreneurs and community projects
      • Users choose between fixed and flexible funding
        • Flexible funding: users receive funds whether or not they met their campaign goal
        • Fixed funding: all funds are returned to donors if users did not meet their campaign goal
      • Fee: 5% (no fees for fixed funding campaigns if their goals are not met) + processing fee 3% & Payment charge: 30 cents per transaction
      • Minimum goal for either type of fundraiser: $500
  • Best crowdfunding platform for nonprofits: Causes
    • The world’s largest online campaigning platform focused on social, political, and cultural issues
    • Great for nonprofits wanting to build a donor community
    • Free of charge as it runs ads
  • Best crowdfunding platform for personal fundraising: GoFundMe
    • Businesses can use GoFundMe too
    • Good for fundraisers that are geared towards a serviced-based clause (e.g. medical needs or emergency relief)
    • Zero personal campaign funding fees for those based in the U.S.
    • Processing fee: 2.9% & Payment charge: 30 cents per donation
  • Best crowdfunding platform for equity crowdfunding: CircleUp
    • Good for consumer brand businesses and entrepreneurs looking to scale as opposed to develop their ideas
    • Fairly competitive selection process
    • Businesses typically need a revenue of at least $1 million to be listed on the site
    • Has helped raise $260 million dollars for 196 startups
    • Offers both equity capital and credit financing
    • Provides a platform to network with experts, retailers, entrepreneurs, and accredited investors.
    • Provides access to special lines of credit and market insights using Helio (CircleUp’s machine-based learning tech for making business strategies)
  • Best crowdfunding platform for business loans: LendingClub
    • Provides up to $40,000 for personal loans and up to $5,300,000 for business loans
    • Form of debt crowdfunding that is easy to quality for and often faster than a regular back loan
    • Does not require business visits, plans, projects, etc
    • Users get their loans with a 3-year or 5-year term
    • Interest rates depend on their credit score (typically 10.68 - 45.89%)
    • Requires at least one year of experience in business, $50,000 in annual sales, no recent bankruptcies or tax liens, and at least 20% business ownership

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