TL;DR - Some of the best crowdfunding platforms are: Kickstarter, Indiegogo, Causes, GoFundMe, and CircleUp.
Helpfulness - 4
Tags - crowdfunding, crowdfunding platform, startup financing
- 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?
- 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:
- 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
- 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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