What Is Crowdfunding? The Best Crowdfunding Sites To Finance Your Small Business
Crowdfunding is a great and innovative way to acquire some financing, if another conventional way of fundraisings like loans, equity financing, or venture capital is not available, or not suitable.
What is it and how does it work?
Imagine that you have a great business idea, you truly believe in. But no bank or institution wants to finance your venture, because of the lack of business experience, your project is too risky, and you can’t secure the loan or anything else. What should you do? Your idea is really good, and to leave it would be the worst decision! Well, you can try crowdfunding… This is exactly how Jessica Mae Stover financed her movie. She wanted to produce a sci-fi film called “Artemis Eternal”, but didn’t have the money for this. So she offered parts of the project to the broad public. Everyone from around the world was able to participate in the venture and get a part of the profits in exchange for a small donation, starting from $1 to $100. This is how Jessica managed to get a big part of the needed $150 000 for her production. Here is her site, the site of the WINGMEN- http://artemiseternal.com/, where you can participate in some of her new projects, financed by crowdfunding.
Crowdfunding was the option chosen by the producers of “The Cosmonaut”, movie. In less than a week, they managed to collect more than 130 000 British pounds and save the project.
This is what Andy White did, too in 1999! He wanted to create a trade association for freelancers in the UK. He needed 100 000 pounds, so he announced that 2000 people would be able to get a share in the project for 50 pounds. Just 5 days later, he managed to collect? 100 100 and start “The Professional Contractors Group”.
Generally, there are two major types of crowdfunding – donation-based and equity-based.
In the donation-based form of it, the supporter gives money to an idea they like, without expecting anything in exchange. This is the more popular form of crowdfunding and it is not actually different from a donation.
The second type (equity-based) is a form of investing, in which the supporter/investor actually buys a stake in the company with her money. It is less spread, because of some law limitations and the fact that the donation here is usually larger than a dollar or two. This type is just like buying shares from a company, the difference here is that these shares are not regulated by a financial institution, nor they are traded on a stock exchange.
The Best 5 Crowdfunding Websites Follow
Where to get crowdfunded? Well, there are many options – you can make your own website, where to promote your project. You can also use some of the big forum websites, where you can start a thread and find followers. The easiest way to get crowdfunded might be to publish your project on one of the specialized crowdfunding sites.
Here are some of the best crowdfunding platforms: http://businessideaslab.com/top-crowdfunding-sites/ On most of them you can register and try to raise some money, by submitting your ideas for free.
Here are some of the top crowdfunding websites:
Kickstarter – Established in 2009, Kickstarter is one of the world’s most well-known crowdfunding sites. It provides an all-or-nothing fundraising option where projects must reach their goals before securing any funds. Projects come in the form of creative ideas that have the potential to create something new and innovative. The project creators set deadlines and offer various rewards to their backers depending on their pledges. This site is ideal for entrepreneurs who are looking to get creative projects off the ground as well as artists looking for financial support for their work. This is a nice place for entrepreneurs, musicians, artists, and startups from all around the globe to raise money for their projects. The site has a professional and reliable platform. Since 2009, the site has provided more than $2.1 billion to nearly 100 000 different projects.
Indiegogo.com – another great place for raising start-up capital for new ventures. Indiegogo provides a broad platform suitable for both personal causes such as charitable donations as well as startup businesses that need funds in order to develop new ideas or launch products. It gives project owners the choice between donation-based fundraising (where no rewards are given) or investment-based funding (where backers receive equity in return). Here you can get financing for whatever project you may have, it doesn’t have to be business or money-related. You may finance your great cause or anything else.
GoFundMe – GoFundMe is one of the leading personal crowdfunding platforms, allowing people to crowdfund anything from large life events such as weddings and funerals to medical treatment bills and educational expenses. Unlike other crowdfunding sites, it does not require setting up a project goal or offering rewards in exchange for funding – donations from backers are strictly voluntary and are more focused on helping people out in times of need than providing business funding or creative projects.
Patreon – Patreon offers a unique approach to crowdfunding by providing supporters with access to exclusive content in exchange for regular monthly payments (called ‘patronage’). Primarily used by content creators such as YouTubers, musicians, and writers, Patreon allows them to build communities around their work while receiving financial support from fans who appreciate what they do and want to help them keep creating great content.
peerbackers.com – The next generation of capital solutions for startups and entrepreneurs. So if you have a good idea, don’t miss checking out them, too.
rockethub.com – one of the leading crowdfunding websites out there. If you have an innovative project, this might be the place for you to get financed. The site has helped thousands of scientists, entrepreneurs, and artists to get where they belong…
fundingcircle.com – This is the ultimate lending platform for small businesses. They provide small business loans of up to $500 000 to any perspective startup or idea.
Is crowdfunding a good way of financing my business?
The past decade has seen a significant increase in crowdfunding as a financing method for businesses. Crowdfunding is the process of raising funds for a venture or project by seeking contributions from a large number of individuals, typically via the Internet. The appeal for businesses lies in being able to tap into a greater pool of investors that would have otherwise been difficult to reach, as well as lower costs associated with capital formation and marketing activities. There are several arguments both in favor of crowdfunding and against it and it is important to consider both before deciding if it is the right option for you.
On the plus side, crowdfunding allows entrepreneurs to access capital more quickly and efficiently than traditional methods of financing. Not only can companies receive donations from small investors all over the world, but crowdfunding also allows them to build a community around their product or service, one that they can rely on even after they receive their funds. This gives companies an advantage over traditional forms of financing such as selling shares or obtaining a loan, which require substantial paperwork and long approval processes. Plus, under most crowdfunding campaigns, entrepreneurs are not required to give up any equity or debt payments, another major benefit over traditional methods of funding.
However, there are also some potential drawbacks to using crowdfunding as well. For starters, many crowdfunding platforms have extensive rules and regulations governing campaigns that you must abide by before you can launch your project; these rules can be difficult to understand and quite extensive depending on the platform you use. Additionally, most platforms require projects to reach at least 50% of their proposed goals before allowing founders to keep any money; this means that if do not receive enough contributions from investors your entire effort will have gone for naught. And finally, fraud is an issue that must be taken seriously; there have been numerous instances where fraudsters have manipulated the system by creating fake accounts or scamming people out of money with false promises of investment opportunities.
Overall, while there are pros and cons associated with crowdfunding as a form of financing for businesses, it can offer unique advantages in terms of access to new investors and cost savings when compared with traditional methods of financing. Ultimately, individuals must weigh the risks against the potential benefits before making a decision on which route will best suit them and their business needs.
These are the best crowdfunding platforms. If you know some more, please don’t hesitate to drop them in the comments below. Also, don’t forget to share this article and spread it on some social sites, too.