Published By Janet Gershen-Siegel at June 23rd, 2018
Written by Janet Gershen-Siegel
Are crowdfunding platforms confusing you? Are you thinking of crowdfunding your business? There are several platforms out there with differing requirements.
Getting working capital to grow your business doesn’t have to be hard. Many companies these days turn to crowdfunding. A lot of these options will work for startup ventures.
Here are 10 crowdfunding platforms that you should know about.
They are the biggest crowdfunding platform. They have over 14 million backers and over 130,000 funded projects. Campaigns are for products and services such as:
You must have a prototype. Also, projects cannot be for charity, although nonprofits can use Kickstarter. You can’t offer equity in a company as a perk.
Taboo projects and perks include anything to do with:
There is a 5% fee on all funds creators collect. Stripe, their payments processor will also apply payment processing fees (roughly 3-5%). Campaigns that don’t make it don’t pay a fee. There are also fees of 3% + $0.20 per pledge. Pledges under $10 have a discounted micropledge fee of 5% + $0.05 per pledge.
Indiegogo has over 9 million backers. Their minimum goal amount is $500. They charge 5% platform fees and 3% + 30¢ third-party credit card fees. Fees are deducted from the amount raised, not the goal. So if you exceed your goal, you will pay more in fees. They do not take PayPal. You cannot change your fundraising structure from fixed to flexible (or vice versa) once the campaign starts.
They recommend fixed funding if you need a minimum amount for your project. Indiegogo recommends regular communications to donors if you choose fixed funding.
In general, GoFundMe is for individuals. Hence you might conceivably use it at the very beginning of your starting up a business. You will need to meet your fundraising goal in order to collect. The service charges 5% as a platform fee outside the US (but nothing in America). Plus there are payment processing charges of between 2 and 5%.
GoFundMe is often for personal causes, such as people looking to cover their medical bills. Hence it may not be best for business funding.
RocketHub is more for entrepreneurs who want venture capital. Also, they give you an ELEQUITY Funding Room. So you can pitch your idea and see if it stimulates any interest from donors.
This platform is specifically for business owners working on projects in these categories:
If you achieve your fundraising goal, you pay a fee of 4%. In addition, you’ll pay a 4% credit card handling fee. If you do not reach your goal, then that fee jumps up to 8% plus the credit card handling fee. Hence RocketHub is best for companies more confident they will make their goals.
CircleUp is only for businesses. So their aim is to help emerging brands and companies raise capital to grow. However, companies must apply and show revenue of at least $1 million to get a listing on the site. However, the platform will sometimes make exceptions.
Due to its more thorough process, CircleUp can be good for entrepreneurs who already have a somewhat established business. These are business owners who want both funding and guidance in order to take their businesses to the next level.
If your business gets approval for listing on CircleUp, the fee percentage is from the total amount you raise. CircleUp says (in its FAQ): “Our commission is intended to be generally consistent with what companies pay to investment bankers in the offline world for similar size fundraising rounds.”
In Part 2, we’ll round out our list of 10 crowdfunding platforms. Discover this new way to get funding for your business.