Crowdfunding Rescue Manual - Part 2/2
Take you through some of the Internet’s best crowdfunding sites.
August 25, 2021
Take you through some of the Internet’s best crowdfunding sites.
August 25, 2021
Maybe you have never heard of the definition of crowdfunding, and you may have encountered similar examples on social media. Crowdfunding simply refers to the idea of raising funds for a project or cause through a large number of online people. Individuals or startups can use it to get early support for their ideas.
There are usually three types of crowdfunding: reward crowdfunding, debt crowdfunding, and equity crowdfunding. By rewarding crowdfunding, you can raise funds by contacting supporters. If your successful pledge reaches a certain amount, the supporters will get a small gift or product sample. As for debt crowdfunding, you will get a loan and pay within a certain period of time-some people prefer this method to bank loans because it can be faster and more effective. Finally, equity crowdfunding means that you allocate a certain percentage of the company's ownership to the people who provide you with the funds.
When you’re seeking a site to fundraise, you want to check for cost as well as if it’s an all-or-nothing site. Many platforms will take processing fees from each contributing transaction as well as a small percentage of your overall benefits, while a few sites use an all or nothing model, which means you only get your money if you reach your intended goal. Below, we take you through some of the Internet’s best crowdfunding sites.
Kickstarter is one of the most well-known platforms in the field of crowdfunding, known for helping technology and creative entrepreneurs fund their projects before obtaining loans or raising funds for venture capital. Since its establishment in 2009, the company has raised more than US$5.6 billion and funded more than 197,425 (as of January 2021) projects. Potential funders can browse many verticals ranging from small gadgets and movies to publishing.
It is also easy to operate in terms of fundraising: first, set your goal, and then the time period to complete it.
Note: You must obtain permission from Kickstarter before starting the event. For each level of funds raised by everyone, you will set up a small gift or personal experience for the donor.
Kickstarter is an all-or-nothing platform, which means that unless you complete your activity, you won't be able to get funding. This also means that the funder’s credit card will not be deducted if you fail to meet your campaign goals. In addition to the processing payment fee (3% to 5%) for each transaction, the fee is 5%. If you raise enough funds, there is a 14-day funding waiting period.
Runner-Up, Best Overall
Indiegogo users are usually creating campaigns for tech innovations, creative works, and community projects. The crowdfunding platform works similarly to Kickstarter, except it doesn’t have an exclusively all-or-nothing fundraising model.
Users have two choices: fixed and flexible funding. Fixed is best for fundraisers where your project needs a certain amount of money while flexible is good for campaigns where you’ll benefit from any funding. With flexible funding, you will get your funds whether or not you meet your goal; with fixed funding, all funds are returned to your donors if you do not meet the campaign goal. However, there are no fixed funding fees for campaigners who do not meet their goal as opposed to 5% for flexible funds and fixed funds that do meet their goals. There’s also a processing fee of 3% and 30 cents per transaction. The minimum goal for either type of fundraiser is $500.
Best for Nonprofits
Causes is the world’s largest online campaigning platform focused on social, political, and cultural issues. It brands itself as a social network for people who want to make a faster and more effective impact . It boasts over 186 million users in 156 different countries. The site is great for nonprofits that want to build a donor community without costing too much money and resources on networking. As it runs ads, Causes are free of charge for users.
On your crowdfunding page, you can collect donations and pledges, raise awareness, and share relevant media with potential donors. In addition to fundraising, Causes is a social networking platform that allows you to find people with common interests when you look through categories such as animals, human rights, and the environment. It also provides a platform for creating petitions for advocacy. It’s not exclusive to registered nonprofits—individuals can also access and raise money on the platform for programs and ideas that they care about.
Best for creators
Patreon is popular among creatives who like digital, such as YouTubers, podcasters, and bloggers. In contrast to collecting one-off campaign donations, you have a subscription model where patrons regularly contribute a set amount of money every month or per creation. The site allows artists to form relationships with their fans, and creators can even deliver exclusive content to their Patreon subscribers as an incentive to continue funding them. Enough to say, this service works best if you frequently share work on your personal platform. Otherwise, pledgers do have the choice of canceling their subscription if creators don’t produce content.
Patreon collects a 2.9% fee and 30 cents from each pledge. The site boasts two million active patrons and over 200,000 active creators.
One defect with Patreon is that it doesn’t promote creators as much as sites such as Indiegogo or Kickstarter, which have entire verticals and pages on their projects for latent donors to browse.
Best for Personal Fundraising
You’ve probably seen a part of GoFundMe fundraisers on social media at one point or another for emergencies and charitable causes, but businesses can use it too. The crowdfunding site charges a 2.9% processing fee and 30 cents for every donation. Since it’s not an all-or-nothing fundraising site, you keep everything that you raise. Besides, for those living in the United States,the personal campaign funding fees are zero.
GoFundMe has launched many successful campaigns, including the Las Vegas Victims Fund ( $11.8 million) and the Time’s Up Legal Defense Fund ($24.2 million). This site is a good option if your fundraiser goes towards a service-oriented cause, such as medical needs or emergency relief. There are alarm bells, however: Conventional startups may not raise as much capital on GoFundMe, and it’s vital to be careful that only ten percent of campaigns ever get fully funded on the site.
Best for Equity Crowdfunding
If you’re building a consumer brand, Circleup deserves your attention, which has helped raise $390 million for 256 startups. It provides both equity capital and credit financing. It provides a platform to connect with professionals, retail traders, and entrepreneurs. You can also network with qualified investors, who have a net worth of at least $1 million and an annual income of no less than $200,000. Other benefits include entitling you to use Helio with special lines of credit and market insights , CircleUp’s proprietary machine-based learning technology for setting corporation strategies.
The company is suitable for entrepreneurs who are eager to scale as opposed to developing their ideas. The competitive process is quite fierce, and usually you also need to have an earning of no less than $1 million to be listed on their site.
Best for Business Loans
Lending Club is a crowdfunding site that provides up to $40,000 for personal loans and up to $500,000 for business loans. It’s a form of debt crowdfunding that’s usually easy to qualify for and is often faster than going through a regular bank. As opposed to most equity crowdfunding, it won’t require things such as business visits or plans and projects.
According to Lending Club, you are allowed to get your loan with a 1-year or 5-year term, on the basis of its website. Interest rates are highly correlated with your credit score—the total annualized interest ranges from 12.15% to 29.97% (as of April 2021)in most cases. LendingClub demands at least one year in business, $50,000 in annual sales, no bankruptcies or tax liens in recent periods, and ownership of at least 20% of the business. That is to say, your financial health should be in a good state .
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