2021-01-10 23:18:36ExpensesEnglishBusinesses today are increasingly seeking crowdfunding opportunities to fund their business ideas.https://quickbooks.intuit.com/global/resources/row_qrc/uploads/2014/07/Tree-Money.jpghttps://quickbooks.intuit.com/global/resources/expenses/crowdfunding-sites-to-raise-money/8 Best Crowdfunding Sites To Raise Money For Your Business Idea

8 Best Crowdfunding Sites To Raise Money For Your Business Idea

16 min read

Raising capital for your next business idea can be very challenging. However, raising funds for your business venture or non-profit cause can be undertaken effortlessly in the current digital era. All thanks to the online crowdfunding sites.

After the 2008 financial crisis, banks across the globe were hesitant in lending money to startups and risky SMEs. This was due to the strict norms that were implemented on account of the reduced liquidity of banks.

Such an instance gave way to crowdsourcing sites and peer-to-peer lending. Businesses today are increasingly seeking crowdfunding opportunities to fund their business ideas.

The crowdfunding industry is growing rapidly. It is estimated that the projected funds to be raised via crowdfunding websites would be $300 billion by 2025.

There are four different types of crowdfunding. These include reward-based crowdfunding, donation-based crowdfunding, debt-based crowdfunding, and equity-based crowdfunding.

Furthermore, crowdfunding sites help you to understand if your business idea resonates with your target market. All this before you can actually start producing goods and services. This is so because these funding sites allow supporters to pre-order, donate, and invest.

But there are so many crowdfunding sites out there. Hence, it becomes challenging to find out the top crowdfunding sites to consider for your next business venture.

So, let’s have a look at what are crowdfunding sites and what are the best crowdfunding sites for raising funds.

What is Crowdfunding?

Crowdfunding refers to a method of raising funds by obtaining small amounts of money from a large number of individuals via web-based funding sites.

Thus, as a small business owner, you can seek crowdfunding websites for a business project, a non-profit cause, or any personal financial need through these online platforms.

In crowdfunding, small amounts of funds are raised from a large number of individuals or legal entities.

This is unlike the traditional sources of funds like money lenders, banks, other financial institutions, etc. where large sums of money are raised via one source at a time.

The supporters in crowdfunding, also known as backers, come together to support a common cause. These supporters are given benefits in exchange for the funds that they provide to support a cause.

The benefits include rewards like:

  • Early discount
  • The benefit of pre-ordering a product
  • Get a say in product development through their feedback
  • Receiving equity share

Further, crowdsourcing websites work in a specific way. You submit your project to a crowdfunding site, set a goal for the amount of funds to be raised, assign a deadline, and run a campaign to gain support for your project online.

The campaign is usually promoted on social media platforms to seek supporters for the cause. However, each of the crowdsourcing sites comes with its own set of features and fees.

Therefore, you must consider such features before seeking any of the funding websites for your next business idea.

So let’s have a look at the best crowdfunding sites that you can consider for funding your business idea.

Top Crowdfunding Sites To Fund Your Next Business Venture

Kickstarter

What is Kickstarter?

Kickstarter is one of the funding sites typically for creative projects. Launched in April 2009, 19 million people have backed a project pledging close to USD 5.5 billion.

To raise funds from Kickstarter, you need to have a specific goal. This could be launching a book, a website theme, a music album, or an artwork.

Therefore, you will design a project which will eventually be finished. Further, such a project must create something in the form of a product or service that would be shared with the people.

Unlike other crowdfunding sites, Kickstarter is one of the reward-based funding websites. Therefore, you cannot offer equity or other investment opportunities to the backers or the supporters of the project. Nor can you raise funds for charity.

How Does It Work?

Accordingly, funds are raised on Kickstarter to support the projects designed by the creators of the project. Supporters also called backers, pledge money to help creators make their products or services bring to life.

In return for their support, the project creators offer unique rewards to the backers. The rewards are the opportunities for the creators to share a part of their project with the community of backers.

These could be offering limited edition products, benefits like pre-ordering, unique experiences, etc.

Furthermore, the creators send a funding goal which is nothing but the amount of money that creators need to complete the project.

Also, you raise funds on Kickstarter on an all-or-nothing basis. That is, your backers would not be charged for the money they pledge for your project if you do not reach your funding goal.

Fees

Kickstarter collects a fee of 5% from the funds so raised if you are able to fund your project successfully on it. In addition to this, Stripe – the payment processor for Kickstarter – collects processing fees between 3% to 5%. However, no fees are charged if your funding activity is not successful. To know the fees for your country, click here.

Best For

Kickstarter is basically one of the best crowdsourcing sites for creative projects. It includes categories like Art, Comics, Fashion, Craft, Dance, Design, Film and Video, Food, Photography, Publishing, etc.

Indiegogo

What is Indiegogo?

Indiegogo is another top crowdfunding site that offers opportunities to entrepreneurs to launch new innovative products in tech, design, art, etc.

Launched in 2008, it has more than 9 million backers and has brought to life more than 8 Lakh innovative ideas. Thus, entrepreneurs can create projects, set campaigns, and get funded for their upcoming business ideas.

The project backers fund the projects they relate to and help entrepreneurs to get their projects to life.

How Does It Work?

Indiegogo may seem similar to Kickstarter. But, it has its own unique set of features. For instance, unlike Kickstarter, it provides you with both fixed and flexible funding options.

You get to keep the funds raised only if you meet your funding goal in case of a campaign with fixed funding. Accordingly, all the backers supporting your project will be refunded with the money so contributed by them if you do not meet your funding goal by the set deadline. This will be done within a span of 5 to 7 days.

On the other hand, the flexible funding option helps you to keep the money so raised even if you do not reach your funding goal.

In addition to this, you can continue to raise funds even after your crowdfunding goal is reached with Indiegogo’s funding solution.

That is, you can keep building on the backer community as you start manufacturing and delivering the product so funded.

Fees

Indiegogo charges a platform fee of 5% of funds raised via your crowdfunding campaign. Remember, the fees are charged from the amount actually raised and not the funding goal set by you.

Here too, Indiegogo’s payment processor charges processing fees that vary depending on the location. To know more about the fees, click here.

Best For

It is one of the best crowdfunding sites for projects related to creative works, tech and innovation, and community.

GoFundMe

What is GoFundMe?

GoFundMe is one of the top donation-based crowdfunding sites. It provides support to project creators having personal or charitable causes.

Furthermore, it has a supporter base of 50 million and has raised more than USD 9 billion for individuals to date.

How Does It Work?

The first step in raising funds is to set a realistic funding goal and start telling your story. As a project creator, you would receive a fundraising page to accept donations and share your campaign with the GoFundMe community.

In addition to this, signing up with GoFundMe is absolutely free. Not only this, you can keep the donation amount that you receive irrespective of whether you reach your funding goal or not.

Once the campaign is made, you share it with your friends and family through emails, text messages, and social media.

Finally, you accept donations and thank the backers for supporting your cause.

GoFundMe provides you with fundraising tools. This makes it really easy to design, share, and raise funds for the campaign that you create.

Furthermore, you can withdraw your donation amount anytime once your donations start coming in. The money that you withdraw gets transferred to your account within 2 to 5 business days.

In addition to this, GoFundMe also allows For Team fundraising. In this, you can create a campaign and invite your friends, family, or supporters to join your Fundraising Team.

Further, each of the members can share the campaign for they get their own unique link once they join in.

In addition to this, you can keep a check on how your fundraising team is performing and use the live Leaderboard for the same to encourage competition.

Fees

GoFundMe charges a fee of 5% of the amount of donation that you receive. In addition to this, GoFundMe payment processor fee is 2.9% + $0.30 per donation.

Best For

GoFundMe, a platform where people raise funds for family, friends, themselves, and even strangers as acts of kindness. That is, it is used to raise funds for almost anything. These include volunteer programs, youth sports, medical expenses, education costs, etc.

Patreon

What is Patreon?

Founded in 2014, Patreon is one of the membership-based crowdfunding websites designed by keeping creative people in mind. The aim of this platform is to help creative people get paid for their creations.

It has more than 6 million active monthly patrons, 200 thousand plus creators, and has paid out more than $2 billion to creators to date.

How Does It Work?

Patreon has various plans for creators such as Lite, Pro, and Premium. These provide you with various functionalities. These include hosting a creator page, tools to communicate with the patrons, and workshops.

As a creator, you can host a creator page on the platform. Furthermore, you can invite your fans or patrons. These fans can become active participants and make monthly payments for your work.

This payment is done via monthly memberships offered to them. These memberships have different levels. For instance, $1, $5, $10, or $25 per month contributions.

Therefore, based on their membership level, you offer them various rewards in return for their per month contributions. These rewards could be exclusive member-only content, early discounts, personalized offerings, etc.

In addition to this, Patreon offers various communication tools and workshops to the creators. These workshops help you to set your Patreon page and guide you on things that you can offer.

In addition to this, Patreon offers you the benefits of flexible payouts. That is, you can withdraw payments whenever you want or receive payments automatically on a monthly basis.

Also, controlling your membership business becomes super easy with Patreon’s Android and iOS apps.

Fees

As stated above, Patreon offers three different plans for creators. These include Lite, Pro, and Premium. The pricing for these plans is as below.

PlanFees
Lite5% of Monthly Income You Earn On Patreon + Processing Payment
Pro8% of Monthly Income You Earn On Patreon + Processing Payment
Premium12% of Monthly Income You Earn On Patreon + Processing Payment

Best For

As specified above, Patreon was founded keeping the creative people in mind. People who use Patreon to earn a recurring income include musicians, podcasters, video creators, visual artists, writers and journalists, non-profits, etc.

Crowdfunder

What is Crowdfunder?

Crowdfunder is one of the top equity crowdfunding sites in the world. It is a platform for early-stage startups and businesses seeking seed stage, Series A, and Series B funding.

Equity crowdfunding lets you as an entrepreneur sell shares of your company to accredited investors. This is because only accredited investors are allowed to invest in deals via Crowdfunder.

It has a network of 12,000 venture capitalists and angel investors who help companies to raise capital.

How Does It Work?

As an entrepreneur seeking funds, you need to build your personal and deal profile on Crowdfunder.

Crowdfunder requires you to submit three documents to launch your deal. These include Term Sheet, Executive Summary, and Investor Pitch Deck.

Further, the first step is to create your deal to launch the same on Crowdfunder. Crowdfunder allows you to create a private deal room where you can upload all your documents and company details.

Creating a deal room on Crowdfunder is completely free. The next step is to choose a subscription that goes best with your venture.

These plans include Starter, Premium, and Premium Plus. Such plans offer various features like deal alerts, deal analytics, hours of monthly support, etc.

Further, you can raise funds through different ways on Crowdfunder. These include equity, debt, convertible note, or convertible share.

Also, you get access to the VC Pool once your deal goes live and thus can connect with them. Investors can then go through the deals they want to invest in. Finally, they can pledge an investment to the deals they like the most.

Thus, if you know that the investor is keen on investing in your business venture, you can connect with them to raise funds.

Fees

As stated earlier, creating a private deal room is absolutely free. Thus, you can create company details, save deal documents, invite your team members, and have a non-public profile.

But if you want to share your deal room with the public and added features, you need to subscribe to one of the following plans.

PlanPrice (Per Month in USD)
Starter$299
Premium$499
Premium Plus$999

Best For

Crowdfunder is an online equity crowdfunding platform. Therefore, it is for startups and business ventures seeking seed, Series – A, and Series – B funding.

StartEngine

What is StartEngine?

StartEngine is one of the equity crowdfunding websites. It’s a platform that brings companies and investors together.

Thus, startups and private companies can raise capital from its community of investors through debt, equity, revenue share, etc. Likewise, anyone above 18 years old can invest in companies on StartEngine.

Therefore, you need not be a VC or a private equity firm to invest in private businesses through StartEngine online. StartEngine has a community of 300,000 investors and has helped more than 375 companies raise capital with more than 250 million dollars in funding raised till date.

How Does It Work?

The first step to raising funds via StartEngine is to create your investment pitch and put it on your StartEngine webpage. You need to choose between the two ways for raising capital on StartEngine.

One is Regulation Crowdfunding that allows you to raise 1.07 million dollars each year through StartEngine funding portal.

The other is Regulation A+ Crowdfunding where you can raise upto 50 million each year via StartEngine’s Broker Dealer platform each year.

Then, you need to submit your application to StartEngine for review. Once that is done, you craft your story and design your campaign page to reach out to investors.

Then, you need to submit your legal documents like Articles of Incorporation and Board Resolutions to get your fund approved.

Fees

It doesn’t matter if you are seeking a seed round or have an existing history of raising funds. You can raise up to 1.07 million dollar via StartEngine’s Seed Round Plan.

Also, you need not pay any upfront amount for the seed round. This is good for companies with Annual Recurring Revenue (ARR) of less than 3 million dollars.

The other plan is for Series A (To C) Funding. This allows you to raise capital of up to 50 million dollars and is good for companies with ARR of more than 3 million dollars.

Best For

This platform is good for startups and private companies seeking to raise seed funds or Series A (To C) Funding for their business.

SeedInvest

What is SeedInvest?

SeedInvest is also one of the top crowdfunding sites that is equity-based. It makes it easy for startups and entrepreneurs to raise capital online. Since its foundation in 2012, SeedInvest has successfully funded more than 250 companies with an average investment of USD 975,000 per company.

It has a pool of more than 450,000 investors, thus making it easy for startups to reach investors for capital.

How Does It Work?

The first step to raise funds on SeedInvest is to sign up on the platform and create your user account. SeeInvest typically helps High-Growth, professional, and early-stage companies to raise funds through preferred equity and convertible note.

Once you create your account, the next step is to create your application. Your application would provide basic details about your company.

Further, the screening committee would screen this application and due diligence would be undertaken to see the legal standing of your company.

Once that is done, you would create your company profile that will be visible to the investors and other marketing material.

Finally, SeedInvest would help you with all your legal documents and transfer funds to your account.

Fees

SeedInvest charges a placement fee of 7.5% of the amount of funds raised on SeedInvest. In addition to this, an equity fee of 5% of the amount raised will be charged.

However, you pay the cost of raising funds on SeedInvest as an issuer only if your fundraise is successful.

Also, up to USD 3,000 of accounting fees is reimbursed on the launch of the campaign.

Best For

As stated earlier, SeedInvest typically works with High-Growth, Professional, and Early-Stage companies seeking funds for their business ventures.

GoGetFunding

What is GoGetFunding?

GoGetFunding is also one of the best crowdfunding sites that helps you to raise funds for personal needs, business projects, and much more. Founded in 2011, GoGetFunding has helped millions of people raise funds online.

How Does It Work?

GoGetFunding is one of the keep-it-all personal crowdfunding sites. That is, it works on a funding model where you keep all the money you raise even if you do not reach your fundraising goal or target.

All you need to do is create your fundraiser with GoGetFunding. There are two options here. You can create a fundraiser with a particular end date. That is, if you need money by a specific deadline, such a kind of fundraiser would be really helpful..

However,you can create an ongoing fundraiser with GoGetFunding if you need to raise funds with no specific deadline.

Then, provide all the necessary information on your fundraising page. Also, you need to promote your campaign by offering rewards, creating marketing material, reaching out to friends and family, etc.

In addition to this, you do not have to wait for withdrawing your donations until the campaign ends. Donations received through PayPal get credited to your PayPal account immediately.

However, card payments and donations received through STRIPE take a 7-day period for clearance.

Fees

Starting your fundraiser on GoGetFunding is absolutely free. GoGetFunding charges a fee of 6.9% on the amounts raised through their platform.

This includes the 2.9% payment processing fee. Further, there is a small amount of handling fee for every donation made.

Your fee gets automatically deducted from the amount of donation you receive and do not have to wait for any bill from GoGetFunding.

Best For

Since it’s a crowdfunding site, GoGetFunding helps people to raise funds for anything that is close to their heart. Be it a project, an event, or a personal cause.

Typically, causes for which funds are raised on GoGetFunding include medical and healing, animal and pets, personal, volunteer and service, special events, business and startups, etc.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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