This article was first published on Feb. 8, 2017, and was updated on Feb. 27, 2018, and Feb. 11, 2019.
Companies that are just starting out sometimes need a financial boost to get things going. You’re too new or untested for angel investors and venture capitalists, or maybe you’ve got your sights set on something smaller and don’t need $20 million to get things going. Perhaps crowdfunding platforms could help.
I mean, you wouldn’t say no to $20 million. (You’re an entrepreneur, not stupid!) But your cupcake bakery doesn’t really need it, and the people who throw that kind of money around won’t even get out of bed for the $30,000 you need to get things started.
This is where crowdfunding can help. Crowdfunding is where you get a lot of people to invest in your idea, rather than finding one person to come up with everything you need.
You’ve probably also heard the term “crowdsourcing,” as in, “we crowdsourced all the information about Robin Hood in order to create the best possible Robin Hood encyclopedia.” That means ordinary people all contributed to that Robin Hood knowledge. And the sum of everyone’s information reduced the amount of time and energy it took to create The Big Book of Hood.
Crowdfunding is basically crowdsourced money.
Everyone chips in a little bit to achieve the ultimate goal. But while you can ask your friends and family to each kick in some cash, you don’t necessarily want to ask 500 people to write you a check or hand you 20 bucks. For one thing, it can be uncomfortable and awkward. For another, it’s time consuming.
Instead, you can use a crowdfunding platform to manage all the collections and give you a central location to share your ideas and the materials and videos that explain what you’re trying to accomplish.
Once you reach your desired goal, you’re expected to begin work on your project.
Finally, keep in mind that these platforms are not in the business of giving away their services. They take a cut of your donations, and some even require setup or promotional fees. I found fees as little as 2.5 percent of each donation to as much as 15 percent of your total take. It depends on the service and what you’re hoping to do, so do your research before you commit.
Top 20 crowdfunding platforms
Here are 20 crowdfunding sites you can use to fund and fuel your startup. Some of them are more geared to developing products, others are about funding artistic endeavors, and still others are ideally suited to nonprofits. Some sites will collect all the money as it comes in; others won’t collect it until the goal amount is reached.
- MightyCause (formerly Razoo).
- InKind (formerly Equity Eats).
- Lending Club.
- Funding Circle.
This one is so popular, it’s entered our everyday language. Kickstarter is geared more toward creative projects like a new album or writing a book, as well as products and inventions like a personal single-wheel vehicle or a pocket-sized solar charger. It’s not really for buying equipment or helping a nonprofit, and you don’t get to keep your money unless you reach your goal through financial pledges. Categories include Arts, Comics & Illustration, Design & Tech, Film, Food & Craft, Games, Music, and Publishing.
I’m more familiar with this crowdfunding platform, having used it to help a friend get funding for his nonprofit organization. Like Kickstarter, you can use it to start up any project or idea. But unlike Kickstarter, you can set up nonprofits on the site. Indiegogo also offers Flexible Funding, which means you get to keep the funds you raised, even if you didn’t reach your goal. Indiegogo also allows you to buy funded products on their marketplace.
Unlike all the other platforms in this list, which are all one-time donation sites, Patreon is a monthly subscription platform where supporters and donors provide regular monthly contributions, rather than one bulk payment.
The goal is not to support a particular project, but to provide ongoing support for a creative venture or artist, such as supporting your favorite webcomic, band or musician, or even your favorite podcast.
I support the Canadaland and I Hear Of Sherlock Everywhere podcasts on Patreon, because I enjoy what they do. Canadaland has managed to turn their subscription base into a small-but-powerful media criticism and publishing platform.
GoFundMe is the “Hey, can I borrow 50 bucks” of crowdfunding platforms. I see it used mostly for personal emergencies, but it can be used for any number of short-term personal projects. I’ve seen people use it to cover an emergency vet bill, a trip to the dentist, and even for a Kenyan farmer to attend an agricultural conference in Australia. In some cases, I’ve seen people use GoFundMe to raise money to cover uber-high medical bills for terminal illnesses.
Crowdrise is geared more toward helping “real-world issues,” rather than funding for-profit ventures. I saw projects for Haiti, including a boy who wanted to donate solar technology to Haiti for his bar mitzvah, and January’s Women’s March on Washington. But you can also use it to fund birthday parties, weddings, and even college scholarships. They can also help you with cycling and walking events, nonprofit event fundraising, and online social fundraising. CrowdRise was acquired by GoFundMe in early 2017.
Being a musician can be pricey. (As the husband of a jazz singer and father to three budding musicians, I can attest to that!) So anything you can do to cover costs when you launch an album, promote it, or go on tour takes a load off.
And like most of these other crowdfunding platforms, you can provide rewards for donors who pledge a certain level, such as downloadable digital music.
The site that used to be called Razoo is now known as MightyCause. Just like its predecessor, it’s not geared so much toward business funding as it is for helping “worthy causes.” MightyCause lets you fundraise for nonprofits and special events for children and family, education, animals and pets, and even faith-based causes. NuDay Syria, Doctors Without Borders, and Southern Poverty Law Center all use MightyCause for fundraising.
This crowdfunding site is unusual in that it’s geared specifically toward restaurants. And since restaurants often have trouble getting funding, it’s great to see InKind try to remedy that. The way it works is that you get funding by providing gift cards to InKind, and they’ll sell them for you as “House Accounts,” which brings in repeat business. They were originally known as “EquityEats,” but they have since changed their name to InKind.
Related: Restaurant startup basics
If you’ve gone through all the crowdfunding platforms but still want to land an angel investor or venture capitalist, you can catch their eye on Crowdfunder. Just like a regular venture capital program, you can sell equity and debt in your company to raise money and attract angels and VCs to your company at the same time. I saw projects that needed $1 to $2 million in funding, but were reaching five times that amount.
This is a WordPress plugin to add to your WordPress blog and use it to collect donations from visitors. It’s not a fundraising plugin for just anyone; it’s for nonprofits only. But unlike every other crowdfunding platform I reviewed, Give does not take any fees based on what you raise. They make their money selling premium add-ons to their system, which you can use if you need additional functionality. If your startup isn’t a great fit for the other crowdfunding platforms on this list, then maybe Give (and Charitable) are for you.
Another WordPress plugin, Charitable lets you collect donations on your website via PayPal, and they don’t charge any transaction fees for credit card donations. You can also use well-known and trusted credit card processors like Stripe and Authorize.net to accept plastic.
The tradeoff is that you have to manage your own WordPress blog, or at least have access to someone who can do it.
12. Lending Club
This is a site for investors who want to invest their money, but still do a little good. As a borrower, you can borrow up to $40,000 for a personal loan, and the investors will make between 5.5 percent and 7.7 percent as you repay the loan with interest. It’s easier to get a loan on Lending Club than a normal bank, and they’re more likely to fund unusual projects and ideas. And it’s great for people who need to borrow some money for, say, car repairs, getting a new laptop because their old one crapped out, or even a minor medical procedure.
OK, if your business idea didn’t pan out, give AngelList a shot, because you can apply for a job at more than 60,000 startups with a single application — it’s the only site I found that lets you do that. But if you’re looking for a place to invest, then AngelList has those opportunities as well. Oh, and you can still apply for funding, too. Just fill out an application, and you’ll be introduced to potential investors and lenders.
I added Ulele to the list of top crowdfunding platforms partly because it’s an international crowdfunding platform, but also because I like to say the name. Ulule. Ulule. Ulule. It’s like saying ukulele, but without the ‘K.’ Ulule funds mostly creative projects, and they’ve helped more than 16,000 artists and entrepreneurs in 198 countries. Don’t let their international focus frighten you though. They’re headquartered in Paris, with offices in Barcelona, Rome, Antwerp and Montreal. If you’ve got a worthwhile project you believe in, give Ulule a try.
Related: 10 hot crafts to make and sell
15. Funding Circle
A competitor to Lending Club, Funding Circle will grant between $25,000 and $50,000 in small business loans — interest rates run between 4.99 percent and 27.79 percent — as well as give you the option to invest money.
If we have music-based platforms, then it stands to reason we’d have at least one for filmmakers. Enter Seed&Spark, the crowdfunding platform for movie makers around the world.
Whether it’s documentaries, dramatic films or offbeat comedies, you can get funding for your movie and even watch others’ contributions.
You can also watch the movies that are produced on their website or your Apple TV or Roku. (You could also try Slated if you’d like to find another movie funding option.)
Crowdcube is another online investing site that lets investors choose which projects they want to back. It’s a great way for entrepreneurs to spread the risk of their new ventures a bit, while still getting the “grown up” funding of investors without needing to deal with banks and financial institutions who typically aren’t interested in smaller projects. This one is based in the UK, so it may be geared more toward the UK/European crowd. But if you’re based in the United States, it’s still worth a try if you want an international funding source.
I like the directness of this website’s name, as if it’s a command and not just an explanation of what they do. Similar to GoFundMe, another bossy platform, GoGetFunding will let you raise funds for any cause, whether personal, nonprofit or even a business. I saw campaigns for raising funds for a British documentary, a man to keep his motel room, funeral expenses for a German jockey, and hearing aids for a Polish DJ. If you have a worthy cause to support and people to help, GoGetFunding and GoSaveTheWorld.
Fundable is a sort of crowdsourced venture capital. You post your business or idea on Fundable and investors can pledge money to your project, just like KickStarter. The only difference is, you’ve got some skin in the game — it costs $179 per month to be on Fundable, and they take 3.5 percent + $.30 of every transaction. You can give rewards (items like prizes or product pre-orders) or give equity in your company. And like KickStarter, the rewards campaigns are all or nothing — if you don’t meet your goal, you don’t get any money.
Kiva is a special crowdfunding platform, and one I truly appreciate: the money raised here is not for you.
Whether it’s lending $250 to a women’s sewing group in Burkina Faso to buy sewing materials, or $2,000 to an Armenian photojournalist, you can loan a small amount to any borrower you choose, and as the loan is paid back, you can make a little bit of money in return. This is a way to help deserving individuals, especially in underserved parts of the world, get just a little bit of money to make a vast difference in their lives.
Crowdfund for success
Regardless of the work you want to do, the goals you want to accomplish, or the lives you want to change and save, there are crowdfunding platforms of all sizes, aims, and areas of focus. There are investors who want to see a return on their loans, and there are sites whose only aim is to fund creative projects or life-saving nonprofits.
Figure out your end goal, and start your research. Find a platform that will suit you and your desires, and then go all in. Don’t split up your efforts between platforms, because that will only confuse people. Focus on that one platform and that one goal, and tell everyone about it, until you raise your funds.
Part of being an entrepreneur is having the drive and passion to ask for money when you need it. These crowdfunding platforms make asking for that money much easier, and even lets you give your donors and supporters a little something in return.
Note: All rates and fees were current at the time of writing, but are subject to change. Check each crowdfunding platform for the most up-to-date information.
Source: Go Daddy Garage