Here is the compilation of some of the best well known online crowdfunding websites for startups.
What is crowd funding?
Crowd funding is a way of getting your startup product or idea funded by a community. So in place of going to banks or venture capitalists with your business ideas you can just join a crowd funding site and post your idea or product there.
If the community thinks your product or idea is promising, you will get necessary funding without any interest rates. But you may have to pay a part of the funding to them as a fee.
Below are some of the best sites that faciliate crowd funding:
1. Kickstarter
About the site- This site is a haven for emerging entrepreneurs to finance their ideas and products. This site has supported over 13,000 new campaigns since its beginning.
How it works- You will get a fundraiser page which includes funding goal, your explanatory video and a deadline. You are expected to offer ‘rewards’ to your contributors which may vary from a simple “Thank You’ on the company website to a prototype of your idea for them. If you do not meet your goal, the idea is abandoned.
Downside- The website only accepts 60% projects each week.
The Catch- You need to pay 5% of the funds to Kickstarter and 3-5% to Amazon Payments.
2. Indiegogo
About The Site- This website takes in any legal and aesthetic project.
How It Works- You will get a profile page, a video, written summary; describe perks for funders, a goal and a deadline. But you may stay there even if the goals are not met till the deadline.
Downside- The downside is that product appeals are not sorted so you need to share space with 10,000 other non-related, random fundraising projects.
The Catch- If the goal is met you need to pay 4% of the funds raised, and 9% otherwise. There is also a third party processing fee of 2.9%.
3. Profounder
About The Site- This is basically a peer to peer micro lending platform. It helps in launching private rounds of crowd funding. Investors either get revenue or an equity amount over a fixed period of time.
How It Works- This site will provide guidance at every stage to the entrepreneur right from raising capital, to creating pitches and term sheets, to sending them to potential investors. It also provides tools to make sure that investors comply with investment regulations. It also helps in calculating the revenue or equity to be divided over the time period.
Downside- In this kind of funding the law prohibits ‘general solicitation’ according to which the investors can only be those people which you already know, like friends, family and customers. So the campaign cannot go viral.
The Catch- It does not have any conditions. Moreover it is free. It will only cost for the paper work if applicable.
About The Site- It is based on the general broker-dealer model which connects entrepreneurs to thousands of angel investors willing for equity investments.
How It Works- The companies whose applications are accepted and are through the selection process are handled by Microventures for investor relations throughout and even after the funds have been raised. Investments are kept until the goal is reached. In case you are not able to fulfill the goal, the investments are returned to their respective investors.
Downside- Though it accepts a project regarding any industry but this platform is specialized for technology based start-ups.
The Catch- To submit a project you are required to pay 100$, 250$ for due diligence and about 5-10 % of the total funds raised.
These are the few crowd-funding websites which do their jobs well. Be sure to check these out, in case you have a startup idea but lack the funds to put that idea to shape.
Also check out other options such as software utilities to conduct and manage fundraising. Blackbuad fundraising software services is one such company that deals with fundraising software tools and its implementation so check that out!