What are Crowdfunding Platforms?
Crowdfunding provides a way for companies or individuals to raise money for a project, cause, or venture they would like to begin. If people are interested in a project/venture they can choose to fund it and often gain a reward in return for this. The reward is often the finished product of the project. If people want to support a cause they are able to make a donation.
If you would like to start a project or raise funds for a cause, or would like to fund a project or cause, there are a variety of portals which allow you to do this. Below we will provide an overview of some of the best crowdfunding portals and how you can use them:
You may have heard of Kickstarter, as it is the most popular crowdfunding website. Kickstarter is for individuals/companies who are fundraising for innovative projects.
Fundraisers input details of their project, select a funding aim (e.g. raise £100,000 for headphones) and are then given time to raise the money. If they do not raise the money within the given time, no funds will be received.
A funders money is only taken if the project meets its funding aim, this means funders do not lose out if the project does not raise enough money and cannot proceed.
If you are interested in a project and choose to give money there will often be rewards related to the amount you donate. For example when the project completes you may be rewarded with the item that is produced (e.g. a watch, video game, phone).
This is a great platform for entrepreneurs who want to produce their creative innovations. It is also low risk for funders and means they can fund a project of their choice and receive rewards.
Pricing: if the funding aim is achieved Kickstarter charge a 5% fee and a processing fee of 3-5%.
Indiegogo is another rewards based fundraising site, similar to Kickstarter. It offers two ways to fundraise – a set time to raise funds (like Kickstarter) or a flexible option.
The flexible funding method does not require you to reach your funding aim (e.g. raise £50,000 for a video game), you are able to use the amount you have raised at the end of the fundraising period.
This is a good option if every donation will help and you do not need to achieve your aim to complete the project and provide incentives.
Funders are offered rewards and incentives for investing their money such as discounted products when they are released.
Pricing: 5% Indiegogo fee on funds raised and 3-5% processing fees.
This website allows people to raise money for important causes and charities. If you want to support a cause on the website you can choose to donate an amount of your choice. No rewards are offered on GoFundMe, rather the feel good factor that you are supporting an important cause and your money will help fund their efforts.
Examples of causes are:
– raising money for personal medical treatment
– supporting schools in third world countries
– helping pets to have essential treatment
– raising funds for memorials
– supporting charities
This is a brilliant site for people in need of help or who need to raise money for a cause/charity. It allows people to donate as much or little as they want.
Pricing: 5% is taken from each donation plus a 2.9% processing fee.
YouCaring is a donation-based site (like GoFundMe) which enables people to raise money for a range of causes such as medical, learning, community, cancer, adoption and pets. People can create aims (e.g. to raise £5000 for college tuition) but work on an every donation helps basis.
One useful feature is that users can have daily access to the funds received, which will be extremely handy for people who need to pay medical bills or any other ongoing costs.
This is another successful donation-based funding site which allows you to support people in need.
Pricing: when people donate the process deducts 2.9% plus $0.30 transaction fee.
Seedrs is an investment platform where people can invest in businesses in exchange for equity in the company.
Companies will put up campaigns and users can then select which one they want to invest in and how much money they would like to put in. Users will then own equity in the company and if it does well they will collect a return on their contribution.
This type of crowdfunding can be risky for those who invest as if the company does not do well they could lose money.
Pricing: 7.5% fee on the money made from investing.
Which Portal Should I Choose?
As you can see there is a range of crowdfunding portals each providing different options, benefits, and fees.
If you are an entrepreneur and want to raise money for a project, or you would like to fund a project and receive rewards, Kickstarter and Indiegogo are the way forward.
If you need to raise money for an important cause/charity or you would like to donate to a cause GoFundMe and YouCaring will allow you to do this.
For people who want to invest in companies, Seedr is the best option offering users equity in companies in exchange for investment.
Which portal you choose will depend on your requirements. The portals above are all well-established websites with years of experience and successful crowdfunding.