Crowdfunding Your Way to a Successful Business!


Discover the most important crowdfunding platforms!

FundraisingWhat is crowdfunding?

Crowdfunding is one of the most popular ways for entrepreneurs and small businesses to raise capital. It harnesses the power of the internet to enable multiple contributors around the globe to give money in the form of donations or investments to finance a product, fund a business, or support a charitable cause. The industry has grown and grown over the last few years, with crowdsourced funding reaching an estimated $34 billion in 2015.
With numbers like that, maybe it’s time you considered joining the crowd!

Types of Crowdfunding

There are several types of crowdfunding models commonly in use today.

  • Rewards-based: In this model, incentives or rewards are offered in exchange for donations. These can include a copy of the finished product or personalised gifts.
  • Donation-based: Here, people make a financial contribution with no strings attached. Donation-based crowdfunding platforms are often used by non-profits and charitable organisations. They can also be used to raise money for individual needs such as emergency medical treatment.
  • Equity-based: In equity crowdfunding, investors choose to contribute money to a start-up or small business in exchange for shares, i.e. for ownership of a small piece of that business.
  • Debt-based: Similar to attaining a bank loan, debt-based crowdfunding, or ‘crowd lending’ allows individuals or small businesses to acquire a loan from a group of lenders often at low or competitive interest rates.

Crowdfunding for your business

There are numerous benefits to crowdfunding for your business. In addition to the initial fundraising, crowdfunding platforms enable entrepreneurs to showcase their ideas, gather an audience through social media channels, and build hype before a launch. Some platforms support product pre-sales, and may also assist with the marketing and distribution of a completed product.
When getting started, it’s essential to find the right crowdfunding platform to suit your needs and fundraising goals. But don’t worry – we’re here to help! Here’s our handy guide to the top crowdfunding platforms on the web!

The Top 5 Crowdfunding Platforms

Kickstarter: A bigwig in the world of crowdfunding, Kickstarter sets out to enable creative types such as musicians, designers, and filmmakers to find backers for their projects. Kickstarter uses the all-or-nothing approach to financing, so if your project doesn’t reach its financial target, you won’t receive a penny. However, this gives peace of mind to backers as they won’t be charged unless the project receives enough funds to actually make it happen, which helps boost overall funding. To date, over 11 million people have backed a Kickstarter project and over $2.4 billion has been pledged.

Indiegogo: Visited by 15 million people monthly, Indiegogo is billed as the largest online fundraising platform worldwide. It provides multiple services aimed at entrepreneurs and small business owners such as a marketplace, integrated analytics tools, and product fulfilment options. It also has strategic partnerships with distribution channels such as Amazon Launchpad and Vimeo.
Indiegogo offers flexible funding, which means you can choose to either keep any donations made – even if you don’t achieve your fundraising targets – or stick with the all-or-nothing approach depending on your business strategy.

Patreon: While Leonardo da Vinci had his patrons, the Medicis, bankrolling his genius, it’s not so easy for modern-day artists and creators to find wealthy benefactors happy to fund their work. Enter Patreon, a site where fans can set up a recurring donation to support their favourite content creators. Popular with online content creators such as YouTubers, bloggers, podcasters, and digital artists, many Patreon members earn thousands of dollars a month from fans eager to devour more of their awesome content.

GoFundMe: Focused on individuals rather than businesses, GoFundMe doesn’t offer the ability to provide rewards or incentives to donors. It is, however, an ideal platform for no-strings-attached fundraising for charitable causes or personal needs — over $2 billion has been raised in the past year alone! GoFundMe prides itself on its fast customer support and personal touch.

Teespring: Aimed at artists, illustrators, and graphic designers, Teespring enables users to launch customised clothing products (e.g. t-shirts or hoodies). A campaign is successful if enough interest is generated in a design, at which point Teespring takes care of the product production and distribution with no financial risk to the designer.

Many individuals and businesses have had major successes with crowdfunding. In 2015, California based Pebble raised over $20 million to fund its smartwatch. In the same year, cartoonist Matthew Inman made almost $9 million from fans eager to make his card game, Exploding Kittens, a reality. And, who knows? With the right crowdfunding strategy, your business could be next!