Crowdfunding, all you need to know

Crowdfunding, all you need to know

January 11, 2021 0 By carolc

Crowdfunding is a way of financing your business through donation of money from the public; this is mainly done through crowdfunding websites.

Generally you post your business idea as a campaign idea into the website with the description of your project. If people want to support your campaign they can donate money to help support your campaign.

These people are called “BACKERS”, on some websites you need to set a monetary goal and a time firm to reach this goal. This goal encourages people to support your campaign, and you can offer rewards based on the amount they donate.

For example you can set for every 20 dollars, the backer gets a 10% or 5% discount when the product /project gets released.

Crowdfunding Websites/Platforms

INDIEGOGO

This platform is a clear choice. It has a high record of success in fundraising; it has funded over 800,000 projects all over the world since 2008. It was funded by Danae Ringlmann, Slava Rubin, and Eric Schell.

This platform charges 5% fee and a third-party payment processing fee. Today over 10 million people use this platform on a monthly basis where about 19,000 campaigns are launched every month. Indiegogo is available in 235 counties.

SEEDINVEST TECHNOLOGY 

This platform is good for startups looking for funds. All startups go through an intense evaluation process, but not all are selected. Seed invest technology has gotten over 300,00 investors and has helped over 200 startups and counting to raise more than 200 million in financial backing.

Its headquarters is in New York City and it was founded in the year 2012. This platform offers a minimum investment as low as 500 dollar, that’s 50 times lower than a typical startup investment.

Seed invest technology was founded by Ryan Feit and James Han.

This platform takes 7.5% placement fee and 5% equity fee.

MIGHTYCAUSE 

This platform is best for nonprofits because it offers the lowest cost for raising money. This was founded in the year 2006 in Alexandria, Virginia.

This platform offers a certain campaign, it charges a fee of 1.2% of the money you raise using the platform and 29 cents per transaction.

STARTENGINE

This is a platform that is best for those looking to invest some money because start engines allow people to put your money directly into companies and startups and get equity in return for as little as 100 dollar to start.

This platform was founded in 2011 by Ron Miller and Howard Marks, with Kevin O’Leary.

This platform enables people to be an investor; you start by investing in companies listed on the website.

GO FUND ME 

This platform is best for individuals, this is a versatile platform that helps individuals to raise funds for anything personal for example healthcare expenses. This platform has a success rate of 9 billion dollars in funds over 120 million donations.

GO FUND ME started in 2010 and has become the largest fundraising platform over the years. Its processing fee is 1.9% and 0.30 dollar per transaction. There are no deadlines in this platform. You can raise money for as long as you want and it works 24/7 and offers expert support in any event you need help setting up.

PATREON 

This platform is best for creative professionals with easy to use fundraising and subscription options for artists and other creative looking patrons. It is created for creative people trying to raise funds.

It was founded in the year 2013 by Jack Conte, the platform has over 200,000 creators. This platform has 3 plans you can choose from. The first one is the “ Lite” plan, it charges 5% fee from  the money generated on the platform, The second one is the “ Pro” plan has 8% cut, then the last one the “Premium” plan has 12%. Then the company takes a 2.9% processing fee and 0.30 dollars per payment.

You can always switch between the Lite and the Pro plans any time while the Premium plan you need at least 3 months commitment.

KICK STARTER 

This platform focuses on creativity. It was founded in the year 2009 on April 28th. CEO is Aziz Hasan; its headquarters is located in Brooklyn, New York, United States.

Founders are Perry Chen, Yancey Strickler and Charles Adler.

CIRCLE UP 

This platform focuses on consumers goods startups. Founded by Ryan Caldbeck in the year 2011. Its headquarters is in San Francisco, California, United States.

Crowdfunding Models

  • EQUIT-BASED: This is a type of crowd funding  model that involves people sharing their company shares, this type of funding only represents a smaller fraction of crowdfunding activity.
  • DEBT BASED: most platforms offer crowdfunding solutions for debt, it’s a part of a large revolution in financial tech internet software that disrupts the traditional financial history while the bank serves as an intermediate. This model focuses on helping to lend money to those who need it, this allow savers to earn and borrowers to pay less.
  • REWARD BASED: this model is one of the most innovative in crowdfunding, and funds the campaign that interests them with the promise of receiving something in return, usually a copy of whatever they are backing.
  • DONATION BASED:  These are charity platforms the fundraisers do not usually give anything in return except for information and feedback of good deeds that those campaigns have achieved.

Crowd funding has been growing at a stable rate worldwide opening up new opportunities for entrepreneurs and investors.

Crowd funding has already demonstrated the ability to promote wealth creation and more. It has also revealed certain potential shortcomings.