Crowdfunding has taken the world by storm and people are finding that this innovative way to raise money can be extremely effective in getting started with a new project or undertaking. But what is crowdfunding? Crowdfunding is a means by which lots of different people contribute to an overall fund. This means the crowd funds certain projects.
Many different websites have built up around this concept, and people are able to post all kinds of different projects and activities they want to undertake and if that project or activity is appealing to others then it will get funded. Often, the person that requires the funds is expected to offer “rewards” or “perks” for doing so. These are graded, with low level rewards being offered for smaller donations, and greater perks for larger contributions. For example, an artist raising money for an exhibition might offer signed postcards of her pictures to those donating up to £10, but if someone donated £1,000 she might offer them a “lunch date with the artist” to demonstrate her appreciation. Crowdfunding has managed to get a number of successful businesses off the ground, and should definitely be considered as a funding option.
There are now a lot of websites out there that offer this funding approach. It may be hard to choose which ones to go for, but luckily Alvaris Falcon has devised a list of 10 sites that can “fuel your dream project”:
1. Kickstarter – this is perhaps the best known crowdfunding website and according to Falcon it has “raised a total of $220 million from 61,000 launched projects so far”. Kickstarter allows people to post details of creative projects but not campaigns for charities. There’s a lot of data to enter but it is worth it because there are a lot of people looking at Kickstarter. There is a 5% fee for successful projects, and credit card fees must also be paid. You only give the rewards if the funding goal is achieved.
2. Indiegogo – this website is very similar to Kickstarter, with the one notable difference being that charities may also raise money via this website. One of the good things about this website is that you can get your hands on the money even if the goal of the project is not reached, and in that case, Indiegogo applies a higher fee. The regular fee is 4%, and again there is a credit card processing fee.
3. RocketHub – this website has two approaches to helping you raise money. One is FuelPad and the other is LaunchPad. FuelPad is for crowdfunding only. LaunchPad however helps projects to get greater public interest by offering them the opportunity to work with major brands and marketers to get better project opportunities. There is a fee of 4% for a successful project and 8% if the project did not reach its goal. There is also a 4% credit card fee.
4. GoFundMe – the difference with this website is that any kind of cause can be raised and potentially funded. For example, as Falcon explains, if your pet needs medication you could try and get it, or even if you have a travel fee to pay. There is a 5% fee and payment fees also.
5. Razoo – this organisation claims that it has raised $97,000,000 for worthy causes. It places emphasis on causes and not for-profit enterprises. There are excellent features for letting people know about your project, and the fees are low at 2.9%, with no extra add-on fees.
6. Crowdrise – this site is most definitely focused on issues rather than profitable endeavours. Examples of causes for which funds have been raised include disease, animal welfare and the arts. It does focus more on charity undertakings in this sense. However, there are still opportunities for raising money for other activities such as weddings. Fees vary depending on what it is you are trying to do.
7. PledgeMusic – this website is focused on music with a goal of encouraging new talent. The website is easy to use, but there is a whopping 15% fee, which may be off putting to some.
8. Sellaband – this website has raised more than $4,000,000 for music bands, helping to coordinate recording sessions for music artists. Again, the fee is 15% and the benefits must be weighed up before you start down this road.
9. Appbackr – the site for raising funds to develop apps is Appbackr. The advantage for backers in taking part in this is that they could get their money back in doing so. Fees vary depending on app price and other factors.
10.Crowdfunder – this site helps you to raise money from Angel Investors and Venture Capital rather than Joe Public. For this reason it is clearly focused on business ideas.
Paula Newton is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Paula’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Paula has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Paula has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.