Crowdfunding, Part 1
Standard crowdfunding started out as donation-based fundraising for businesses or creative projects via an online funding platform. Project creators set a fundraising goal and deadline, donors donate and the crowd funding platform charges a small fee for their service. Some have an application process and others don’t. The type of funding offered are usually based on an:
- All or Nothing Model: When the fundraising period is over, the pledged money is only collected from the contributors if the fundraising goal is met. If the goal is not met, no money is collected, i.e you don’t get any money.
- Keep it All Model: Whether the goal is met or not, all the money is given to the entrepreneur minus the commission.
Some platforms offer a choice of either or.
They can also be classified a
- Donation based fundraising
- Debt based fundraising.
- Equity based fundraising.
Here’s a very brief overview of some of the donation-based crowd funding platforms available to you.
kickstarter.com is one of the most popular crowd funding sites, they focus on creative ideas in design, arts, gaming and technology. They have a rigorous selection process. The model they follow is the all or nothing model. Their website says that 44% of projects have reached their funding goals. Creators have 100% ownership of their work, funders may get rewards from the creator (funded). If a project is successfully funded, kickstarter applies a 5% fee to the funds collected. According to the stats provided on their website, out of the most successfully funded projects, the top three categories were: Music, film and video and art.
indiegogo.com’s projects are in three broad categories: Creative and performing arts, causes and entrepreneurial ventures. You’ll have to choose between flexible and fixed funding. They take 4% fees if you reach your goal in either funding choices – flexible or fixed. If you don’t reach your goal, in a flexible funding you keep what you earned but you give up 9% in fees. For fixed funding, you get nothing and the collection is returned to the backers.
There’s no application process, so decide on the amount you want to raise and your deadline, create a pitch video and in it convince people why they should back you and create your campaign. Also, figure out what kind of rewards you want to offer your backers, it could be anything from a discount on your product to a thank-you party.
gofundme.com is a crowdfunding platform for personal projects like medical emergencies, natural disasters, community projects, etc. Create your page, share with friends and collect donations. They take 2.9% plus $.30 for every transaction.
kapipal.com is an international platform for personal crowd funding. No fees are charged, you just set up your Kapipal page and start collecting contributions, of course you’ve got to let people know about your cause, so send your page’s url to your network, announce it on your social networks and get the word out there. All money contributions are donations, perhaps you can set up some kind of reward for your donors, like a tee-shirt or goodie bag. All money transactions are done through paypal.
peerbackers.com offers an online “crowdfunding” platform to help raise money by attracting many small donations from a large group (friends, family, professional & social contacts) to meet a funding goal and donors receive rewards or perks for their contributions. Submissions are reviewed and once you’re approved to fundraise on their platform go ahead and let everyone in your network know. If your goal is reached you’re charged 5% fees and all the funds go the project creator, who is responsible for delivering the rewards to the backers. If the goal isn’t reached there are two things that can happen, one, if you’re able to still deliver the rewards to the backers all the funds raised will be handed to you but if you can’t fulfill the rewards without reaching the goals, then the money is returned to their backers.
somolend.com provides small business loans funded through social local lending. If you’re a small business looking for loans or an investor looking to invest in a small business, this is the platform for you.You communicate your needs and negotiate with them and if it works for both the lender and you, you get accepted. After the fundraising campaign ends, you transfer the monthly loan payments to SoMoLend and they pay the lender every month for the life of the loan.
“SoMoLend provides a secure platform that automates the business loan campaign development process, interest rate negotiations, contracts, fundraising progress, and payments.” (somolend.com)
They’ve added a new branch to their lending where they enable you to borrow from friends and family or your immediate circle of contacts, they receive a return on their investment in the form of interest.
rockethub.com lets you keep your funds whether or not you reach your goal but if you reach your goal they take 4% commission, and if you don’t reach your goal, they take double that in fees. Rockethub has a partnership with A&E for Project Startup where they will support innovative entrepreneurs with seed money and possible national exposure.
artistshare.com is a website that connects creative artists with fans allowing them to share in the creative process and fund the creation of new artistic works. ArtistShare created the Internet’s first fan funding platform for artists.
healthfndr.com focuses on innovative startups that are in the health care field. It is highly curated
app split.com is a crowdfunding website where you can raise funds for your apps and sell them (developer) and bid on app ideas as a backer.
appbackr.com is a donation based funding to get apps off the ground and running.
foodstart.com helps restaurants and food trucks raise capital online in small amounts. In exchange, backers receive great perks like food discounts, guaranteed tables, and behind-the-scenes tours all redeemable with a physical card they receive in the mail.
microryza.com is crowd funding for science and research projects.
petridish.org where you fund science and explore the world with renowned researchers.
youcaring.com is a simple, FREE online platform created for people who want to fundraise for causes they care about. From medical expenses, to memorials and mission trips or even pet care — if it’s important to you it qualifies you to set up a free online fundraiser. They provide you with customizable personal fundraising webpages to help you spread your cause and raise support. No fees or commission.
Create Your Own Crowfunding Platform.
ignitiondeck.com – your own custom crowdfunding platform. Do you want a crowdfunding platform on your own website with no middlemen? There’s IgnitionDeck – a wordpress crowdfunding plugin. There are three different pricing options, as of now starting at $79, which can be used for an unlimited number of campaigns. The IgnitionDesk Enterprise will let you build a crowd funding platform like kickstarter. They do not charge a fee so you get to keep all your donations. Works if you have a known market you can get to pledge and have resources and ways of getting the word out there.
http://www.selfstarter.us provides the source code to create your own crowdfuding website. So find a programmer or if you’re good at it, and have the time, this would be for you. It’s totally free.
crowdvalley.com is the site to go to if you need help with crowdfunding infrastructure, platforms and associated in the areas of energy, lending, real estate and securities. So you subscribe to a platform, set up your own online funding portal and run it with powerful management tools.