Guide to Crowdfunding: 5 Amazing Platforms You've Never Heard Of
Kickstarter, GoFundMe, and Indiegogo have become synonymous with crowdfunding, but they are by no means the only options for growing your business. There are hundreds of active crowdfunding platforms worldwide -- and easily accessible.
Until recently, crowdfunding has primarily been an avenue to support artistic projects, charitable fundraising, and cover personal expenses such as medical bills. However, the online funding culture has since grown rapidly and is considered an effective way to raise capital for businesses and entrepreneurs.
What is Crowdfunding?
To "crowd-fund" is to obtain small amounts of money from a large amount of people (in the form of donations) in order to fund a project or business. This is generally done through the Internet via an online platform such as Kickstarter. Not all crowdfunding platforms are equal, however, and some are a better fit for small businesses than others.
Crowdfunding Platforms You Might Not Know About
Below are five crowdfunding platforms specifically designed to help small businesses and entrepreneurs meet their funding needs.
Created last year by Cynthia Hornig and Jen Jones, Women You Should Fund is the offshoot of the duo's women's empowerment website, Women You Should Know.
Women You Should Fund isn't the first crowdfunding platform created specifically for women and women-led businesses, but it does have arguably the greatest reach. In an interview with Forbes, the brand reported a reach of 2.2 million per week on Facebook and 500,000 page views a month.
It's this massive reach that sets Women You Should Fund apart. Instead of just relying on an entrepreneur's own social reach for potential contributors, women who use the platform have the power and reach of the Women You Should Fund community behind them.
Women You Should Fund is a rewards-based platform, meaning products or services are rewarded to funders dependent upon the amount of the contribution.
Wefunder is part of a new trend in crowdfunding known as equity crowdfunding. As the name implies, investors receive equity rather than a product or service as a reward for their investment.
Equity crowdfunding has only existed in its present form for about six years, but it's proving to be extremely effective. The U.S. Small Business Administration (SBA) reported small businesses raised over $30 million using equity crowdfunding in a one-year period between 2016 and 2017.
There's no charge to begin a company profile on Wefunder, but there is a 7% charge on the total amount raised: 5% in cash and the remainder in equity. While Wefunder doesn't have any requirements to use their platform, they do recommend coming to the table with at least one experienced investor who publicly endorses your company.
Powered by RocketHub and Bankroll Ventures, ELEQUITY is also an equity crowdfunding platform. Unlike Wefunder, ELEQUITY has an application process and not all applicants are accepted. However, if your business does qualify, you will receive an incredible amount of hand holding and guidance throughout the process.
In a recent interview, Chief Experience Officer Mark Stanich described ELEQUITY's "sweet spot" as the luxury and innovation spaces. While ELEQUITY's website does not explicitly list the types of businesses it accepts, if your venture falls within those sweet spot categories, chances are much higher that the platform will be a good fit.
Fundable is the largest platform dedicated strictly to crowdfunding businesses. In addition to the freedom to choose either a rewards-based or equity crowdfunding campaign, Fundable offers a hands-on approach with a wealth of learning resources and support available.
The platform is easy to use and free to create a company profile. Fundable doesn't take a cent of the money you raise but there is a monthly fee to use the platform starting at $179. For rewards-based campaigns, there's also a standard credit card processing fee of 3.5% plus $0.30 per transaction.
If you can't find a crowdfunding platform that suits your needs, you can create your own ad-hoc platform with Selfstarter. Based on Ruby on Rails, Selfstarter provides a free, open-source, fully customizable skeleton upon which you can build the crowdfunding platform of your dreams. For some businesses, this method is the perfect solution.
Other Crowdfunding Options for Niche Businesses
While many platforms boast millions in funds raised for thousands of projects, your unique business might actually benefit from smaller, niche crowdfunding sites such as Cruzu: a platform strictly for winemakers; or Seed & Spark: a site specifically for film and television. These niche crowdfunding platforms have the advantage of a pre-existing target audience perfect for funding your product or service.
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About the author: Holly Layman is a freelance writer based in the greater Los Angeles area. Connect with Holly at hkvlayman.com.