Small business owners or those who are considering a business or philanthropic venture all have one thing in common: They need funding at one point or another. One method of raising funds that is growing in popularity is crowdfunding. Crowdfunding allows you to tap into the better nature of people and encourage them to invest money to help your business grow, to launch a new business or to help fund a charity either for a one-time event or as an ongoing endeavor.
Currently, crowdfunding does not require SEC approval but this may change as legislation is currently pending which may hamper investments that are debt or equity based. In general, crowdfunding does not require a payback of funds received but it is also important to review the platform you select carefully to determine what fees are involved as well as to determine whether they use a “KIA” or keep it all approach or an “AON” all or none approach.
Some of the sites you may elect to use for obtaining funds for a new project or good cause include:
- Crowdrise – Crowdrise is a site that allows those who are pursuing good works to start a fundraising campaign on their site. They offer three levels of plans including a free plan that has slightly higher fees than their paid plan. They also offer an option for users to accept mobile donations if appropriate. Their plan is a “keep it all” which means funds go directly to your bank account as they are donated
- RocketHub – at Rockethub, users can start a campaign for nearly anything they can think of they want to raise money for. The fees on this site are slightly higher than other crowdfunding sites but if you have a good social network, there are many options available for sharing your project. They work on both a keep it all model with all funds raised released to project owners after funding is complete. Users who reach their goal are charged a four percent commission plus a four percent credit card fee while users who do not reach their goal are charged eight percent commission plus the credit card fee
- Indiegogo – this unique site offers users a very flexible, easy to use platform where you can raise money for a charitable pursuit, a business startup or to grow your existing business. Indiegogo provides all the tools you need to share your idea on social media platforms, a simple way to track your fundraising and the ability to accept PayPal as well as multiple credit cards. There are two funding options, Flexible Funding which is a keep it all option that costs four percent if you reach your goal and nine percent if you fail to reach your goal as well as a fixed funding where funds are returned to the donor if you fail to reach your goal. This is in addition to fees charged by credit card processors and PayPal
- Kickstarter – if you are the creative type and have an idea for a movie, song or even a book, Kickstarter may be the right source for your crowdfunding campaign. It is imperative to understand when you get started this is a very limited platform including using an all or nothing funding method and allowing users to collect funds only through Amazon payments. Users who fail to meet their funding goal do not receive any funding that was raised and your project must fall into one of their funding categories to launch a campaign
- GoGetFunding – this fascinating platform allows users to create a campaign for anything they deem necessary. From personal fundraising for medical bills, charity endeavors to business startups or expansions, whatever you need money for GoGetFunding is there. There are many benefits to this program including the keep it all method of raising funds and low fees of only four percent regardless of how much you raise in funds. They also provide coaching for those who need help. The fee of four percent is over and above any fees charged by PayPal or credit cards
There are a number of reasons why a fundraising campaign works better online, primarily because the target audience is larger than if you are raising money in your own community. For business startups or established business owners who need a slight financial boost to get over a growth hump, crowdfunding may be more cost-effective than trying to get a loan at your local bank.