Smart Funding Platforms— the Digital Solution to Funding Problems
If you’re a newbie entrepreneur just waiting to jumpstart your dream startup journey, there’s no way you haven’t heard of crowdfunding. Sourcing miniscule amounts of money from a large global network of small-time investors seems to be the next big idea for raising revenue, especially after the U.S. passed the Jumpstart Our Business Start-ups (JOBS) bill. This is important for new age entrepreneurs who don’t have access to the big venture capitalists and who haven’t got a super-rich grandmother somewhere to act as angel investor. So how does crowdsourcing work and what are the biggest sites to launch your product? This list helps you get a picture:
As any comparison chart will tell you, Kickstarter is on top of the list when it comes to crowdfunding sites. The site claims to promote “creative projects” but they’re not too stringent about the definition. They’ve launched projects that are a testament to weirdness, like Crystal Bacon (which is basically sculptures of bacon made with acrylic plastic) and Grilled Cheesus (which is a sandwich press with the mold shaped like the Savior’s face) and these have actually been funded. So don’t be afraid to showcase the wackiness of your ideas on Kickstarter. The model asks you to provide rewards to backers, and takes 5% of the donation raised on successful projects. It is your discretion to set up the funding target and the time interval needed to collect it, but if you fall short of even a dollar of funding, your project will be declared failed and the money goes back to the investors.
If raising money for a cause is your agenda, look no further than Razoo. The site claims to have raised $450 million for various non-profit causes ever since its inception in 2006. The site supports registered as well as non-registered non-profits under three heads—charitable fundraiser, charitable team fundraiser and personal fundraiser. It asks for a 4.9% processing fee, which is lower than other crowdfunding sites. With donations being raised under multiple heads, you can raise money for almost anything, from environment protection to helping refugees to aid for natural disaster victims.
Unlike Kickstarter, GoFundMe caters to more personal projects, like helping individuals meet their mortgage bills and funding family vacations which would ordinarily be unaffordable. GoFundMe has an easy funding model which does not keep deadlines and donation limits, making it convenient for individual fundraisers. It also allows you to continuously interact with donors through its user dashboard. In addition to cause-related fundraising, it also harbors creative projects related to music and film.
Indiegogo was one of the earliest crowdfunding sites and it remains an attractive option for entrepreneurs and funders alike. It originally started off with supporting film projects, but has since branched out into many dimensions, like launching people who want to start a Cereal Killer Café (Yeah, you guessed it, a café which sells only cereal) and someone who wanted to produce cat ear headphones (which have speakers in the shape of cat’s ears) which actually got funded. One of their biggest projects “Let’s Build a Goddamn Tesla Museum” wanted to buy back Nicola Tesla’s workspace in New York and turn it into a museum. A sum of $850000 was asked for, and so far people have paid around $1.4 million. So if you’re looking to launch your new project, try Indiegogo.
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Crowdfunder is unique in its own way as the projects launched on it do not offer rewards or pre-ordered physical products, unlike Indiegogo and Kickstarter. Instead, it allows the entrepreneurs to offer debt or equity securities in return for investments, thus putting first time project heads in touch with accredited venture capitalists and angel investors. This format means that you don’t deal with a base of like-minded customers who back your product for a one time deal. Funding on Crowdfunder is a like a formal round of seed stage investment and it gears your start-up for a long time investment partnership. If your idea is slightly more mainstream than Crystal Bacon or Cat Headphones and if you’re looking for a generous amount of funding to launch your project, you can start with Crowdfunder.
This site has its own brand of uniqueness as in addition to offering crowdfunding services, it has a Success School where it teaches newbie participants marketing and entrepreneurial skills. Categories include everything from music albums to documentaries to wildlife support donations. The site also has a running partnership with A&E networks, which runs select projects on its channels which help them gain popularity. RocketHub deducts 8% from failed projects and 4% from those that make it. In addition to usual music and art projects, a lot of scientific and educational ventures have also been supported by RocketHub.
If developing the next hottest app is your bold new venture, then Appbackr is the place to go. It is one of those crowdfunding sites where investors can actually make money, by buying the still-in-development apps at a lower price and getting profits when they sell on Apple and Android stores. Though the concept is ingenious, Appbackr is still a work in progress, primarily because of the amount of risk involved. However, it’s still an excellent site to check out if you need funding exclusively for developing a new app.
Facebook, Twitter and YouTube
Without any knowledge of crowdfunding sites, people have used Facebook and YouTube for raising thousands of dollars in funds. Social media platforms are also a prerequisite for successful funding campaigns. You must have an active social media presence to share your story and ideas. The mastermind of any successfully funded crowd venture would tell you about the importance of videos in getting your ideas across. Connecting to potential donors and customers through websites, blogs and Facebook pages is also a great idea. If you want to be a musical sensation, YouTube is the best platform to start with and ask for subscriptions. You can also try and latch on to important networks and forums that provide exclusive markets for your product.