Does this sound familiar? You’ve put together a business plan, invested all your savings, and have been working your idea as a side hustle for a few months. Finally, you feel like it’s the right time to raise some real capital. That’s a big step.
Luckily, the bank isn’t your only option these days. Crowdfunding sites abound on the internet, and I’ve rounded up a few of the best. Whether you’re funding the next hottest startup, a creative endeavor, or a caused-based organization, you’ll find a crowdfunding site below that might just be perfect.
Crowdfunding is a way for small businesses or startups to raise money in exchange for equity, rewards, debt, or nothing at all. Business crowdfunding can provide you with fast access to cash, but it requires a strong promotional strategy, increased transparency, and the possibility of giving up a piece of your business.
Crowdfunding your next business venture can be a fast and relatively easy way to raise money. However, you should know which type of crowdfunding is best for your business and what it requires. Here are the most common types of business crowdfunding:
- Equity crowdfunding: The most traditional type of funding in this list is equity crowdfunding. You sell a piece of your business to an investor or groups of investors and they provide you with the funding (capital) to move your business forward.
- Donation crowdfunding: If you’re a nonprofit or local business, donation-based funding might work for you. It simply requires you to create a campaign asking for donations for your business. The money is donated, and there is nothing to repay.
- Debt crowdfunding: Also called “marketplace” funding, debt crowdfunding is when business owners borrow money from other individuals, instead of from a bank. You borrow at a set annual percentage rate, and loans are often structured similar to those of a traditional business loan.
- Rewards crowdfunding: This is likely the most well-known type of crowdfunding. Made popular by sites like Kickstarter, funders are offered products, services, or other gifts in exchange for a set donation amount. For example, if I’m trying to fund my dog walking business, I might offer one hour of puppy snuggles to anyone who donates $50. For those donating $100, I might offer one hour of puppy snuggles plus a free grooming session.
Best Crowdfunding Sites for Startups
Kickstarter helps artists, musicians, filmmakers, designers, and other creators connect with the resources to bring their ideas to life. Since their launch in 2009, the company has helped 15 million people pledge $3.7 billion to successfully fund more than 143,000 projects. Funding is all or nothing, so you must meet the goal you set within the allotted time or everyone gets their money back.
Price: It’s free to create a project on Kickstarter, but if it’s successfully funded, Kickstarter applies a 5% fee to collected funds. There will also be processing fees between 3-5%.
Indiegogo offers both live crowdfunding campaigns and a marketplace for innovative products. It’s helped entrepreneurs raise over 1 billion dollars for more than 650,000 projects. Acquire starter capital and find out quickly whether your idea has legs with Indiegogo’s “global network of early adopters.”
And with this platform, you don’t have to stop raising money at a specific time. There are no fundraising targets or deadlines. Plus, you can apply equity, offer securities, revenue sharing, and even cryptocurrency sales.
3. Crowd Supply
Crowd Supply’s mission is to “bring original, useful, respectful hardware to life.” Whether you want to bring a family recipe to market, create cutting-edge open hardware, or build electronics, Crowd Supply can help. 70% of launched projects have been successfully funded (2X more than Kickstarter for comparable projects), and the average amount raised per successful projects is $66,000 (6X more than Kickstarter for comparable projects).
Price: Crowd Supply has a variety of plans. The Standard plan is 5% of gross campaign sales, not including payment processing fees and the Custom plan is 6-15%. Features differ per plan and include campaign management, media asset creation, and even a dedicated PR team.
Crowdfunder is a community of 200,000 entrepreneurs and investors offering equity crowdfunding — which allows entrepreneurs to sell shares in their company to accredited investors. Their network of 12,000 VCs and angel investors has helped startups of all kinds raise money (Over $150 million) from Pre-Seed to Series A.
Price: Crowdfunder offers Free, Starter ($299/month), and Premium ($499/month) plans — each with a variety of services, from document storage to personalized support.
Experiment is a platform funding scientific discoveries. From dinosaur fossil excavation to the historical study of medieval monasteries — Experiment backers will fund it if it “pushes the boundaries of knowledge.” They fund project scientists themselves, so there’s no overhead like the 50-60% that comes with a university grant. Here are the guidelines for what makes a fundable experiment.
Price: It’s free to start a project, but once you receive full funding, Experiment charges an 8% platform fee plus payment processing fees between 3-5%.
If you have a social cause organization aimed at helping animals, your community, or the environment — to name a few — Chuffed can help. For nonprofits and cause-based organizations exclusively, their most successful campaigns raise an average of $7,000. Nearly 8,000 campaigns have successfully raised $18 million collectively.
Price: Donors pay your processing fees. For example, a donation of $100 would require a $3 fee. And all donors are encouraged to make a small donation to Chuffed on top of that.
Patreon allows artists, musicians, writers, and more get paid by running a membership business for their fans. Providing a meaningful revenue stream, fans pay you a subscription amount of their choosing in exchange for exclusive experiences and behind-the-scenes content. Over $350 million has been paid to creators, and the average patron pays a monthly fee that’s more than most consumers pay for Netflix or Spotify.
Price: Patreon takes 5% of successfully processed payments. There’s also a payment processing fee each time a payment is processed (usually batched at the beginning of each month). You can also expect payout fees charged for moving funds from your creator balance to your bank or PayPal account.
Create a profile, then choose whether you’d like to raise funds by selling your product, taking pre-orders, and selling merchandise or by raising funds from accredited investors. The former, their rewards program, is recommended for consumer-facing companies aiming to raise up to $50,000. The latter, their equity program, is recommended for between $50,000 and $10 million funding goals for product, service, or B2B businesses.
Price: It’s free to create a company profile then $179/month to fundraise. There are no success fees, but for rewards-based raises there is a processing fees of 3.5% + $.30 per transaction.
WeFunder allows you to raise between $50,000 and $50 million from investors. Most campaigns take between one and three months to reach their goals. From breweries and restaurants to tech startups and fashion businesses, you’ll be able to solicit funds from WeFunder’s more than 150,000 investors.
Price: It’s free to create a profile. WeFunder doesn’t charge management or transaction fees. Administrative fees are charged to investors which covers all the costs of operating WeFund.
SeedInvest works with high-growth, professional, and early-stage companies. You can raise either preferred equity or convertible note funding. For priced rounds (preferred equity), you’ll need to provide the pre-money valuation. And for convertible notes, you’ll need to provide the valuation cap, conversion discount, interest rate, and term length.
You’ll need to create an application, make it through a screening committee, and conduct your due diligence before making a profile and closing your round. This is a platform for companies that are ready to make it big. You should expect the process to take a minimum of 60 days to complete.
Price: There’s a 7.5% placement fee charged on the total amount raised on SeedInvest, and it’s paid only on the successful completion of your offering. You can also expect a 5% warrant coverage based on the amount raised and up to $10,000 in due diligence, escrow, marketing, and legal reimbursement expenses.
“Raise money for anything,” no raise requirements or startup fees involved. That’s what it says on the Fundly homepage. They fund everything from personal health needs to politics and even trips. Create a page, manage your campaign from the Fundly app, and use Fundly’s Facebook OpenGraph integration to maximize your reach.
There’s no minimum amount to raise to keep your funds, payments can be withdrawn within 48 hours of the donation, and automatic transfers can be arranged.
Price: Everyone pays a platform fee of 4.9% plus a credit card processing fee of 2.9% and $.30 per transaction (depending on your country).
LendingClub provides personal loans up to $40,000 and business loans up to $300,000. LendingClub is not a bank. They connect borrowers with investors. In exchange for solid returns, investors purchase Notes that correspond to fractions of loans. LendingClub screens borrowers and facilitates all transactions.
For business loans, get all your capital up front, one-to-five year terms, no monthly payments, and no prepayment penalties. They recommend their loan program for large, one-time expenses. LendingClub also requires you be in business for 12 months or more, have at least 50,000 in annual sales, no recent bankruptcies or tax liens, and ownership of at least 20% of the business.
Price: Expect an origination fee of between 1.99 and 8.99%, and total monthly payments per $10,000 borrowed of between $227 and $955 with total annualized rates of between 9.77% and 35.71%.
StartSomeGood is a cause-driven crowdfunding site. If you have an uplifting project that needs funding, StartSomeGood can help. You can be a nonprofit, for-profit, unincorporated group, or any other status — they care about your ability to have social impact. View more of their criteria here.
Price: It’s free to submit your project, and you’ll only pay a service fee of 5% if your project reaches its funding goal. You can also expect payment processing fees.
Crowdcube is an equity crowdfunding platform built to turn your friends, family, fans, and customers into investors. They’ll help you set realistic targets, a sensible valuation, an effective pitch, and a well-executed communication plan to unlock Crowdcube’s investor community.
You’ll launch publicly when your pitch reaches 20% of goal. The average pitch reaches their full target in just 22 days. At 75% funding, Crowdcube’s legal team will become involved to help complete your round quickly.
Price: There are no fees for listing your business on Crowdcube. You’ll be charged a success fee of 7% on the amount you successfully raise, and payment processing fees also apply.
15. Funding Circle
Expand, hire staff, or fund your next step with fast, affordable business loans. They’ve funded veterinary clinics, cosmetics brands, and more. Interest rates run between 4.99% and 26.99% per year, and you’ll repay in between six months and five years. There are no prepayment penalties, and you can borrow between $25,000 and $500,000. Simply fill out an online application, enjoy a dedicated account manager, and get a fast decision.
Price: Besides possibly steep interest rates, you’ll pay an origination fee of between 0.99% and 6.99%. There’s also a 5% charge on late payments.
Are your creative juices flowing? Get started with one of these crowdfunding sites today and turn your dreams into your day job.