9 Best Crowdfunding Platforms for Businesses

Through crowdfunding platforms, you can connect with interested investors and contributors to finance your business. The numbers of investors can range from a mere handful to thousands, pooling together their resources to help get your business off the ground or even onto the next level.

When it comes to crowdfunding, there are three main types:

Rewards crowdfunding — Contributors receive a reward if the campaign is successful, typically a physical or digital product of some sort.

Debt crowdfunding — Typically peer-to-peer (P2P) lending sites, where individuals act as private lenders and spread the risk by pooling their funds to provide a wide variety of business loans to entrepreneurs.

Equity crowdfunding — Investors get a share of equity in the company in exchange for their investment.

While the types of crowdfunding may be limited to just those three, there are hundreds of crowdfunding sites in existence. That can make choosing the right platform to meet your needs a daunting, perhaps even, an overwhelming task. If you’re not sure how or where to start, you’ve come to the right place; below are the nine best crowdfunding platforms that can help you kick your business into high gear.

1. Kickstarter (Rewards Crowdfunding)

Kickstarter is one of the most recognizable of all of the crowdfunding websites. Since it was founded in 2009, 16 million backers have pledged more than $4 billion on over 160,000 successful projects.

The site is ideal for businesses that are looking for funding for creative or tech-related products (which the backers would receive later on as their reward). for example, the products could include games, apps, music, films, or innovative retail goods. Kickstarter has a big audience, so a campaign here can provide you with not just a funding source but good exposure, as well.

Creating a campaign on Kickstarter is free but potential users should be aware that the platform has an “all or nothing” funding policy. Simply put, if you don’t meet the funding goal that you set within the allotted time, you don’t get any money. It’s important to be certain that the goal you first set is realistic and reasonable. Fortunately, if you’ve met your goal amount, Kickstarter does allow you to stretch or raise the goal.

If your campaign is successful, you will have to pay a 5% fee, as well as a payment processing fee, which can range from 3% to 5%.

You should know that Kickstarter is a highly competitive platform, so getting your campaign to stand out from the rest of the crowd can be a challenge. Statistically, only one of every three projects will get funded, while about 13% of all Kickstarter projects had not received even a single pledge. Smaller campaigns tend to be more successful than larger ones, with 80% of all of the successful campaigns receiving funding of less than $20,000.

Despite the obstacles, the site’s huge audience makes it a worthwhile undertaking.

2. Patreon (Rewards Crowdfunding)

Unlike some other rewards-type crowdfunding platforms, Patreon operates on a subscription model. That is, backers (aka patrons) agree to contribute a set amount to their selected creators, either per month or per content created. Given that, Patreon is a popular choice among entrepreneurs who deliver creative digital content on a regular basis; for example YouTubers, bloggers, and podcasters overwhelmingly prefer Patreon to other crowdfunding sites.

With Patreon, you can also allow your campaign to run indefinitely, which allows you to earn a continuous revenue stream instead of receiving a lump sum of cash at the end of a pre-determined period.

Patreon has more than 3 million active patrons supporting 100,000+ creators. Since 2013, when the site was founded, it is on track to pay out $1 billion to creators.

The platform charges a 5% fee, as well as additional payment processing fees.

3. Indiegogo (Rewards and Equity Crowdfunding)

Indiegogo began in 2008 and has thus far raised more than $1 billion to fund 800,000+ campaigns.

It is best suited for companies that create innovative consumer goods that can be shipped to the backers as their reward for their investment. You should know that some backers are willing to support entrepreneurs at the early stages, such as the concept or design stage, however, investors usually prefer to see a working prototype before they are willing to make a pledge.

Indiegogo permits flexible funding as well as all-or-nothing funding. In the former case, you can keep whatever funds your campaign raises, even if your goal is not reached. Also, Indiegogo allows you to run your campaign from most countries, and pre-approval of your campaign is not needed.

Getting your campaign noticed on Indiegogo can be difficult, though, as around 19,000 campaigns launch on the site each month, and there are more than 7,000 active campaigns at any given time. On the plus side, the site is very popular — with a network of 9 million backers and 10 million monthly visitors from 235 countries and territories.

Unlike other crowdfunding sites, the Indiegogo platform also has a marketplace where you can sell your product after the campaign. The site’s InDemand feature allows successful fundraisers to solicit additional backers indefinitely.

In addition, Indiegogo also offers equity crowdfunding through its partnership with Microventures, making it a hybrid crowdfunding site.

The platform charges a 5% fee plus payment processing fees.

4. SeedInvest (Equity Crowdfunding)

SeedInvest is a highly exclusive equity crowdfunding platform. It has 250,000+ investors who have invested a total of $100 million on more than 150 companies.

Qualifying to campaign on the site is difficult, as the platform has a strict vetting process for fundraisers; it is so strict, in fact, that only 1% of applicants are approved. Even so, it can be a worthwhile risk as SeedInvest averages $500,000 investment per company.

From the investor’s standpoint, SeedInvest has a popular feature which allows them to spread their risk; that is the auto-invest feature, which enables them to automatically invest in multiple startups. A campaign is only included in the auto-invest pool if it meets its funding goal. Only accredited investors, i.e. of a high net worth, are permitted to invest.

With SeedInvest, you can raise preferred equity or convertible note funding. The cost at SeedInvest can be considerably higher than others of its ilk. There is a 7.5% placement fee for a successful campaign, plus a 5% equity fee. In some cases, SeedInvest may also charge up to $10,000 in fees related to its due diligence, marketing, and escrow fees, and/or reimbursement for legal expenses.

5. LendingClub (Debt Crowdfunding)

LendingClub is a P2P lending portal that provides both personal loans and business loans. Since 2007, it has loaned a total of $28 billion.

With LendingClub, an entrepreneur can borrow from as little as $5,000 to much as $300,000. Interest rates and monthly payments are fixed for the life of the loan (up to five years) and there is no fee or penalty for early repayment. Term loans are up to five years and each applicant will be assigned a dedicated US-based client advisor.

To qualify, your business needs to be at least 12 months old, with minimum annual sales of $50,000. You also must have had no recent bankruptcies or tax liens and own at least 20% of the company. Lastly, your personal credit score should be fair or better.

Fixed interest rates can range from 5.99% (for borrowers who have excellent credit and financial strength) to 29.99% (which is akin to taking out a cash advance on a credit card). The origination fee can range from 1.99% to 8.99% and, for comparison purposes,the APR can range from 9.77% to 35.71%. For every $10,000 you borrow through LendingClub, you will be required to make monthly payments between $227 and $955 (which is wholly dependent on the interest rate charged and the term of the loan).

If you are interested in debt crowdfunding, and to learn more about small business loans, check out the comparison table, so that you can make the most appropriate decision for your company.

6. Crowdfunder (Equity Crowdfunding)

Crowdfunder has a network of 12,000 investors and 36,000 companies. It has funded more than a hundred deals, with an average deal size of $1.8 million. It is suitable for both early-stage startups and more mature companies that are raising seed stage, Series-A and Series-B funding.

To launch a campaign with Crowdfunder, fundraisers need to pay a monthly subscription fee (which starts at $299) and submit three requirements: a Term Sheet, an Executive Summary, and an Investor Pitch Deck. Crowdfunder, because of the subscription fee, does not take a cut of the raised funds and you keep what you raise, even if you don’t meet your funding goal.

7. Fundable (Rewards and Equity Crowdfunding)

Fundable offers both rewards and equity crowdfunding and, since it was founded in 2012, has already raised $506 million.

Like Crowdfunder, Fundable does not charge a fee for a successful campaign, but you have to pay $179 per month to post and manage a fundraising campaign. In addition, for rewards-type campaigns, a fee of 3.5% plus $0.30 per transaction is deducted by WePay, Fundable’s merchant processing partner.

To be able to crowdfund on the Fundable platform, your company must have a U.S. presence. That means your business must be registered in the United States, though it may be headquartered in another country. You, as the principal or at least one business partner, must also have a U.S. based address, bank account, and federal tax ID number or U.S. social security number.

Rewards or equity? Fundable recommends setting up a rewards campaign if you are looking to raise a small amount (below $50,000) and an equity campaign for higher amounts or if you do not have a product or service that can be used as a reward.

Reward campaigns on Fundable are “all or nothing;” however, if you fail to meet your goal, you can try again. You are also allowed to download the contact information of your backers so you can coordinate directly with them if you decide to make a second attempt at raising funds.

8. Wefunder (Equity Crowdfunding)

Wefunder has a pool of more than 230,000 accredited investors (meaning they have a high net worth) who have funded 269 companies with more than $90 million. Wefunder supports three federal laws that permits startups to legally raise funds: Regulation Crowdfunding, Regulation D, and Regulation A+.

Wefunder is essentially for the heavy hitters and only companies located in the United States will be allowed to campaign. The minimum goal is $50,000 and the maximum amount is set at $1,070,000 per year, per Regulation Crowdfunding. Under Regulation D, the minimum goal is $50,000 but the goal amount is unlimited.

Wefunder is an all-or-nothing crowdfunding site. Companies that have successful campaigns tend to be those that offer innovative but practical solutions. Moreover, they tend to already have a community of supporters and a large customer base, as well as existing investors.

Creating a company profile on Wefunder is free, but there is a 7.5% charge for a successful campaign.

9. Republic (Equity Crowdfunding)

Republic’s $10 investment minimum makes equity crowdfunding accessible to the masses. Republic is also unique in its push for diversity; it aims to fund startups whose teams include women, veterans, minorities, and other entrepreneurs who usually do not have access to business funding.

However, only C-Corporations and Limited Liability Companies (LLCs) which are incorporated in the U.S. can fund raise through Republic. These companies will be screened thoroughly before being approved. The platform’s success rate is impressive — 95% of the campaigns on the site have been successful. These companies have also doubled their user base, received millions of views, and pre-sold products worth tens of millions.

As regards fees, they are only assessed if the campaign is successful and has reached its funding goal. The fees amount to 6% of the total cash funds.

Final word

Thanks to technology, business owners can more easily find financiers eager to invest in promising up-and-coming companies. What’s important is to choose the crowdfunding platform that is the best fit for your business. The sites listed all have proven track records and at least one is likely to meet your needs. Which one that is will depend on whether you’re willing to provide a reward, take on debt or give up equity in your business in exchange for the funding.

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