Transform your dreams into tangible realities with these crowdfunding platforms.
Are you an aspiring entrepreneur with a groundbreaking idea, but struggling to secure funding? Look no further than crowdfunding. This innovative funding method has emerged as a game-changing way for entrepreneurs and inventors to raise funds and bring their ideas to fruition. It is a powerful tool that allows creators to collect smaller contributions from a wider audience and reach their funding goals. According to a Fundera report, crowdfunding capital grew 33.7% in 2022, with an average success rate of 22.4%. What’s more, the crowdfunding industry is expected to surpass US$300 billion by the end of 2030.
In this article, we have curated a list of the top four crowdfunding platforms that can help bring your vision to life. Keep reading to discover the best options for your next venture.
Kickstarter: The go-to platform for creative projects
With a focus on creative projects in art, design, technology, music, films, and games, Kickstarter has become a go-to platform for creators worldwide. Since its inception in 2009, the platform has helped over 581,000 projects come to fruition, raising over US$7 billion as of February 2023.
Projects such as the e-paper watch Pebble and high-tech cooler Coolest Cooler have earned more than US$20 million and US$13 million respectively through Kickstarter. In 2022, the highest-performing project was Surprise! Four Secret Novels by Brandon Sanderson, which managed to raise an impressive US$40 million.
Setting up a project on Kickstarter is straightforward. You simply set a funding goal and a deadline, and people can pledge money to support your idea. If your project reaches its funding goal by the deadline, the funds are released to you; otherwise, no money changes hands. Kickstarter charges a fee of 5% for successful projects, as well as an additional fee of 3-5% for credit card pledges.
Indiegogo: The top choice for crowdfunding entrepreneurs
Launched in 2008, Indiegogo has helped entrepreneurs, small businesses and nonprofits alike ‌fund their projects. And with an average of US$41,634 raised per campaign——the highest average amount achieved by a project on any crowdfunding platform—it’s no surprise that Indiegogo is a top choice for those seeking crowdfunding. In March 2022, the foldable e-bike project MATE X caught the spotlight and became the most profitable Indiegogo campaign to date, raising about US$17.6 million.
To get started with Indiegogo, simply create a campaign, set a funding goal and length of the funding period (up to 60 days) and start promoting it. You can also offer perks to donors, like exclusive access to your product before launch or early bird pricing. Unlike Kickstarter, Indiegogo offers a more flexible funding model that allows entrepreneurs to keep the funds raised even if they cannot meet the funding goal. Indiegogo charges a 5% platform fee on every donation, and additional fees may apply based on location and currency.
GoFundMe: The popular platform for personal crowdfunding
GoFundMe is a popular platform for personal crowdfunding campaigns, often used to raise money for emergencies, medical expenses, education or community projects. As of mid-2022, the platform has raised an impressive US$17 billion since its launch in 2010.
Setting up a campaign on GoFundMe is easy—all you need is an account on the platform, a goal amount and a compelling story to attract potential donors. Donors can contribute using their preferred payment method (credit card, debit card or PayPal), and GoFundMe charges a nominal fee of 2.9% plus US$0.30 per donation to cover payment processing costs and other fees. The platform includes several tools, such as built-in social support, which allows you to directly share your campaign to platforms such as Facebook and Twitter, allowing campaigners to acknowledge their supporters and update them with personalized messages.
StartEngine: The equity crowdfunding platform for private businesses
Unlike the previously introduced platform, StartEngine is an equity crowdfunding platform where private businesses can raise funds by offering securities, such as shares, convertible notes, debt and revenue shares. With an average investment size of US$650, the platform boasts over one million potential investors who can invest as little as US$100 into companies they want to support.
The platform’s success stories speak for themselves. As per StartEngine, nine out of ten companies met their minimum funding goal on the platform in 2022, while 167 companies raised more than US$1 million. For example, Boxabl, an instant-house manufacturer, raised an impressive US$24 million in its Reg A+ round in 2022, and then immediately maxed out its Reg CF round in only 12 hours.
Reg A+ has become known as a “mini IPO” since it allows small businesses to sell their shares to the public through crowdfunding and raise up to US$75 million in a given year. This streamlined process enables companies to save both time and money that would otherwise be required in a traditional IPO. Meanwhile, Reg CF permits firms to raise up to US$5 million without undergoing the burdensome process of registering with the U.S. Securities and Exchange Commission.
On StartEngine, businesses can set up a campaign page to feature their business concept, financials and fundraising goals. Investors can browse through the campaigns to pick those they wish to invest in. Start Engine charges businesses 3.5% of the funds raised, but entrepreneurs can also pass along this expense by charging their investors a 3.5% processing fee on the investment form.
In conclusion, the world of crowdfunding offers a plethora of opportunities for businesses to launch and grow their ventures. With platforms like Kickstarter, Indiegogo, GoFundMe and StartEngine, businesses have a wide range of options to choose from depending on their unique requirements. Before embarking on your crowdfunding journey, you need to weigh various factors like the type of project you’re launching, the target audience, the funding structure and the platform’s fees. Armed with the right crowdfunding platform and a robust marketing strategy, businesses can access a global pool of investors and backers to turn their entrepreneurial dreams into a reality.
Also read:
- What Are the Main Types of Crowdfunding and How Can Your Startup Get Started?
- Crowdfunding Your Startup
- The Evolution of Crowdfunding
- 4 Essentials for Crowdfunding Success
Header image courtesy Freepik
