What Is Crowdfunding? (Raise the money you need fast

Small sums of money are raised through crowdfunding by many individual investors in order to finance a new venture. A crowdfunding website or social media account connects investors and entrepreneurs, allowing investors to expand their pools of investors beyond the traditional circle of family and friends to contribute to entrepreneurship.

The use of online crowdfunding platforms has made raising funds for businesses, nonprofit causes, and personal needs easier since the advent of the digital era. With easy-to-use tools that provide smooth experiences for fundraisers and supporters, these platforms have raised over $34 billion.

You can find a crowdfunding site for whatever reason you want to raise money(extra money).

There are many platforms designed to help entrepreneurs, artists, and climate change activists obtain funds for their projects, ideas, or causes. Our research and review of the top crowdfunding platforms will help you get started. In selecting the top six programs, we looked at the ease of use, the success of their fundraising campaigns in the past, the pricing options, and social media integration. 

There are different types of crowdfunding.

Small businesses can access funding opportunities through crowdfunding portals that are built like social media sites.

Crowdfunding sites are not all the same. 

Business crowdfunding is divided into two types:

• Crowdfunding rewards: YoIn exchange for some kind of reward, individual contributors donate funds to your startup campaign by creating a campaign for it. Rewards could include pre-orders of your product, advertisements on websites, or even t-shirts.
• Equity-based crowdfunding: In equity crowdfunding, you can connect with investors who will offer you a stake in your company in exchange for a larger donation. As the organization’s contributors, you may be required to report to them as if they were minor shareholders.

Some crowdfunding platforms offer both kinds of funding, but most focus on one. 

The best option is usually a crowdfunding campaign that offers equity investments when you need a significant sum of money. If you think you’ll benefit most from pooling thousands of small donations, the reward-based crowdfunding method may be right for you.

 

Several reasons why crowdfunding is beneficial to businesses

• A crowdfunding campaign is one of the few options that startups without experience or credit can use to raise money. Whenever you apply for funding through lenders, they consider the number of factors to determine whether you qualify. In crowdfunding, however, it is more important to have a compelling pitch than your credit score.

• A business whose focus is on products and capital-intensive projects can launch at rocket speed by funding upfront. 

• Additionally, crowdfunding sites can boost the credibility of your business. Your project will receive a flood of interested customers ready to pay once it launches.

• Startups often raise funds through crowdfunding. In order to grow their brand story and cultivate loyal followers, many small business owners turn to crowdfund sites. Supporters of business owners assist them in reaching their goals through monetary support.

• If you want to sell your business effectively, you have to share your mission and your brand’s intentions directly with your audience. However, the first step is deciding on the right platform for introducing your business. When you need to raise funds for your business, consider these five crowdfunding sites.

Best crowdfunding sites for startup in 2021 can raise your money fast.

1. Kickstarter

Best overall site for crowdfunding

• Reward-type campaign
• Creative arts are the focus.
• All or nothing: Funds you can keep
• The funding fee for successful campaigns is 5%
• Payment fees (US): 3% + $0.20 per pledge $10 and over; 5% + $0.05 per pledge under $10
• Startup locations allowed: U.S., UK, Canada, Australia, New Zealand, and the Netherlands

Pros.

• The campaign has been accepted by six countries.
• There are more than 18 million campaign funders worldwide.
• Payment fees of 2.9%

Cons.

• Acceptance of campaigns is a tricky process.
• The campaign success rate of one in three
• Funding that is all-or-nothing
• Founded nearly a decade ago, Kickstarter has grown to become probably the most recognizable of all crowdfunding sites – and rightfully so!
• Starting with the bad news: Kickstarter campaigns are quite difficult to complete. There are certain types of projects that Kickstarter grants funding to, including arts and crafts, fashion, photography, games, and technology. These highly competitive platforms carefully select crowdfunding projects to list on their website.
• Even so, with more than 15 million project backers worldwide, Kickstarter is worth having a look at if you’re looking for the biggest audience.

2. The iFundWomen program: Best for women entrepreneurs

• Reward type campaign 
• focusing on women-led businesses
• Your funds are yours: whatever funds you raise Funding fees: 5% 
• Transaction fees (US): 2.9% + $0.30 
• Startup locations allowed: 23 countries

Pros.

• Model for flexible funding that keeps what you raise
• Investing in the community of women-owned businesses
• Our startup coaching services, video production, and private forums are available to all our clients.

Cons.

• Only 23 countries have access to campaigners.
• Limited information about success rates and customer experiences
• It should be evident from the site’s name that iFundWomen is a women-centric crowdfunding platform. In addition to providing coaching, marketing, and other services, the platform also functions as a crowdfunding platform for women entrepreneurs.
• Entrepreneurial women continue to face significant challenges in obtaining funding for their businesses, despite owning an increasing share of startups. There are some challenges in raising funds for women, and iFundWomen is designed to address them.

IFundWomen does not offer rewards for fundraising but lets campaigners keep any money raised. Out of the funds earned from funding fees, 20% are used to support women-owned business campaigns and services.

3. GoFundMe: Best for charitable causes(BEST FOR INDIVIDUALS)

• Campaign types: Reward, donation
• Industry focus: People and causes
• Keeping funds: Whatever you raise
• No fees
• for payments (US): 2.9% + $0.30 per transaction
• Startup locations allowed: 19 countries

Pros.

• People-focused causes should be the focus of the organization.
• Funding fees are not charged to US-based personal causes.
• What you raise is what you keep model
• A fee of 0% for the platform
• Flexible fundraising for yourself, friends, or charity
• 24/7 expert support is available

Cons.

• A traditional startup has few options.
• One-in-10 campaigns that are fully funded are successful
• Charges for debit and credit card transactions

With more than 120 million donors, GoFundMe has been able to raise more than $9 billion since 2010 and is regarded as an important fundraising platform. Because of its simplicity and success, individuals find it to be the best platform. 

GoFundMe pages can be set up in three simple steps. Your first step should be to determine the amount of money you hope to raise. Your next step can be to add images and videos. Final step: make sure to share your campaign on social media, by text, and by email with your friends and family. 

Among other things, you can manage your donations using the dashboard, thank your donors, and withdraw money. A significant advantage of GoFundMe over other charitable fundraising platforms is that there is no platform fee. Processing fees 1.99 percent when processing costs are taken into consideration. It does not have a deadline or time limit – you are free to fundraise at any time. 

You can get 24/7 expert support from GoFundMe when setting up your page or if you need any assistance.

With GoFundMe, people all over the world can raise money for charities and causes they care about.

It’s a worthwhile consideration even if GoFundMe isn’t appropriate for every startup venture, such as helping people with medical conditions, emergencies, or problems.

For personal causes based in the US, GoFundMe has zero funding fees and allows you to keep the money you raise. Just keep in mind that GoFundMe campaigns have reportedly low success rates, probably due to the site’s massive scope, so getting people to see—and support—your project could be challenging.

4. Wefunder: Best for equity crowdfunding

• Types of campaigns: Equity, debt

• Industry focus: VC-track startups

• All or nothing: You can keep your funds

• The funding fees are 7.5% of the total funds raised

• Fees for payment (U.S.): N/A

• The only country that allows startups is the U.S.

Pros.

• A campaign’s success rate is high.
• Lack of exclusivity
• Startup resources

Cons.

• There are many legal requirements and rules.
• Financial disclosures required
• There isn’t only one equity crowdfunding platform out there (a few other platforms are also included in this list), but Wefunder is our favorite.
• This is due in part to Wefunder’s high success rate (around 75%), despite the fact that it is not super exclusive. The reason for this is also because Wefunder offers startup companies plenty of support and resources, such as mentorship, legal and investor relations advice.
• Wefunder is best for startups that are interested in venture capital. Small businesses that plan to remain small shouldn’t use it. Wefunder is regulated more than many other platforms because equity crowdfunding is its focus. However, the equity-based platform on Wefunder can be an ideal option if you do not mind these factors.

5. Fundable: The best option for flat fees

• Types of campaigns: rewards, equity
• Startups are ready to expand in a healthy market
• Keeping the funds: No matter what you raise for an equity stake; or seeing them all or nothing as a reward
• A monthly subscription of $179 is required for funding
• Fees (US): 3.5% + $0.30 per transaction for reward campaigns
• Locations allowed for startups: Must have a U.S. headquarters

Pros.

• Fundraising fees are flat and low.
• Customers receive excellent service.
• Consulting for startups to create great campaigns

Cons.

• Unsuccessful fundraisers are penalized by a flat fee.
• Unsubscribe options are not automated.
• Crowdfunding platforms typically take a percentage of funds raised, whether they are equity or reward-based. The Fundable platform is unique compared to other crowdfunding platforms. Subscription fees are flat each month. Those subscribed to Fundable can post campaigns to raise money (although campaigns need to be manually approved after they are verified to meet their terms).

The flat fee charged by Fundable is a crucial component of successful campaigns. (Like other crowdfunding sites, the fee is approximately 5% of what you raise). You will pay less than 2% of your account to reach $10,000.

How do you solve it? Fundable is best for startups that are confident in their ideas and don’t mind losing money if the campaign fails. Whether you’re successful or not, you’re still responsible for paying the fee.

6. Mighty Cause

Its low-cost platform and free tools make Mighty Cause our pick for the best for raising money by nonprofits.

Pros.

• Integrated systems with customer relationship management (CRM) software, like Salesforce.
• Get a free demo by requesting one
• The integration of social media is available
• Fundraising campaigns year-round, giving days, and fundraising campaigns through crowdfunding

Cons.

• The platform has paid plans that include CRM integrations

• Since 2006, Mighty cause has been a social fundraising platform for nonprofits and individuals. Since the site has helped more than 150,000 causes attract donations, it holds the edge in this category for organizations seeking donations.

• Among the campaigns offered by the platform are peer-to-peer fundraising and giving days. A Mightycause transaction fee averages 1.2% of the amount raised. As a free example, fundraising campaigns can be year-round, peer-to-peer, event-related, etc. The platform offers a free “starter” option. 

An individual can set up a fundraising campaign for their favorite nonprofit, or nonprofits can raise funds themselves.

7. Start Engine

• As little as $100 can be invested.

• For anyone looking to invest some money, StartEngine stands out because it allows everyday people like you to fund startups and companies you like with $100.

Pros.

• $100 is a minimum investment
• Raised more than $200 million
• Currently, Kevin O’Leary serves as a strategic advisor to the company on ABC’s “Shark Tank.”

Cons.

• The company is relatively new

Founded in 2011 by Howard Marks and Ron Miller, the platform enables anyone to become a member of the ABC television show “Shark Tank” as an investor. Kevin O’Leary is a strategic advisor. Due to its investor-friendly approach, we choose it as the best platform for crowdfunding.

Depending on the listed share value, you can start investing in any of the companies listed on its website, including biotech pioneers and travel and tourism startups. Our company profiles feature information about valuation, price per share, business size, number of investors, and others to help you make informed investment decisions. 

Simply click the “Invest Now” button and follow the directions to fill out your personal details and your payment method. With over 300,000 investors on the platform, you can raise funds if you are a startup trying to get funding. Over 375 businesses have raised funding through the platform.

Honorable mentions

8. Patreon(BEST FOR CREATIVE PROFESSIONALS)

• Types of campaigns: Reward, subscription/donation
• Focus industry: Artists and creators
• Any funds you raise are yours to keep
• We charge a fee of between 5% and 12% of successfully processed payments (depending on the plan we choose)
• (US) Payment fees are 2.9% + $0.30 per transaction over $3; 5% + $0.10 for transactions under $3
• Locations of startup companies: worldwide

Pros.

• A monthly subscription can be created.
• Vimeo, MailChimp, and many more software integrations are available through us.

Cons.

• Starting at 5%, the fee goes up to 12% depending on which plan you select

• Founded by YouTube musician Jack Conte and YouTube producer Sam Yam in 2013, Patreon now brings in over $2 billion in funds for creative professionals, making it the clear winner as the best site for creating content.

Treon is a crowdfunding platform designed specifically to assist creative people with fundraising by helping them attract friends, family, supporters, and admirers. Getting started on Patreon is free, but depending on which of the three plans you choose, there is a monthly fee. Patron’s “Lite” and “Pro” plan to charge 5% and 8%, respectively, of the money earned, while the “Premium” plan charges 12%. Moreover, there is a processing fee of 2.9% and $0.30 for each payment. 

Creators just starting out can select the Lite plan, while those seeking to build membership options can choose Pro, while those with a substantial following on social media can choose Premium. Patreon offers mobile applications, business tools, and more with all plans.  

If you choose the Premium plan, you are required to commit to at least three months.

Developing an audience and a source of income using Patreon may not be the best option for experts launching tech startups with considerable capital needs.

Patreon is open to anyone (who’s at least 13 years of age). It’s also excellent for creative funding projects like video, time-lapse photography, music, comics, podcasts, games, animation, and much more.

You’re probably not going to earn colossal profits with Patreon, but you can keep the donations you receive (minus a 5% processing fee) for as long as you want.

9. Indiegogo

The following campaign types are available: reward, equity

• Focus on tech and innovation
• Funds you can keep: Whatever you raise or none at all   
• 5% funding fee
• Rate (US): 2.9% + $0.30 per transaction
• We allow startups to start anywhere in the world

• As one of the most well-known crowdfunding sites, Indiegogo may rank second to Kickstarter.

• It offers campaigns in a variety of industries, such as consumer technology and community improvement, and has over 9 million backers.

• It’s a reward-based campaign with all-or-nothing funding regulations on Indiegogo. You can also invest in equity and hold on to the money you raise with a keep-what-you-raise campaign.

• A downside is Indiegogo’s meager success rate, with reports ranging from 8% to 10%. According to some reviews, the experience has been less than favorable for some startups, partially because of the high fees charged to partially funded campaigns.

10. Republic

• Equity and reward campaigns
• Diverse startups focusing on diversity in the industry
• All or nothing: Funds you can keep
• Funding fees: 6% for startups + 2% for CrowdSAFE
• US payment fees (per transaction): 3.5%
• Locations allowed for startups: United States
• Republic is the newest crowd investing platform that specializes in equity investment. The program isn’t suited to everyone due to its curated selection of companies.
• Republic’s 95% success rate for selected campaigns makes it an attractive platform for investors looking to connect with growing companies in the United States.

Additionally, Republic looks for companies with diverse teams and emphasizes diversity.

10. SeedInvest

• Equity-based campaign
• Startups in the technology industry
• All or nothing: Funds you can keep
• A 7.5% funding fee is added to an equity fee of 5% for successful campaigns
• Payment fees (U.S.): Startup pays nothing; investors pay 2%
• The U.S. is allowed as a startup location

• The goal of SeedInvest, founded by MBA graduates and experienced investors, was to give tech startups access to capital from people who were willing to make large equity investments.

• Businesses can only join if they are based in the United States, and there are strict selection criteria to follow. The first step is to create a minimum viable product, proof of concept, and at least two members of the team. Once selected, your campaign will gain access to both accredited and non-accredited investors.

• Seed Invest’s greatest drawback is that every successful campaign must pay a placement fee of 7.5%. However, the site is growing in popularity among entrepreneurs, investors, and successful companies.

11. Kiva

• This campaign is a debt campaign
• Startups who are interested in microloans
• All or nothing: Funds you can keep
• Fees for funding: None
• U.S. payment fees (none)
• The U.S. is allowed as a startup location

• Kiva might just be your most affordable option when it comes to debt crowdfunding. Having a successful Kiva campaign earns you a 0% interest loan for your startup.

• So you will have to repay your Kiva loan, but you won’t have to worry about funding fees or payment fees. Instead, you should focus on getting your campaign off the ground. You must prove your social capital through donations from friends and family to start your Kiva campaign, which means you must convince them to fund your business.

• There is a maximum loan amount of $15,000 with Kiva. I wouldn’t recommend Kiva to someone in need of big bucks. However, if you need affordable debt crowdfunding to raise money for a small project, Kiva may be worth exploring. 

12. Experiment 

• Funding for scientific discoveries is provided by Experiments. There is no overhead. Scientists are funded directly, so there is no 50-60% overhead that comes with a university grant. Experiment backers will fund anything that “pushes the boundaries of knowledge.” Here are the criteria that determine whether an experiment can be funded.

• You can start a project for free, but you’ll be charged with a platform fee of 8% and transaction fees of 3-5% once you receive full funding.

13. Chuffed

• You can use Chuffed if you run a social cause organization that works to help animals, the environment, or your community. The average fundraising campaign for nonprofits and cause-based organizations raises $7,000 on average. A collective total of $18 million has been raised by nearly 8,000 campaigns.

• Processing fees are paid by donors. To charge $3 for a $100 donation, for example. Chuffed also encourages everyone to make a small donation on top of that.

14. Fundly

• There are no startup fees and no requirements to raise money. This is what Fundly says on its homepage. From personal medical needs to political matters and even family vacations, they fund everything. With Fundly’s Facebook Open Graph integration, you can create a campaign page, manage it from the app, and maximize your reach.

• The platform fee is 4.9% and .30 per transaction (dependent on the country). There is also a 2.9% credit card processing fee.

15. Lending club

• Loan amounts range from $40,000 to $300,000 through Lending Club. There is no bank in Lending Club. Investors and borrowers are connected by them. Notes that represent fractions of loans are purchased by investors for solid returns. All lending transactions are handled by LendingClub.

• Business loans are available with no monthly payments and no prepayment penalties. Get your entire capital upfront, over terms of one to five years. One-time, large expenses should be financed with their loan program. In addition, LendingClub requires that you have been in business for 12 months or more, have at least $50,000 in sales annually, have no recent bankruptcies or tax liens, and own at least 20% of the company.

• Prices for $10,000 loans range from $227 to $955, with annualized rates ranging from 9.77% to 35.1%. 

FAQs

Conclusion

With crowdfunding, many people can give money at one time through the internet. When entrepreneurs, artists, musicians, and other individuals with creative ideas lack other funding options, crowdfunding provides them with the funding they need. Kickstarter, GoFundMe, and Indiegogo are some of the most popular crowdfunding sites. If you are looking for cash quickly, these can all help you fund your project.