Crowdfunding is not a new concept, from a long time books author used this concept to write a book. If enough people would subscribe or shows their readiness to buy then the book would be published. It creates confidence in the author that enough people would buy the product when we reach out to the customers. Also, it is a great tool for market research before starting manufacturing. The same concept applies into the product with a real money involvement. Artistshare is one of the oldest crowdfunding platforms. It started in 2003, mainly designed for creative artist who allows public to finance and raise fund for the creative project. After that Indigogo in 2008 and Kickstarter in 2009 gained huge popularity in the market.
Types Of Crowdfunding platform
- Reward Crowdfunding
- Equity Crowdfunding
1. Reward Crowdfunding
This type of crowdfunding may use variety of purposes, such as making a video game, software, scientific research or some social cause. Here, entrepreneurs sales their product before launching it. Nowadays this type of concept becomes very competitive. So, first entrepreneurs generate pledge by their friends and family to create importance of the product.
2. Equity Crowdfunding
Investors may get the percentage of ownership of the company, usually in the form of shares.
Crowdfunding is very popular in North America. Globally, this industry projected to reach US $1 trillion in 2025. In 2015, there were around 2000 active crowdfunding sites available to raise fund for entrepreneurs. We would not able to highlight all of them but, we will talk about best crowd funding sites for business startup.
According to Wikipedia Kickstarter got more than $1.9 billion in pledges from 9.4 million backers to fund 257,000 creative business or project. The platform is available to backers from all around the world and to creators from the US, UK, Canada, Australia, New Zealand, The Netherlands, Denmark, Ireland, Norway, Sweden, Spain, France, Germany, Austria, Italy, Belgium, Luxembourg, Switzerland, and Mexico. It is very popular in North America. According to Alexa, Kickstarters’ global rank is 479 relative to other sites in May 2017. Kickstarter is based on all or nothing concept.
This is one of the first popular sites to offer crowd funding. Indiegogo takes 5% of the total contribution. Also, creators should pay credit card or PayPal charges which are between 3.5% to 9%. In this, you can choose either funding model among all or nothing or keep what you raise. Indiegogo raise more than US $1 Billion and growing. It is helping every step from concept to shipping. According to Alexa, Indiegogo’s global rank is 1458 relative to other sites in May 2017.
- Gofund me
GoFundMe is a unique website where they are not an incentive-based website. Although they do allow projects which are designed to fund other projects. GoFundMe business model includes social cause, tuition fee or other noble cause. According to the website, this platform raised US $3B so far with 25 million donors. GoFundMe charges 5% fee in addition of around 3% processing fee. This site is very useful if you asking for donation. According to Alexa, GoFundMe’s global rank is 1248 relative to other sites in May 2017.
First open source platform in the world where you can make business partners and grow business together. If you have an idea or want to expand your business, simply, you need to post your business ideas and investors can contact you directly. There is no fees or commission charged by this website. Investors could be your neighbor living on the next door or could be a person living 1000 miles away from you. This may change the era of entrepreneurship. Website claims to have 3000 active users and growing rapidly.
This website is claiming to raise over $97,000,000 and growing. The site relies on causes than profitable projects,Also, they do have a section for non-profit fundraising projects. Razoo charges very low rate as 2.9% and this may be the lowest possible among all sites. Razoo’s global rank is 1,49,000 relative to other sites in May 2017 which shows its popularity decrease over time.