Why is GoFundMe not operating in Nigeria
8 crowdfunding platforms that turn ideas and dreams into reality
Raising capital for your next project can be a huge hurdle on the way to realizing your vision.
While bank loans and traditional investors are still viable funding options, crowdfunding gives you the opportunity to get support from the "crowd": a group of individuals who jointly invest in your idea to make it a reality.In addition, crowdfunding can also offer business people the opportunity to determine the demand for their ideas before production begins by letting others "join in" with pre-orders, donations and investments.
Reading tip:Investing in your business: Here's what to consider before investing more money in your business.
What is crowdfunding and how does it work?
Traditional financing (often referred to as fundraising) is based on raising a large amount of money from a single source. Crowdfunding, on the other hand, is a strategy aimed at raising smaller amounts of money from a larger collective of individuals.
A number of incentives can be offered to these supporters in exchange for their support:
- The opportunity to qualify for an innovative product at an early stage.
- The ability to pre-order a product and participate in its development.
- Exclusive rewards (such as an early bird discount or free giveaways) at launch.
- Personal contact with the founding team or the opportunity to support people who know you personally.
- Participation in a company in the early stages or growth phase with high potential (less often the case with consumer-oriented brands).
While each crowdfunding platform has its own unique features, platform fees, fee structure, and user base, the core concept is the same: you submit your project to the platform with a funding goal and deadline, and then solicit support online, often via social media.
So what are your options if you want to crowdfund your business or your next project? Let's take a look at some of the best crowdfunding platforms (and Kickstarter alternatives) that you can use to raise money for your next campaign.
The 8 best crowdfunding platforms for new creative projects
- Crowdfunder (Shopify App)
Fees: 5% when you reach your goal (excluding payment processing fees)
Kickstarter is almost synonymous with "crowdfunding" and is one of the most popular platforms on which innovative ideas find support. Since its inception in 2009, the Kickstarter community has successfully funded over 156,000 projects (including physical products, films, games, and more) for a total of $ 4.1 billion.
Kickstarter is a reward-based crowdfunding platform. The supporters are offered incentives to support the project, from t-shirts and shoutouts to exclusive discounts. Different levels of rewards can also be offered. The more money a supporter pledges, the more attractive the rewards they unlock with it.
Kickstarter campaigns work on an "all or nothing" principle. This means that you will only get access to your funds (and pay Kickstarter's fees) if you meet your original funding goal. If the goal is missed, the funds remain with the supporters.
As a result of this system, projects on Kickstarter are typically high quality, novel, and often innovative enough to grab trendsetters' attention and get press mentions. Backers also generally consider these projects more trustworthy as they don't really part with their money until the campaign is a success.
You can find out more about running a successful Kickstarter campaign in our interview with Fluxbag. And if you're planning the transition from your Kickstarter campaign to a Shopify store, you should definitely check out our appropriate guide.
Fees: 5% when you reach your goal (excluding payment processing fees).
Indiegogo is a trusted crowdfunding platform that supports businesses, artists, and nonprofits. Although this sounds similar to Kickstarter at first glance, this crowdfunding platform has unique features and campaign options.
The most notable difference is the ability to choose a fixed funding goal (all or nothing like Kickstarter) or a flexible funding goal for your campaign. With flexible funding goals, you get your funds regardless of whether you reach your goal within the deadline or not.
The flexible funding option is especially useful when you can keep your promise to supporters even if you don't have enough capital to raise (e.g. when you're launching a new line of products for an established company).
In addition, with Indiegogo InDemand, you can still collect money after your crowdfunding campaign has ended, while you are in the production phase or preparing to fulfill orders. InDemand is at your disposal, regardless of whether you run your campaign on Indiegogo or another crowdfunding platform.
Reading tip: Fluxbag was also able to celebrate successes with Indiegogo. Read the entire post here.
Fees: 5% (excluding payment processing fees)
Patreon is one of the special platforms on this list with a particular focus on creative content producers - bloggers, YouTubers, podcasters, cartoonists, musicians, live streamers, and their kind.
While many of the leading crowdfunding platforms are designed for time-limited campaigns, Patreon is designed for creatives and internet personalities with loyal audiences to generate recurring income through paid memberships. You can choose whether you want the so-called Patreons to pay you for special community benefits "per month" or "per creation" to motivate you to create more content.
Based on different payment levels, Patreon members offer all kinds of exclusive discounts, such as: B. Exclusive content, branded articles, earlier access to new content, shoutouts and much more. If you work in the creative field, publish new content regularly, and have a large online following, it can be worthwhile to create a Patreon page.
Here you can build a community of committed fans and offer exclusive content (through the various integrations of Patreon) that is activated depending on the membership level of the supporter.
Reading tip: Are you active on YouTube? You can read here how you can earn money on this platform.
4. Crowdfunder (Shopify app)
Fees: $ 29 / month (excluding Shopify subscription)
If you already have a Shopify store and are interested in funding a new product through your own website, the Crowdfunder app for Shopify is a great choice.
It enables crowdfunding in its simplest form: accepting pre-orders as a way to validate an idea while funding production. In addition, the commissions that are often charged by other platforms are no longer applicable. There is only a constant monthly fee.
With the Crowdfunder app you can try out new product ideas, collect money for a specific purpose or bring limited products to market.
fees: Free (excluding processing fees)
GoFundMe is a free crowdfunding platform that was primarily developed to support people and initiatives.
Because GoFundMe is for personal use, the supporters here tend to only sponsor campaigns that come from their own personal network and environment, or with which they are in some way familiar.
Unlike the other platforms on this list, GoFundMe is not designed for commercial crowdfunding campaigns. However, if you have a small business or if you need to raise money to face a personal challenge, you can use this crowdfunding platform to attract support from your personal network.
Fees: $ 179 per month during active campaigns instead of a percentage of total earnings (excluding payment processing fees).
Fundable is part of the Startups.co platform and is one of the leading crowdfunding websites that enables startups (initially only with registration in the USA) to offer rewards or shares in exchange for funding.
According to their website, startups that offer rewards tend to raise fewer funds (under $ 50,000) but gain more supporters. In contrast, startups that offer participation tend to generate more capital from fewer investors.
However, to be successful in raising capital, you need all the ingredients that accredited investors expect: verifiable growth, a solid business plan, and a company presentation, if not more.
Fees: 7% of the funds raised when the goal is achieved and a closing fee of 0.75% to 1.25%.
Crowdcube is a crowd investing platform based in the UK. There is only a relatively small number of campaigns here. However, companies that are approved with their funding goals on the platform and are successful can join Crowdcube's "Funded Club" and receive exclusive benefits from partner organizations.
You can apply for your pitch to attract investors from your network or you can contact Crowdcube's established investor community.
Fees: Plans start at $ 299 a month to create a public profile and open a "deal room" that investors can be invited into. A non-public profile and a corresponding deal room can be created free of charge.
Crowdfunder is another crowd investing platform where you can raise capital from accredited investors. The platform's network includes over 12,000 venture capitalists and business angels to whom you can present your project.
Instead of charging a percentage fee on the funds you raise, Crowdfunder offers monthly plans. This makes the platform ideal for startups that have already proven themselves to a certain extent and have proven their growth potential. Deals can be made for shares, loans, convertible bonds, or royalties.
Choosing a crowdfunding platform is just the beginning
Crowdfunding can provide entrepreneurs with a way to validate their product ideas, raise the money needed to start production, or finance their growth with access to a network of potential investors and customers.
In fact, many Shopify merchants have been able to take their business to the next level thanks to the funds they have raised on crowdfunding platforms like the ones above.
However, it still takes a little luck and a lot of preparation to realize your funding goals. You have to convince people that your idea is worth supporting. Also, and maybe just as important, you need to get your campaign across to the right people in the right way.
If you're interested in crowdfunding, you should also check out the following case studies and interviews from companies that have successfully crowdfunded:
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Posted by Hendrik Breuer: Hendrik is the editor of the German Shopify blog. Do you want to publish a guest post? Then please read this guide first.
This article originally appeared in English on the Shopify.com blog and has been translated.
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