Crowdfunding is an accessible and feasible alternative for small business owners to source funds. Thanks to its immense power and success, most entrepreneurs turn to crowdfunding in lieu of traditional funding methods. It’s not complex to gather why most individuals who want to raise funds and highlight their venture to the masses opt for crowdfunding as their primary source of financing.
If your small business is promising and appealing to the masses, you should leverage this goodwill wave to solicit lump sums from your backers. In return, you can offer incentives or equity to your backers for their contribution. What’s more, crowdfunding builds awareness and publicity for your yet-to-be-established venture. In sum, crowdfunding is an excellent financing option to charge any business into a success.
Nonetheless, and akin to any funding option, one has to weigh a lot of considerations before crowdfunding for a venture. A vital thing to consider is the platform to launch your crowdfunding campaign. The rise in popularity of the crowdfunding market has also seen the number of crowdfunding websites soar. Unfortunately, not all platforms are ideal for raising lump sums, offering visibility, and in general, taking small businesses to the next level.
As a result, we have selected the top crowdfunding platform appealing to small businesses and startups.
Crowdfunding platforms for small businesses
An ideal crowdfunding platform for small businesses should charge low fees, have a substantial audience of prospective investors, and allow various campaigns. Moreover, they should have a track record of helping many organizations find their footing through crowdfunding.
SeedInvest is a top equity crowdfunding platform for highly vetted startups. The websites boast more than 575000 investors that lend financial support accruing to more than $350 million since its launch in 2013. In addition, SeedInvest connects entrepreneurs with investors and venture capitalist firms.
SeedInvest has a strict vetting procedure and only allows startups or SMEs with high potential growth to launch a campaign on their website. Also, it charges a 7.5% placement fee and a 5% equity-based fee on the raised amount. Seems a bit high-end, right? Still, SeedInvest is the most prevalent and potent equity crowdfunding platform to take any profitable business to the next level.
Funding Circle is a peer-to-peer lending marketplace that has helped more than 118000 small businesses access more than $18 billion in finance. At a glance, Funding Circle matches institutional investors with small businesses looking for finance to expand their ventures. Masses can lend money directly to SMEs at lower costs than they would get at banks and other lending institutions.
Fundable is a business crowdfunding platform dedicated exclusively to helping firms raise capital from investors, friends, and followers. Having been created by startup founders who have successfully solicited lump sums from investors and venture capitalists, Fundable is an ideal platform for entrepreneurs to launch their funding campaigns.
In its debut year, Fundable successfully generated over $80 million, and the numbers have continued to grow exponentially ever since. The most attractive feature of this platform is that its team guides you through the entire campaign process, from setting up an enticing campaign page to marketing and insights to help your company mature.
Yet another peer-to-peer lending marketplace, LendingClub, offers small businesses loans through debt-crowdfunding. It’s a pioneer in the peer-to-peer lending marketplace, established in 2006. Since then, it has helped raise more than $15 billion in loans.
Similar to SeedInvest, is Wefunder, a crowdfunding platform that connects startups and SMEs with investors. It’s among the few equity crowdfunding platforms that boast a significant success of 75%. Wefunder allows credited and uncredited investors to purchase equity in early-stage private organizations. Moreover, it provides entrepreneurs with mentorship, helps with legal documents, and investor relations support.
Without a doubt, Kickstarter is the most prevalent crowdfunding platform. Its immense popularity enhances the discoverability of promising businesses. Since its launch in 2009, Kickstarter has been the cornerstone for more than 205000 projects.
Oculus VR is a sensational Kickstarter success that surpassed its initial target of $250000 and raised more than $2.4 million in 30 days. Subsequently, and due to the visibility offered by Kickstarter, Meta acquired Oculus VR for $2 billion, and the company has seen tremendous growth since then.
Kickstarter is an ideal platform to offer small businesses maximum visibility and raise funds. Still, successfully running a campaign on Kickstarter isn’t a forte many entrepreneurs excel at. More than half of the campaigns run on Kickstarter bite the dust.
Akin to Kickstarter, Indiegogo is a reward-based crowdfunding platform with immense popularity. However, it’s more flexible than Kickstarter, considering campaigners can offer equity, securities, revenue sharing, and even cryptocurrency sales. In addition, Indiegogo boasts more than 15 million monthly web visitors, offering entrepreneurs a marketplace for innovative products/services.
In addition, Indiegogo has an Indemand feature that allows business owners to continue raising funds and growing their customer base even after the end of their campaign. Again, similarly to Kickstarter, Indiegogo charges 5% of the raised funds plus a 3% payment processor fee.
Crowd Supply claims to have twice the success rate of Kickstarter and Indiegogo. Crowd Supply is a crowdfunding platform that also serves as an online store for the inventories of successful campaigns. Moreover, it provides mentorship that is somehow similar to a business incubator.
Crowd Supply offers users various payment plans. Each plan has different features, such as campaign management and a dedicated PR team.
It’s almost impractical to elucidate all crowdfunding platforms for small businesses. So instead, we have pinpointed prominent sites to offer you maximum venture visibility and help it raise capital.
Nonetheless, it’s essential to remember that crowdfunding sites offer small businesses different options. For example, depending on your preferred platform, you might have to give equity to your company, take on debt or offer your backers rewards. Therefore, scrutinize a website’s terms and conditions before launching a campaign. Most importantly, have a backup plan, since not all crowdfunding ventures are successful.