Crowdfunding is a terminology used to connote the practice of raising funds for a project or venture through a large number of people typically domiciled on various crowdfunding sites. The method of raising funds is a form of alternative financing and crowdsourcing.
Unless you live in a location that does not have the internet, there is no way you would not have heard of people or organizations that have raised millions of dollars online to fund their school fees, medical bills, and other needs.
There is no telling the number of crowdfunding websites currently in use, but we can tell you that there are a plethora of them that do not have real communities or even meaningful successes in terms of funding.
And now, you may want to ask about the best and most reliable crowdfunding sites.
Given my knowledge of crowdfunding and my working relationship with the owners of some of those sites, I stand a better chance at guiding you than a minor in the industry.
I will talk briefly about the industry as a whole, the types of crowdfunding available, and then I’ll go ahead to make recommendations.
The Crowdfunding Industry
Crowdfunding or collaboration on the web has made life a tad easier, and this industry has continued to evolve.
Based on a report on the Crowdfunding industry by Massolution, a colossal sum of $2.7 billion was pulled in 2012 from the campaign of over 1 million people. The industry expected growth and made a $5.1 billion projection for 2013.
As this industry continues to thrive and grow, it is widely expected that buying shares in a crowdfunding company, localization, group-based approaches, mobile solutions, etc., will be made possible in the coming years.
There are two main models of crowdfunding: Donation-based funding and investment funding.
Donation-based funding is where funders donate or contribute funds through a collaborative goal-based process, which is done in return for products and rewards. It was the first model ever created. Meanwhile, the second model is the most recent, known as investment crowdfunding. This is a crowdfunding model where enterprises seeking capital sell ownership state virtually in the form of debt or equity. Individuals who fund projects become owners or shareholders and get a return in this type.
Crowdfunding Sites To Choose From
There is a chunk of crowdfunding sites that you can choose from, but we are interested in listing the most reliable. Find the following sites with different models and focuses.
This is a crowdfunding site for creative projects that uses the donation-based funding model. The projects here range from products like pre-selling music albums/movies, art installations, and even a cool watch. They do not crowdfund businesses, charities, causes, or personal financial needs. Kickstarter is one of the pioneer platforms, and it has grown in leaps and bounds ever since.
Indiegogo is also one of the earliest platforms. The difference between Indiegogo and Kickstarter is that the former utilizes donation-based funding for almost everything. Music, personal projects, charities, and whatnots bar investment. They are very well in use because of their robust nature, flexibility, and broad approach.
Crowdfunder raises investments for users. This is one of the fastest-growing platforms that offer equity crowdfunding from individuals, angels, and VCs. They were also a leading participant in the JOBS act legislation.
RocketHub uses donation-based funding for a wide range of creative projects.
The uniqueness of this platform stems from their LaunchPad and Fuelpad, which aid campaign owners in connecting with potential promotion and marketing partners for collaboration.
Crowdrise uses a donation-based model of funding for charity and other causes. They have a community of basically good Samaritans that channel their resources to funding random needs and inspiring causes.
The uniqueness of Crowdrise is that the donations of funders are tracked to reveal the quantity of charity and impact they are making, whether individuals or organizations.
This is a crowdfunding site for lending for small businesses based in the US; they also provide debt-based investment funding to businesses that qualify with existing revenue and operations. They have partnered with the banking industry to provide loans and help bring friends and family members into small businesses.
The other good news is that they have been multiplying to other cities in the US.
For individuals in the tech industry looking to build a mobile app, you can turn to appbackr for donation-based funding. Get on their website and their community for mobile app development.
Mainly for tech startups with the prospect of blooming or startups yearning for Silicon Valley momentum, you can find investments through AngelList. This platform has refused to say they are doing crowdfunding, but they have catered to VCs’ investment establishment in tech startups. It, however, appears that they are just getting into the game. Those accredited investors and institutions on AngelList have been funding many top tech startups.
If you are looking to create your crowdfunding community to support a donation-based project for a specific market or group of people, Invested.in is where to look. It is a Venice, CA-based coy, a white label provider of software. They give you tools to get started and grow by yourself.
Quirky is a platform for inventors where collaborations for donation-based crowdfunding are carried out with a community of like-minded individuals. They mainly help bring an invention or a product to life with the participation of a community.
You may be wondering if the sites mentioned earlier are the only available crowdfunding platforms, but it’s far from it. Nonetheless, check out the website and decide on a collaborative community to join.
How Crowdfunding Is Shaping A New Economy
While crowdfunding is a growing market for social enterprises, philanthropism and entrepreneurship have merged through platforms like these. Profits and purpose have been met for individuals and companies.
Crowdfunding has also been used as a tool that has revitalized arts when it is dying off.
It is also accelerating Angel investing and creating a new market for investors.