Crowdfunding is a way to raise money for an individual or organisation by collecting donations through family, friends, friends of friends, strangers, businesses, and more. Typically this is done via an online platform that manages the donations and distribution of perks.
Crowdfunding isn’t a new concept: People have been coming together to fund projects they believe in for centuries now.
The internet has just made it easier to connect with those people and reach even more of them. It’s also made it possible for anyone with an idea to get funding without relying on traditional venture capital methods.
A plethora of crowdfunding platforms using blockchain has emerged to meet different needs in recent years. In addition to GoFundMe, platforms are dedicated to real estate, nonprofits, business startups, and creative projects.
If you’re considering a crowdfunding campaign, look closely at fees, marketing tools, and audience before settling on a platform. It’s worth shopping around, as different sites can vary widely in the services they offer. Let’s explore various sites.
GoFundMe is the best-known crowdfunding platform for personal causes, such as medical bills or tuition assistance. It’s also one of the most flexible — you can use it for almost any purpose and withdraw funds immediately as donations roll in.
Like most of its competitors, GoFundMe charges a 5% fee on each donation plus 2.9% for payment processing.
Kickstarter is the original crowdfunding platform for creative projects, including movies, music, stage shows, and art.
However, it’s “all or nothing” you have to reach your goal within a specific time frame, or your donors get their money back. Kickstarter charges a 5% fee plus 3% processing costs.
Indiegogo launched in 2008 and has funded over 500,000 projects. It also uses an all-or-nothing model but allows you to keep any money raised even if you don’t reach your target (it’s called “flexible funding”).
Projects that use this option are charged higher fees than those on the all or nothing option (9% compared to 5%). Indiegogo is open to any idea, including those that require testing before going into production (such as medical devices).
SeedInvest is an equity crowdfunding platform that provides individual investors with access to pre-vetted startup investment opportunities.
The SeedInvest platform allows entrepreneurs to raise capital from the SeedInvest community of sophisticated investors. Seedinvest’s mission is to improve the way startups and investors connect online.
SeedInvest does not allow everyone to post their company on its platform. Companies must apply and be approved by the SeedInvest team before their offering can be listed.
SeedInvest is open to accredited and non-accredited investors alike, but only accredited investors can invest in each specific business offering on the site.
Even though the current crowdfunding platforms are doing a pretty good job, they are all bound to face fierce competition in the coming years. The biggest threat will come from other similar services in other countries rapidly rising and becoming prominent players in the industry.
There is still a long way for crowdfunding to go before it reaches mainstream acceptance. For now, it remains an attractive service for small businesses, artists, and inventors, who have a lot of potentials when harnessed.
These platforms are paving the way towards more transparent, efficient, and direct communication between would-be creators and consumers.