Top 6 crowdfunding sources for startups and businesses

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Crowdfunding for startups is quite relevant…

So, you’ve got a very good business idea but you think there’s a different view on how you want the business to look like? Your business startup is brilliant and has almost every good potentials a business must and you are seriously ready to make money with your business.

But the problem lies in your shallow pocket as a beginner.

So how do you get around doing this? Aside from the fact that you might have some huge wallet sponsors or venture capitalists, you might want to talk to the masses and see if you might get some financial support for your startup business.

You have researched your teeming industry, discovered who your customers would be, understand the challenges you might face and how to overcome them, and also you are done with writing your business plan, next thing is how to get the funds to get started.

Note: insufficient capital may cause your startup to fail – read: reasons why startup fails

Crowdfunding sources for startups

A crowdfunding platform is a site that connects you (Business owner), and your startup with investors who are willing to contribute to your startup. These websites does just good to add flavor to an already produced flakes and as such they get you investors to your promising business startup.

Crowdfunding services can be used to jumpstart your business as well as your success. The portals are often built like social media sites and connects you to investors and other folks willing to help small-business owners get products and services into the market.

They help you streamline the process of taking a proof of concept to prospective investors and see if there is a chance for success. In some cases, with equity crowdfunding, the investors may help you flesh out your business if your idea isn’t viable on the market.

Several factors which are considered before choosing these best performing crowdfunding sites

  1. Funding and payment processing fees the site charges startups
  2. The sites campaign success rate
  3. The size and reputation of the site to the public. (Use CrowdsUnite to check)
  4. Whether the startup can keep all funds raised (as opposed to an all-or-nothing model)
  5. The campaign type and business locations allowed on site
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Best performing Crowdfunding platforms and there focuses

GoFoundMe: People, Charity causes

Pateron: Artists and Creators

Indiegogo: Tech and Innovation, Creative works, Community projects

CircleUp: Early-stage consumer goods

Kickstarter: Creative arts

RocketHub: Science, arts, Education, Business, Social goods

1. GoFoundMe – [link]

 Best for people and charity cause

Strengths

  • Zero funding fees for US-based personal causes
  • Works on the keep-what-you-raise funding model
  • Focus on people-based charitable causes

Weaknesses

  • Has a minimal option for traditional startups
  • One-in-ten success rate for fully funding campaign

GoFoundMe is a charitable platform which has an international recognition for helping people around the world to put their money into charity and things that matter to them.

If you are starting up a charity-like business for assisting people or attend to medical conditions, emergencies, this platform is best to consider.

However, GoFoundMe campaigns have reportedly low success rate, so you will need to work hard to get people to see and invest in your project.

GoFoundMe details

Campaign type: Reward, donation

Payment fees (US): 2.9% + $0.30 per transaction

Startup locations allowed: 19 Countries

Funds you can keep: Whatever you raise

Funding fees: 0% for personal campaigns in the USA; 5% for charities and countries outside the USA

Industry focus: People and causes

Rating by CrowdsUnite: 7.5 out of 10. Overall

2. Pateron – [link]

Best for artists and Creators

Strengths

  • Operate on the keep-what-you-raise funding model
  • Internationally recognized platform with at least 2 million patrons
  • Focused on giving artists and creators a steady flow of income

Weaknesses

  • A minimal option for traditional startups
  • Relatively expensive payment processing fees
  • Lack of equity investing options

Pateron may not be seen as the best solution for a technology-related startup or an IT business startup; it is best for artists and creators when it comes to building a huge audience and fan base as well as a good source of income.

At least at the age of 13, anyone can launch a successful campaign on Pateron and get help fund creative projects like photography, video, music, writing comics, podcasts, games, animations just to mention but a few.

You may not earn any colossal investments with Pateron, but you could keep all the donations you were able to get (5% payment fee) and indefinitely leave your campaign running.

Pateron details

Funding fees: 5% successfully processed payments

Payment fees (USA): varies but 5% on average

Startup location allowed: Worldwide

Industry focus: Artists and creators

Campaign type: Reward, subscription/donation

Funds you can keep: Whatever you raise

Rating by CrowdsUnite: None available

3. Indiegogo – [link]

Best for Tech, and Innovation, Creative works, Community projects

Strengths

  • Flexible campaign funding options
  • Additional marketplace e and equity platforms
  • Global access to millions of funders

Weaknesses

  • Partially funded campaigns are costly
  • No personal causes allowed
  • Low success rate for fully funding campaigns

Indiegogo can be considered as the best crowdfunding sites in the world.

It was initially founded to help fund projects like cancer and theater treatments. Now, indiegogo is an international platform with over 9 million backers that accepts campaigns in a variety of industries, for consumer technology to community improvement.

Most indiegogo campaigns are reward-based with all-or-nothing funding rules. But there are options for equity investment and keep-what-you-raise campaign too.

Meanwhile, there has been a very bad report about the success rate of the indiegogo reporting about 8% to 10% range. According to some reviews, the experience for startups has been less than favorable, partly due to the high fees for partially funded campaigns.

Indiegogo details

Payment fees (USA): 3% + $0.30 per transaction; $25 transfer fee

Startup locations allowed: Worldwide

Funds you can keep: All or nothing; Keep virtually whatever you raise

Industry focus: Technology and Innovation

Campaign types: Reward, equity

Funding fees: 5%

CrowdsUnited rating: 6.2 out of 10 overall

 4. CircleUp – [link]

 Best for early-stage consumer goods and products

Strengths

  • Focus on early-stage consumer products
  • Insights fueled by proprietary machine learning technology
  • Unique access to startup loans

Weaknesses

  • Very highly selective campaigns
  • All-or-nothing campaign model

If your startup is focused on building consumer brands, then you should check out circleup. This is one of the best equity crowdfunding sources you can get.

CircleUp offers an exciting array of services which includes a platform for connecting with accredited investors, insight into machine learning technology and access to special lines of credit for startups to the entrepreneurs.

An accredited investor is one with a net worth of at least $1 million or earns around $200,000 a year per SEC regulation.

One good thing about theCircleUp is that they do not charge any fees for friend and family investments. It provides special access to funding through a partnership with Procter, gamble and general mills. On the other hand, CircleUp has a rigorous selection process with a preference for USA based businesses and massive revenue growth potential. That means CircleUp is for more established startups looking to scale not for brand new ideas.

CircleUp details

Funding fees: Not available

Payment fees (USA): Not available

Startup locations allowed: Worldwide

Funds you can keep: All or nothing

Industry focus: Early stage consumer brands

Campaign types: Equity, credit

CrowdsUnite rating: Not available

 5. Kickstarter – [link]

Best for creative arts startups

 Strengths

  • More than 15 million campaign funders worldwide
  • 2.9% payment fees
  • Campaign accepted from 6 countries only

Weaknesses

  • Tricky campaign acceptance process
  • All-or-nothing funding
  • One-in-three campaign

For over a decade, the Kickstarter crowdfunding platform is renowned for some very specific and good reasons.

However, the bad side of this platform is his – completing a successful crowdfunding campaign on Kickstarter is quite a tough one. This is as a result of the level of competition involved with the site and as a result, they do carefully select the crowdfunding projects allowed on the site.

On Kickstarter, any kind of business cannot be funded; you must create something you can share with others. Your project must also fall under one of the Kickstarter curated categories, like arts and crafts, fashion and design, film, photography, games, and technology.

Still, with a strong base of over 15 million project backers across the globe, Kickstarters worth a shot if you really need to get your big idea in front of the biggest audience possible.

Kickstarter details

Campaign type: reward

Payment fees (USA): 3% + $0.20 per pledge $10 and over; 5% + $0.05 per pledge under $10.

Startup locations allowed: USA, UK, Canada, Australia, New Zealand, and the Netherlands

Funding fees: 5% of successful campaigns

Funds you can keep: All or nothing

Industry focus: Creative arts

CrowdsUnited ratings: 7.9 out of 10 overall

 6. RocketHub – [link]

Best for Science, arts, Education, Business, Social Goods

Strengths

  • Funding model that lets you keep funds for partially successful campaigns
  • Worldwide access granted for startups and funders
  • Partnership with A&E for startup promotion

Weaknesses

  • Higher fees for partially funded campaigns
  • Higher than average payment processing fees

RocketHub is another reward-focused crowdfunding site that connects exciting startups with eager investors.

The site started out with a focus ion creative art projects,  but it has since expanded to funding campaigns related to science, education, social good, and other realms. The company also partners with television network A&E to support and promote startups even further.

RocketHub funding fees are lower than average, at 4% for a successful campaign. Another excellent perk is that you can even keep funds if you don’t reach your campaign goal. Although in that case, RocketHub takes a more substantial 8% portion.

Rockethub details

Funding fees: 4% of fully funded campaigns; 8% of partially funded campaigns

Payment fees (USA): 4% per transaction

Startup locations allowed: Worldwide

Funds you can keep: Whatever you raise

Industry focus: Science, education, business, arts, and social good

Campaign types: Reward, equity

CrowdsUnite rating: 7.8 out of 10 overall

Crowdfunding alternatives

Notwithstanding the fast growth of crowdfunding, it is not the best way to kickstart your startup. Try out these other types of loan which are tried-and-trusted and often less risky sources of startup funding.

OnDeck: This is an excellent choice for more established startups that need good capital that adapts to your growing needs.

Kabbage: This is an automated platform for accessing lines of credit to fund short-term needs.

Lendio: A loan marketplace with a quick and easy application process and personalized options for startups.

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