Obtaining funds for either personal or business purposes without collaterals can be very challenging and difficult especially if the required sum is huge. Crowdfunding provides a unique opportunity for people and budding startups to raise large funds quickly.
Crowdfunding is raising funds for a project or cause through a large group of people online
Crowdfunding takes the problem of funding to the masses through the internet. An individual or entrepreneur can showcase their ideas through an online platform and ask for small monetary contributions from supporters.
The business or individual usually sets funding goals to reach a benchmark by a certain date. Once that funding goal is met, the sponsoring platform administers the fund.
Types of Crowdfunding
There are typically three types of crowdfunding: reward, debt, and equity crowdfunding. With reward crowdfunding, funds are raised by reaching out to friends and supporters. Debt crowdfunding provides fast loans to be paid back within a specific time frame and equity crowdfunding where a share of the company is given to the people who provide the funding.
When choosing a crowdfunding platform, there are certain factors like fees, popularity and ease of use that needs to be considered. Below are some of the best crowdfunding platforms you can use.
The GoFundMe platform is very popular on social media. You have probably seen it being used for emergencies and charitable causes, but businesses can use it as well.
The crowdfunding site is very easy to use and is very popular among influencers on twitter. The platform collects a 2.9% processing fee and 30 cents for every donation. However, it has zero personal campaign funding fees for those based in the United States.
GoFundMe is the best crowdfunding platform for Personal Fundraising
The platform has had many successful campaigns including the recent fundraising for Erika, the disqualified BBNaija housemate. Also as it is an all or nothing platform, it lets you keep everything that you raise.
Kickstarter is popularly known for helping tech and creative entrepreneurs fund their projects before raising money from venture capitals. The platform is very easy to use. It has raised over $1 billion in funding from 5.7 million donors and completed more than 189,000 projects funded since its inception in 2009.
Kickstarter “curates” its projects, which means that before your campaign can launch, you’ll have to be approved by Kickstarter. For each level of money raised per individual, you also need to set a small gift or personal experience for your donor.
Kick Starter is one of the biggest crowdfunding platforms in the world
The platform charges a 3-5% processing payment fee per transaction and 5% fee to be taken from the funds that are raised. Also, it has a 14-day waiting period for funds and only accepts projects based in the US, UK, Canada, Australia and New Zealand.
Patreon is one of the more popular crowdfunding platforms among digital creatives. Instead of one-off donations, Patreon creates a subscription model where fans can regularly contribute a set amount of money either monthly or per creation.
The site is very easy to use and boasts over two million active patrons and over 100,000 active creators. The site also allows YouTubers, bloggers and other content creators to form relationships with their fans.
Patreon is the best crowdfunding platform for Creators
Patreon collects a 2.9% fee and 35 cents from each pledge. It even allows creators to deliver exclusive contents as incentive for funding among their subscribers. One drawback is that creators must regularly share work on your personal platform if they don’t want fans to cancel their subscription.
CircleUp has saved many entrepreneurs and startup founders the headache of funding to scale their business. The platform offers both equity capital and credit financing and has helped raise over $260 million dollars for 196 startups.
The platform is easy to use for an entrepreneur as the platform provides a network with experts, retailers, other entrepreneurs and accredited investors, who have a net worth of at least $1 million.
CircleUp is the best crowdfunding platform for Equity Crowdfunding
The platform has different rates depending on deals and selection process and is fairly competitive. However, the platform is best for entrepreneurs who are looking to scale as opposed to develop their ideas because you need to have a revenue of at least $1 million to be listed on the platform.
Lending Club is not as popular as other platforms listed above but it has very good deals for businesses. The platform provides a form of crowdfunding that is easy to get and faster than normal bank loans. Lending Club has provided up to $40,000 for personal loans and up to $5,300,000 for business loans.
The Interest rates for the loans can however be high depending on your credit score—the total annualized interest typically ranges between 10.68% and 35.89%.
Lending Club is the best crowdfunding platform for Business Loans
The platform can provide loans with a 3-year or 5-year term and doesnt require VC formalities such as business visits or plans and projects. However, the business must be over 1 year and have an annual sale of $50,000.
Causes is the number one online crowdfunding platform for social, political, and cultural issues. This means that it is the perfect platfrom for NGO and other non profit causes. The platform practically wants to help raise money to make the world better.
Causes is the best crowdfunding platform for NGO and Nonprofits
The platform is very easy to use and provides a large donor community. In addition to fundraising, Causes is a social networking platform that allows you to find people with common interests as you look through categories such as animals, human rights, and the environment. The platform boasts of over 186 million users in 156 different countries.
The platform is free to use but it runs paid ads.
In summary, crowdfunding platform can be a great way to raise a large amount of money in a short period of time. Depending on what you want to use the funds for, there are several platforms you can select from. However, be sure to check the fees as they can rack up. Doing that helps you make sure it’s worth the cost to use the platforms.
Keep in mind that you need to raise awareness of your funding campaign so people can donate.
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