Millions of women and men around the world give up on their dreams for one main reason. And the reason is lack of money.
Nowadays, it’s not easy to get a loan from a bank. Nor are venture capitalists very forthcoming with money to fund a new startup. Having personal resources is superb, but most of us have only lifetime savings and a few investments, which isn’t really enough.
That’s exactly where crowdfunding comes in. It is a simple way to raise money for your dream project that would help you use skills and knowledge for a good purpose.
What is Crowdfunding?
To help you understand crowdfunding and how crowdfunding works, here’re some simple definitions.
The concept of crowdfunding has prevailed since ancient times. People would donate or lend some money to an organization or person to build a monument or shrine or even for some personal venture.
Charities, for example, work on the simple concept of crowdfunding. People donate money or stuff which is used for the benefit of a large number of people.
In some cases, charity is done towards an individual to help them undergo expensive medical treatment that they can’t afford. Or to help a family in distress. And sometimes, an entire community facing hardships or is in need of better facilities.
Crowdfunding works on a similar concept. If you have a superb business idea and possess the necessary skills, you can ask for money from the general public to finance your venture.
Crowdfunding works online. This means you can seek funds from people using an online resource such as your Facebook page.
However, in our times, things are a bit simpler. Instead of you asking for funds as a person or enterprise, there are the best crowdfunding platforms that would do the needful. In return, they charge a percentage of the total money you collect as their service fees.
Projects for Crowdfunding
This brings us to the question, what’re the types of projects that qualify for getting money through the best crowdfunding sites? Actually, there’re no hard and fast rules to raise money from the best crowdfunding platform.
You could approach one to seek money for almost anything.
Having said that, here’re some common ventures and projects for which you could raise money through any best crowdfunding platforms.
- Technology-based startup ventures.
- Educational projects for specific communities or the underprivileged.
- Science projects such as exploration and experimentation.
- Production of movies and documentaries in some instances.
- Supplying goods to a specific section of the community.
- Rebuilding infrastructure after a disaster.
The above are common instances for people to seek crowdfunding. Regardless of the fact, you could visit a good crowdfunding site or platform and enquire whether your project or venture qualifies.
Getting Started with Crowdfunding
Should you have an amazing project that you believe would make a difference to people, here’re some tips for getting started with crowdfunding. Before beginning, make sure you have adequate information about the venture.
1. Study Various Crowdfunding Platforms
The first and obvious step is to study various crowdfunding platforms in your country and worldwide. To do so, you’ll have to check their details, such as projects for which they help seek crowdfunding and countries where they operate.
In some instances, it would be wise to go for a foreign best crowdfunding platform, especially if the exchange rate between your currency and the US Dollar is high.
For example, people in India can seek the best crowdfunding from the US because the currency exchange rate hovers around $1= INR 70.
Also, find out details such as social media integration of their crowdfunding campaigns so you can share your venture on Facebook, Instagram, Twitter and others.
Finally, look at their service charges because you’ll be paying them from the money that comes in from crowdfunding.
2. Keep Your Project Plan Ready
The second tip is to get your project plan ready. Doing this is the most complex of all tasks related to getting crowdfunding.
The crowdfunding platform, as well as people, would love to know what your project is all about. And how it would help the public or a specific group of people.
Then you’ll also have to provide details about your own experience and expertise in the field where you’re starting a project and those of any core leadership members too.
Furthermore, describe in detail who would be your target market or audience and how the project would work to their benefit.
And finally, you’ll have to offer some sops to people who donate to the venture for which you’re seeking the best crowdfunding. Be very specific in mentioning how donors or contributors to your project stand to gain by giving their money.
In fact, writing details about your project is similar to creating an excellent business plan. It has to outline every feature of the venture, whether it’s a startup or a documentary on something.
3. Arrive at a Figure
Now the most important step. That is to arrive at a near-precise figure of how much money you wish to raise through crowdfunding sites. This is extremely important because asking for too less can put your project in trouble.
On the other hand, asking for too much can sound like fraud or put off potential contributors and donors from giving money to your crowdfunded project.
Here I would even go as far as recommending you use some good financial consultant or accountant to calculate the total amount of money you would require from crowdfunding.
And don’t forget to calculate the cost of campaigning and fees that a crowdfunding platform charges. Often, these fees are calculated on the basis of percentage.
This isn’t a rule, but most of the best crowdfunding platforms charge between 2.5 per cent and 7.5 per cent of every credit transaction as their service fees.
The median fee, according to various sources, stands at five per cent of every credit transaction. Meaning for every $10 that goes to your crowdfunding account, $ 0.50 would go to the crowdfunding platform.
Additionally, you might also have to bear the expenses of wire transfers, inbound credit, PayPal transactions, international fund transfers, and so on to receive the money in your crowdfunding account.
Therefore, arrive at a figure that would actually help you launch the project without seeking more funds from any source.
4. Launch Crowdfunding Campaign
And finally, launch the crowdfunding campaign. Normally, the best crowdfunding platform will do the needful.
However, you would have to do some work, such as publicizing the crowdfunding campaign on social media and monitoring the funds that you’re receiving.
Here it’s worth remembering that a crowdfunding campaign has a deadline. That means you can run a campaign only for a specific number of weeks, depending on the amount of funds you’re looking at.
In some cases, it’s possible to extend this deadline, though the final discretion lies with the crowdfunding platform.
Therefore, adequate publicity and compelling write-ups on social media and blogs will help you achieve the necessary funds faster if you exert extra effort on the campaign.
Overview of Top Six Crowdfunding Platforms
Once the above steps are clear, it becomes easier to select a crowdfunding platform that specifically suits your project. Therefore, we’re listing the top six crowdfunding platforms that have ratings from various sources.
The list is randomly generated and doesn’t signify rankings of any kind. This list is for information purpose only.
1. Start Engine
Start Engine is a relatively newer best crowdfunding platform operating since 2011, but it comes with amazing features. This platform is ideal if you’re launching any startup that doesn’t really require too much capital.
By 2020 end, Start Engine had helped nearly 400 startups, and other newer enterprises raise funds to the tune of $200 million. People can contribute a minimum of $100 to your crowdfunding campaign.
Start Engine has a membership of over 300,000 investors across the globe.
In 2020, Indiegogo ranked as the topmost crowdsourcing platform. Indiegogo has a presence in nearly all countries in the world and has helped over 800 ideas raise funds to launch a venture.
This crowdsourcing platform accounts for close to 20,000 new campaigns every month. The flip side is that their service fees are five per cent of the total sum collected, which can be a bit higher.
And there’re other additional expenses too. Over 800,000 investors use Indiegogo to fund projects from around the world.
As the name would suggest, MightyCause specializes in crowdfunding for Non-Profit Organizations, Non-Government Organizations and charities. As a result, they charge only 1.2 per cent of incoming credit as their service charge, and other fees are minimal.
They also have a membership option available at $99 per month. This premium and paid version comes loaded with features such as donor management, the launch of social media campaigns, branding and marketing of the campaign, among others.
4. Seed Invest
If you’re planning on launching a startup and require seed money for its launch, Seed Invest could be the perfect platform. They have over 300,000 veteran contributors that are interested in providing seed funding to newer companies.
However, to qualify and get the best of Seed Invest, your startup idea has to be unique and sustainable. Once you receive money from the best crowdfunding campaign through Seed Invest, it’s your responsibility to take the startup to the next and self-sustainable level.
GoFundMe is for individuals that require to raise money from crowdfunding for multiple reasons, such as paying bills for complex medical treatment or helping a person with good credentials steer out of financial problems.
Over one decade, they have helped raise close to $10 billion through nearly 120 million donations from people across the world.
They don’t charge a service fee since the platform works for a humanitarian cause. However, there’re other expenses that you would have to bear.
Patreon is also for individuals that are in creative and fine arts. For example, if you wish to make a movie or documentary that genuinely touches the lives of people, seek crowdfunding from this platform.
They have helped close to 200,000 creative persons to raise more than $2 billion in crowdsourcing funds. Patreon offers a ‘Lite’ plan which charges only five percent of the total funds as service fees.
The ‘Pro’ plan for the higher amount of funds costs eight percent of the total inward credit, while the ‘Patron’ plan for creative veterans comes with a tag of 12 percent of total inward remittance.
Other Crowdfunding Platforms
There’re scores of best crowdfunding platforms around the world. However, the six we list above are available globally.
Hence, anyone residing anywhere in the world can utilize their services. Rules and regulations that all crowdsourcing platforms follow are pretty strict and ensure there is no fraud or money laundering.
Hopefully, this article will provide some valuable insights for you to seek crowdfunding for any legit cause.
Before concluding, we’ll emphasize that a good project plan or business plan holds the key to the success of any crowdfunding campaign. Therefore, work on the four tips we provide above to get the best from crowdfunding.