crowd funding
Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet. Crowdfunding is a form of crowdsourcing and alternative finance. In 2015, over US$34 billion was raised worldwide by crowdfunding.
What Is Crowdfunding?
Crowdfunding is a popular form of fundraising, and it’s been used for a variety of reasons as varied as social justice causes, funding new businesses, helping with medical needs, or funding real estate projects. Basically, crowdfunding is just raising money online from multiple people to fund something. Businesses and individuals participate in crowdfunding to raise money.
How Does Crowdfunding Work?
Crowdfunding works by having multiple people individually contribute a small amount to a project, a new business, or a cause. Usually, the pool of people is large and they may not know each other, which is where the “crowd” in crowdfunding comes from. Instead of having just a few investors fund the venture, crowdfunding allows a lot more people to give a little bit of money.
There are three types of crowdfunding:
- Reward crowdfunding: You reward contributors with a product sample or a gift if they give a certain amount
- Debt crowdfunding: Instead of getting a bank loan, you get a loan from crowdfunding and then repay it
- Equity crowdfunding: You give your contributors equity in the company in exchange for cash
How Much Do Crowdfunding Sites Charge?
Different crowdfunding sites charge different amounts. Make sure to read about all of the fees charged by the site before signing up. Sites will typically charge a fee for processing payments, which may range from 3%–5% per transaction. Some sites might also require that a minimum amount be raised or else the contributors get their money back, so make sure you’ll be able to hit your target.
Are Crowdfunding Sites Worth the Cost?
Crowdfunding sites can be a great way to raise a large amount of money in a short period of time. However, the fees can add up, so you want to make sure it’s worth the cost to use the site. If you have a popular product or cause, a piece of content that went viral, or a large social media following, then it may be easier to justify the expense. Keep in mind that you need to raise awareness of your crowdfunding campaign so people can donate.
How We Chose the Best Crowdfunding Sites
We researched and reviewed the most popular crowdfunding sites to narrow it down to our top picks. We selected the very best crowdfunding sites based on their features, their track records, their number of users, what type of crowdfunding they offer, their costs, and more.
We have some of the biggest names when it comes to crowdfunding, known for helping tech and creative entrepreneurs fund their projects before getting a loan or raising money for venture capital. The company has raised over $5.6 billion with more than 197,425 (as of January 2021) projects funded since its inception in 2009. Potential funders can browse a number of verticals from arts and film to publishing.
It’s also easy to use on the fundraising side—begin by setting your goal and then a time period to complete it. FYI: before your campaign can launch, you’ll have to be approved by Kickstarter. For each level of money raised per individual, you set a small gift or personal experience for your donor.
BancCorp Capital is an all-or-nothing platform, which means that you don’t get your funds unless you complete your campaign. It also means that the funder’s credit card won’t be charged unless you meet your campaign goal. The fee is 10% on top of processing payment charges (3% to 5%) per transaction. If you raise enough money, there’s a 14-day waiting period for funds.
