If you are looking for the right crowdfunding platform to launch your idea, you should start by understanding the ever growing crowdfunding industry and then familiarize yourself with the crowdfunding platforms listed below.
The crowdfunding industry
Over the last five years, this industry has seen a lot of growth helping people raise money to fund personal projects or finance businesses. Sites have come up for different niches such as charity, social impact, real estate gaming and so much more. According to a report by Massolution, in 2012 $2.7 billion was raised online through crowdfunding. In the year 2013, an estimated $5.1 billion was crowdfunded online and 2014 has seen a lot of crowdfunding sites join the industry.
In prior years, most of the crowdfunding has come from reward based crowdfunding where people buy experiences or products. However, this industry has recently faced a lot of changes in terms of regulations. For the first time now, investments can now be made through crowd funding which is also known as equity crowdfunding.
Rewards and equity
These are the two basic models. Reward based crowdfunding has been around for a very long time. This is the place where people buy experiences, ideas or donate. While the funding goes into helping a business, funders are not allowed to invest and become shareholders.
An example that shows how crowdfunfing is different from investing is OculusVR sold to facebook $2Billion after using reward based crowdfunding to pre sell its product. After the sale was completed, no backer received any financial benefits of the sale as they were only shareholders and not real investors. They are only supporters and product owners. The supporters were not pleased.
Equity crowdfunding allows people to become shareholders in a company. There are a lot of companies online that are seeking and raising investment for their company on sites such as circle up and crowdfunder.com. In equity, businesses sell ownership stakes in the form of debt or equity. There has been a lot of debate on who is better, equity or reward based crowdfunding.
The Jobs Act was passed in 2012 April in the United States making way for equity crowdfunding. Up to date, it is only two parts of these new laws that have been in effect. This has opened up opportunities for entrepreneurs to publicly advertise for investment and for accredited investors to invest online through equity crowdfunding.
Reward based crowdfunding sites
Below is a list of some of the top crowdfunding sites:
This is a leading crowdfunding site where project owners have managed to raise more than $1 Billion for their projects. Kickstarter is the new way for people to get funds for creative projects. They deal in projects related to film, music, art, design and technology. This platform is not for charity or even financing personal needs. In the year 2014, they were able to raise the largest amount of funding which is coolest cooler at over $13 million.
As kickstarter is selective on the projects that it approves, this crowdfunding is open to nearly all kinds of projects and they have a larger international presence than kickstarter. They only provide reward based crowdfunding. The site was first created to fund indie film and theater projects but it has expanded to nearly anything and everything.
This is a charity for donating to charitable causes. The company has a similar model to kickstarter or Indiegogo but it only focuses on raising funds for charity and causes.
This is an online community and a reward based platform that is used by inventors and makers. This platform is not just for funding but it is also a place to collaborate with a crowd on the development of a prototype or product.
This platform used to be known as crowd tilt is a reward based crowdfunding solution for communities and groups to pull their dollars and raise money together. The main difference seen on tilt is that they are leaned down with a simplified experience to other reward based platforms. The average size of this platform is smaller than the other reward based platforms.
This is the right place for you to go if you want to create your own crowdfunding platform by white labeling their software.
With the above information in mind, you can now choose the right crowdfunding option for you.