One of the best ways to get the capital for the startup of a small business idea without tapping out savings resources, taking bank loans or knocking on investors doors is to look for crowdfunding. Crowdfunding essentially means a group of people would support and fund your project via the internet. These individuals would generally be a part of a crowdfunding website and would be on the lookout for prospective business ideas to invest in. And if they like your idea, they would contact you about investing a small amount in it.
Crowdfunding is quite popular, and can be the perfect way to fund your business. However, you need to be extremely careful of the particular website you choose to crowdfund your business idea, lest you run into a fraudulent site. Here are some of the most popular crowdfunding websites for business startups that you can choose from.
Kickstarter is a really popular crowdfunding website in the UK and US that supports individual with business ideas related to technology, theater, art, dance, comics, fashion, design, music, games, publishing and photography etc. Officially launched in 2009, the site has helped over 42,000 budding entrepreneurs to establish their businesses, raising a total of over $649 million for the same. The site also offers a lot of useful resources for its users to start and manage successful campaigns. Users would have to pay back about 5 percent if they reach their target in addition to a payment processing fee.
Like Kickstarter, Indiegogo is a crowdfunding website that lets anyone with a proper idea build and manage an online campaign, in addition to raising money for the same. The site offers online support and backup for business ideas related to the fields of filming, gaming, education, design, technology and mobile etc. It has widgets that allows users to integrate their site profiles with their profiles in other social media networks like twitter and Facebook. These widgets also allow users to raise money by showing their campaign in these social media platforms.
The site charges a 4 percent fee as soon as users meet their goal (funds) and a basic payment processing fee. Users get to keep the rest of the money that they raise through the campaigns on the site. And the analytics tool helps them keep a track on who contributed how much to the campaign (would become extremely useful during payback). Another added highlight is the Indiegogo’s Crowdfunding Tips for Campaigners tool that gives users useful insights into setting up and managing a campaign till the very end.
No other site is more flexible than ProFounder which lets your company be yours (and remain yours till the end) while you campaign for funds. The site offers users plenty of interesting widgets that would allow them to start/manage campaigns, create a pitch and negotiate their own terms. Accordingly, users can choose how much revenue they want to share with whom, and for how many years they want to do so. Payments to investors are also flexible (not fixed amounts) and would depend on the success of the business to a large extent. The site’s widgets also allows users to calculate payments for individual investors on a quarterly basis (including due dates and funds distribution). The site charges a 5 percent fee once users reach their target (needed funds).
And finally, there’s RocketHub, a site that creatively labels its users and contributors as creatives and fuelers respectively. Users can submit their ideas/projects to the section called ‘Launchpad’ for raising funds (aka fueling). Based on their campaigns, users are given badges and rewards to highlight their enthusiasm and success. Users can also keep the money that they raise albeit a processing fee of 8 percent that needs to be given to the site once the target is reached.