Small businesses looking to get capital to jump-start their business can find it difficult, due to lack of experience and little proof of success early on. In the last decade or so, crowdfunding platforms in Canada have offered a potential solution to these woes by letting would-be customers chip in to get a business off the ground.
Crowdfunding in Canada makes it easier than ever for your friends, family and even strangers to back your business or product idea. This list helps you quickly evaluate the leaders in the market to find the one that might work best for you.
1. Kickstarter
You’ve no doubt heard of this Brooklyn-based platform – in some circles, “Kickstarter” is to crowdfunding platforms what “Kleenex” is to tissue.
Kickstarter is designed to fund creative projects, but don’t worry if you’re not claiming “artist” or “musician” on your tax forms. In 2014, a man in Ohio asked for $10 to make a potato salad on Kickstarter, but received more than $50,000. So, the company will let a lot of fundraisers stay on the site.
It’s an all-or-nothing platform – which means if you don’t reach your fundraising goal by the end of the designated time, you won’t get any of the money raised up to that point. It also means your backers won’t have to pay for your project, which could make donating more attractive.
How Kickstarter works
On Kickstarter, you raise donations toward a specific goal and specific project. You’ll pay an overall fee and then additional fees that vary by donation amount.
Fees
- 5% of all funds raised as a Kickstarter fee
- 3% plus CAD$0.20 payment fee for pledges more than $10
- 5% plus CAD$0.05 for pledges under $10
Pros
- Name recognition means you’ll likely have more visibility
- You get a small fee break for smaller donations
Cons
- Project must fit Kickstarter’s categories and requirements (unless it’s for potato salad)
- Kickstarter limits the types of projects you can fund
- Projects can only last a maximum of 60 days
2. GoFundMe
More than 150 million donations have made GoFundMe the biggest crowdfunding website in the world. Backers can support almost any cause on the site as well, such as animal welfare, education and medical emergencies.
GoFundMe is all about flexibility. Sign up for either a personal or charity campaign and continue collecting funds well after you’ve reached your goal.
How GoFundMe works
GoFundMe is a platform to raise donations toward a project. You’ll pay a fee on each donation you receive.
Fees
- 0% platform fee
- 2.9% plus CAD$0.30 transaction fee for each donation (fee is 2.2% plus CAD$0.30 for charities)
Pros
- Widely recognized brand, which can help with fundraising
- GoFundMe waives processing fees for charities
- There are no deadlines or minimum fundraising goals
3. Indiegogo
Indiegogo is the crowdfunding platform for entrepreneurs that has raised more than $1 billion for design, tech and innovation projects since its inception in 2008. Indiegogo provides assistance to users every step of the way, from concept to marketing, to help with a successful fundraising campaign.
How Indiegogo works
Similar to other platforms, you’ll pay a general platform fee and then a fee on each donation. You’ll also pay a transfer fee each time funds are sent to your bank account.
Fees
- 5% platform fee
- 3% plus CAD$0.30 transaction fee per donation
- CAD$25 transfer fee every time funds are sent to your bank account
Pros
- Focused on creative services, marketing and communications, prototyping, production, retail, licensing and distribution
- Lower fees for charitable campaigns
Cons
- Campaigns are limited to 60 days (Indiegogo may choose at its own discretion to extend the deadline)
- You must provide rewards, even if you don’t receive full funding
Industry-specific crowdfunding platforms
Chances are there’s a platform for people in your specific industry. If so, these platforms typically tailor services to your needs and can attract backers looking to fund a project just like yours.
Here are just a few examples of crowdfunding sites to check out:
- Appbackr is designed to help app developers get their apps off the ground.
- FrontFundr and SeedInvest could help you grow your cannabis business.
- Experiment (formerly Microryza) offers scientists a nontraditional way of funding research.
4. Crowd Supply
Crowd Supply is essentially a “preorder” store, meaning supporters can commit to ordering a product that needs funding to support the manufacturing process. Since 2012, Crowd Supply has been one of the go-to crowdfunding platforms in Canada for product designers.
How Crowd Supply works
Crowd Supply is a little more exclusive with crowdfunding ventures. You’ll need to pitch your idea to a team of experts, and prove that you’ll be able to carry out production if your funding goals are met. If you fail to meet your funding goals, the money that was raised is refunded to those who donated it.
Fees
- Platform fee that is typically 12% of your goal, depending on your plan
- 2.9% plus US$0.30 fee per donation
- Flat fee per distributed item if you use Crowd Supply’s fulfillment services. Fee is based on item’s dimensions and shipping costs.
Pros
- Expert guidance with campaign review and management
- After your campaign ends, you can sell your product on the platform
Cons
- Potentially high fees
- Smaller backing community
5. Experiment (formerly Microryza)
Experiment is an online crowdfunding platform that aims to fund and share scientific research around biology, chemistry, physics, mathematics, engineering, earth science, computer science and medicine.
How Experiment works
This all-or-nothing crowdfunding site allows backers to donate to new or ongoing research and experiments. People who back campaigns have access to lab notes and research results as the project unfolds. If a campaign fails to reach its goal, backers aren’t charged.
Note that Experiment is not always accepting new project submissions. Visit experiment.com/faq to learn more.
Fees
- 8% platform fee
- 3% to 5% payment processing fee
- 2.9% plus US$0.30 fee per donation
Pros
- Provides additional grants to projects under specific categories
- You maintain complete ownership and intellectual property rights
Cons
- No funding if your campaign doesn’t reach its goals
- Platform comes with high fees
6. Mightycause (formerly Razoo)
Campaigns on Mightycause have raised more than $600 million for important causes – more than most of the biggest crowdfunding names combined. People use this platform to fundraise for large community-led or corporate events, or smaller individual causes such as walk-a-thons or projects with St. Jude Children’s Research Hospital.
Mightycause encourages charitable donations through events like Giving Day, a day-long community-based competition where non-profits sign up and try to get the most donations.
How Mightycause works
Mightycause provides a free starter plan that supports unlimited campaigns, donation tools that can be embedded on your website and both peer-to-peer (P2P) and event fundraising.
For $99/month, the advanced plan offers access to a CRM dashboard, email marketing tools, data integration tools and a donation form that can be embedded in your website.
Fees
- Processing fee of 2.9% plus $0.30 per donation for personal campaigns
- Processing fee of no more than 2.2% + $0.29 per donation for charitable campaigns
- Monthly rates from US$59 to US$99
Pros
- Expert guidance from a fundraising coach
- Donors can choose to cover processing and platform fees as part of their donation
- Try the advanced plan with a free 14-day trial
Cons
- Less visibility than bigger-name platforms
- Users complain about a glitchy website
7. FundRazr
This Canadian crowdfunding site has something for every campaign. FundRazr can work with you to access your funds right away or wait until you’ve reached your goal. It’s especially great for non-profits, offering a service that connects you with people who are interested in getting involved in your fundraising efforts.
How FundRazr works
Donation campaigns are free to create, and you can choose from keep-it-all or all-or-nothing. Campaigns are subject to varying fees, though contributors are allowed the option to cover fees.
Fees
- Platform fee of 0% (free tier) or 5% (standard tier)
- Payment processing fee of 2.9% plus $0.30
- Nearly Free Pricing plan allows fundraisers to create their own pricing scheme
Pros
- Versatile design platform allows you to personalize your campaign
- Intuitive website that is easy to use
Cons
- Backers are typically limited to your personal network
- Takes some time for your campaign to go live
Crowdfunding in Canada not for you? Compare online business loans
Bottom line
Crowdfunding platforms in Canada give users a lot to sift through in order to find the best match for their business or idea. The seven listed here should provide a great starting point for potential users to evaluate their options. When making your decision, be sure to remember potential fees, whether the site adopts an all-or-nothing model, and when you can expect to receive the funds raised.
