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 sites have offered a potential solution to these woes by letting would-be customers chip in to get a business off the ground.
Crowdfunding 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.
You’ve no doubt heard of this Brooklyn-based platform – in some circles, “Kickstarter” is to crowdfunding sites 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.
How exactly does crowdfunding work?
- 5% of all funds raised as a Kickstarter fee
- 3% plus $0.20 payment fee for pledges more than $10
- 5% plus $0.05 for pledges under $10
- Name recognition means you’ll likely have more visibility
- You get a small fee break for smaller donations
- 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
More than 50 million donors 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 an overall platform fee and a fee on each donation.
- 0% platform fee (for personal campaigns started in CAD, USD, GBP and some European countries)
- 2.9% plus CAD$0.30 transaction fee for each donation
- Widely recognized brand, which can help with fundraising
- GoFundMe waives processing fees for charities
- There are no deadlines or minimum fundraising goals
Indiegogo is the crowdfunding site 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.
- 5% platform fee
- 3% plus CAD$0.30 transaction fee per donation
- $25 transfer fee every time funds are sent to your bank account
- Focused on creative services, marketing and communications, prototyping, production, retail, licensing and distribution
- Lower fees for charitable campaigns
- 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 sites
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:
Crowdfunder focuses on investors and entrepreneurs looking to raise equity for their campaigns. More than 15,000 individual and institutional investors on the site have funded more than 100 projects to date, with an average fund of $1.8 million. Crowdfunder contributes to startups at all stages and has fundraising coaches on hand to share industry knowledge and help optimize your pitch.
Crowdfunder recently launched a Canadian version of its site, Crowdfund.ca. Since hopping across the pond, Crowdfund.ca has been a go-to website for people raising money for charities, businesses and sports teams. Plus, there’s no commission fee for projects in response to COVID-19.
How Crowdfunder works
Crowdfunder is an equity-based platform that shies away from reward-based crowdfunding. Instead, investors claim a small stake in your company and can get a return in future profits.
- US$299-$499 monthly membership fee
- Can benefit fundraising at all stages
- Easy for investors to browse niche ventures
- High monthly fees could deter new businesses
- No access to smaller investors
5. GoFundMe Charity (formerly CrowdRise)
GoFundMe Charity, as the name suggests, is specifically built for charitable foundations and non-profits. Household name charities such as Me To We, the American Red Cross, UNICEF and many other organizations regularly turn to this crowdfunding site to raise money.
GoFundMe Charity launched in 2018 after GoFundMe acquired CrowdRise, a for-profit crowdfunding platform that helped organizations raise money for charity.
How GoFundMe Charity works
GoFundMe Charity is a flexible fundraising option for people or events centred on charitable giving. You have no goal requirements or deadlines to meet, and its customer service team lends a hand with marketing your campaign.
As of 19 June 2020, it offers Free and Flex plans; however, Free plans will only be available for a limited time. Clients with enterprise-level needs can contact the company directly to discuss a unique pricing arrangement.
- Free plans offer a 0% platform fee and a fee of 1.9% plus US$0.30 for donations
- The Flex plan comes with a 3% platform fee and a processing fee of 2.2% and US$0.30 per donation
- Integrates with popular applications like WordPress, Salesforce, Mail Chimp and more
- Flex plan users can allow donors to include the platform’s fees in their donations
- Provides “Donate” button that can be embedded into users’ websites
- Unlimited events, pages, campaigns, team members and fundraisers
- Must have a PayPal business account and be enrolled in the PayPal Giving Fund to get on the GoFundMe Charity list
- Donations made after the 15th of the month are received the following month
6. 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 websites 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.
- Platform fee of 5% to 15% 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 within the US (international backers will pay a surcharge to cover additional shipping costs)
- Expert guidance with campaign review and management
- After your campaign ends, you can sell your product on the platform
- Potentially high fees
- Smaller backing community
7. 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.
- 8% platform fee
- 3% to 5% payment processing fee
- 2.9% plus US$0.30 fee per donation
- Provides additional grants to projects under specific categories
- You maintain complete ownership and intellectual property rights
- No funding if your campaign doesn’t reach its goals
- Platform comes with high fees
8. 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.
- 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
- 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
- Less visibility than bigger-name platforms
- Users complain about a glitchy website
Do you have an idea for a product or technology that could make you rich – if only you had the funding? And the designer, the marketing team and everything else? Quirky was built with you in mind: It’s a site that crowdsources ideas.
How Quirky works
You submit your idea and the Quirky community decides if it’s worth funding. If greenlit, you receive a small percentage of royalties from your produced idea. Since you’re not doing the heavy lifting, you don’t end up with a large percentage of profit from your royalties.
- Instead of a flat rate, investors get a share of the money earned by your product over time. The amount they get varies from product to product
- Minimum effort in developing a product
- No fees – so you don’t stand to lose much
- Limits your control over product design
- You only get 1.5% to 5% of your revenues
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.
- Platform fee of 0% (free tier) or 5% (standard tier)
- Payment processing fee of 2.9% plus $0.30
- Pro tier allows professional fundraisers to create their own pricing scheme
- Versatile design platform allows you to personalize your campaign
- Intuitive website that is easy to use
- Backers are typically limited to your personal network
- Takes some time for your campaign to go live
Crowdfunding not for you? Compare online business loans
Crowdfunding sites give users a lot to sift through in order to find the best match for their business or idea. The 10 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.