business plan for crowdfunding platform

"One strategy that worked well for us was leveraging our niche market effectively. By focusing on book lovers, we created products that deeply resonated with a specific audience. Our “Book Lovers’ Soy Candles” became the best-selling candle business on Etsy in 2014. This taught me the importance of understanding your target market and tailoring your campaign to meet their interests and needs.

"Another key element was collaboration and community engagement. Back in 2008, I started a local artist and farmers market, which honed my skills in creating community-driven events. Sponsoring events and donating products to local charities and non-profits significantly increased our brand visibility. For anyone running a crowdfunding campaign, building a community around your product is crucial. Engage with local events, offer samples, and create a buzz around what you're offering.

“Lastly, clear and consistent communication is vital. When we launched our own website in 2015, we ensured that our branding, messaging, and visuals were all cohesive and appealing. This consistency built trust with our customers. For a crowdfunding campaign, this means having a clear project outline, regular updates, and professional visuals. Show your backers that you have a solid plan and the capability to deliver on your promises.”

2. Sahil Kakkar , CEO of RankWatch , says, “Offer tangible rewards and sell passionately.”

"When we launched RankWatch, a platform designed to enhance SEO strategies, crowdfunding was crucial for our initial financing. Our product, an innovative tool for real-time SEO monitoring and adjustments, resonated well with tech enthusiasts and marketing professionals, who constituted our main backer base. We focused heavily on transparent communication and regular updates about the development process, which helped build trust and maintain interest.

"The most effective strategy was offering tangible rewards aligned with our product's future usage, such as early access and discounted subscriptions. For those looking to run their crowdfunding campaigns, my tip is to ensure your rewards are enticing and directly related to your product or service.

“Additionally, leverage every possible channel to share your story passionately and authentically. Engaging potential backers emotionally can significantly boost your campaign's success. Keep your campaign message clear, concise, and compelling to maintain momentum and interest throughout your crowdfunding journey.”

3. Adam Garcia , Founder of The Stock Dork , says, “Highlight personal success stories.”

"Running a successful crowdfunding campaign taught me the value of storytelling. Our product, a smart budgeting app, resonated with backers because we highlighted personal success stories and demonstrated tangible benefits.

“For others venturing into crowdfunding, focus on building a genuine connection with your audience and providing clear, compelling reasons why your product matters. Authenticity and a well-crafted narrative can make all the difference.”

4. Alari Aho , CEO of Toggl , says, “Build community and foster trust.”

"Authentic storytelling played a pivotal role in our crowdfunding success. We crafted a compelling narrative around the problem our product aimed to solve, highlighting the real-life struggles and aspirations of our target audience. By connecting emotionally with our backers and sharing our journey transparently, we fostered a sense of community and trust, motivating supporters to rally behind our campaign and spread the word to their networks.

"Our product was Toggl Plan, a visual project management tool designed to streamline collaboration and increase productivity for teams of all sizes. With intuitive drag-and-drop functionality and customizable timelines, Toggl Plan empowers users to plan, track, and manage projects with ease, allowing teams to stay organized and focused on achieving their goals.

"Prioritize building a community around your product before launching your campaign. Engage with potential backers early on through social media, forums, and events, soliciting feedback and involving them in the product development process. By cultivating a loyal following and establishing credibility within your niche, you'll have a ready-made audience eager to support your crowdfunding campaign when the time comes.

“Additionally, don't underestimate the power of authenticity and transparency. Be honest about the challenges and risks involved in bringing your product to market, and demonstrate your commitment to delivering value to backers. By fostering trust and credibility, you'll not only attract more backers but also build long-lasting relationships that extend beyond the campaign.”

5. Yoyao Hsueh , Founder of Topical Maps says, “Create pre-launch buzz and engage visually.”

"Running a crowdfunding campaign for an advanced topographical mapping tool, success came from creating a compelling narrative and engaging visuals. Building excitement through a pre-launch email list and social media buzz was crucial.

“My tip: Connect emotionally with your audience, show them the problem your product solves, and maintain transparency throughout the campaign. Authenticity builds trust and drives support.”

6. Niclas Schlopsna , CEO of spectup says, “Craft a compelling product narrative.”

"One memorable crowdfunding success story from our work at SpectUp involved helping a client, Emma, launch a unique, eco-friendly travel backpack. Emma's product stood out due to its sustainable materials and innovative design features tailored for modern travelers. The key to her successful campaign was a combination of meticulous planning, compelling storytelling, and community engagement.

"We started by helping Emma craft a captivating narrative that highlighted not just the features of the backpack, but the story behind its creation and the environmental impact it aimed to address. This narrative was crucial in connecting emotionally with potential backers. High-quality visuals and a professional video further showcased the backpack's unique qualities and versatility, making it visually appealing.

"Another crucial element was building a community before the launch. Emma engaged with potential backers through social media, sharing sneak peeks and gathering feedback. This not only created buzz but also fostered a sense of ownership among early supporters. When the campaign went live, these engaged followers were ready to contribute and spread the word.

“Specific tips for others looking to run successful crowdfunding campaigns include starting with a strong, relatable story; investing in professional visuals; and actively engaging with your target audience well before the campaign launch. Setting realistic funding goals and offering attractive, meaningful rewards can also significantly boost your campaign's appeal.”

Ultimately, crowdfunding is a viable option for a lot of entrepreneurs looking to raise capital. It's a relatively accessible, effective option for several businesses that might not have the prominence or resources required to garner investments conventionally.

That said, hitting your fundraising goals via crowdsourcing isn‘t some magic bullet — so if you decide to leverage one of these platforms, be sure to set feasible goals, thoroughly understand the service you go with, and work to cultivate the buzz you’ll need to succeed.

Editor's note: This post was originally published in June 2019 and has been updated for comprehensiveness.

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The Crowdfunding Business Model Explained: A Complete Guide

Uncover the intricate details of the crowdfunding business model in this comprehensive guide.

Understanding the Basics of Crowdfunding

Crowdfunding is a method of raising funds for a project or venture by pooling small contributions from a large number of individuals, typically via the internet. It allows project creators to reach a wide audience and secure the necessary funds to turn their ideas into reality.

Definition of Crowdfunding

Crowdfunding has revolutionized the way individuals and organizations raise capital for their projects. It provides a platform for creators to showcase their ideas and connect with potential backers who are interested in supporting innovative and impactful initiatives. By leveraging the power of the crowd, crowdfunding has democratized the funding process, allowing anyone with a compelling idea to access the necessary financial resources.

One of the key features of crowdfunding is that it operates on a principle of collective participation . Instead of relying on a single large investor or institution, crowdfunding campaigns rely on the collective contributions of numerous individuals. This not only spreads the financial risk but also creates a sense of community and shared ownership among backers.

The Evolution of Crowdfunding

Crowdfunding has come a long way since its inception. Initially, it was primarily used by artists and musicians to fund their creative endeavors. These individuals saw crowdfunding as a way to bypass traditional gatekeepers, such as record labels or art galleries, and directly connect with their audience.

As the concept gained traction, crowdfunding platforms like Kickstarter and Indiegogo emerged, providing creators with dedicated spaces to showcase their projects and attract backers. These platforms offered a streamlined and user-friendly experience, making it easier for both creators and backers to participate in crowdfunding campaigns.

With the rise of technology and the increasing interconnectedness of the world, crowdfunding has expanded beyond the realms of art and music. Today, it encompasses a diverse range of projects, from technology startups seeking seed funding to social causes aiming to make a positive impact on society.

Entrepreneurs and innovators now turn to crowdfunding as a viable alternative to traditional funding sources. By presenting their ideas to the public, they can gauge market interest and validate their concepts before investing significant time and resources. This not only reduces the risk for creators but also empowers backers to support projects they truly believe in.

Moreover, crowdfunding has become a powerful tool for social change. Non-profit organizations and individuals passionate about making a difference can leverage crowdfunding platforms to rally support for their causes. From funding medical treatments for individuals in need to supporting environmental conservation projects, crowdfunding has proven to be a catalyst for positive change .

The evolution of crowdfunding has also given rise to various models and approaches. Reward-based crowdfunding, where backers receive a tangible reward in exchange for their contribution, is one of the most common models. Equity crowdfunding, on the other hand, allows backers to become shareholders in the project or company they support. Additionally, donation-based crowdfunding enables individuals to contribute to charitable causes without expecting any material return.

In conclusion, crowdfunding has transformed the way projects and ventures are funded. It has created a new paradigm where individuals can directly connect with their audience and secure the necessary resources to bring their ideas to life. As the concept continues to evolve, crowdfunding is likely to play an increasingly significant role in shaping the future of innovation, creativity, and social impact.

Types of Crowdfunding

Crowdfunding has revolutionized the way individuals and businesses raise funds for their projects or ventures. With the power of the internet, crowdfunding platforms have emerged as a popular means of connecting creators with potential backers. There are several types of crowdfunding, each with its own unique characteristics and benefits. Let's explore them in more detail:

Donation-Based Crowdfunding

In donation-based crowdfunding, backers contribute money to a project without expecting any financial returns. This type of crowdfunding is often used for charitable causes, community initiatives, or personal projects. It allows individuals to support causes they believe in and make a positive impact on society. From funding medical treatments for individuals in need to supporting disaster relief efforts, donation-based crowdfunding has facilitated countless acts of generosity and compassion.

Rewards-Based Crowdfunding

Rewards-based crowdfunding allows project creators to offer incentives or rewards to backers in exchange for their contributions. These rewards can range from early access to products, exclusive merchandise, or personalized experiences. This type of crowdfunding is commonly used by entrepreneurs, artists, and innovators who want to engage their supporters and provide them with tangible benefits. Backers not only get to be a part of the project's journey but also receive unique perks that make their contribution even more rewarding.

Equity-Based Crowdfunding

Equity-based crowdfunding involves offering shares or equity in a company to backers in exchange for their investments. This type of crowdfunding is commonly used by startups or businesses looking to raise capital while involving a broader base of investors. Equity-based crowdfunding allows individuals to become shareholders in a company, sharing in its success and potentially earning financial returns if the company performs well. It provides an opportunity for investors to support promising ventures and diversify their investment portfolios.

Debt-Based Crowdfunding

Debt-based crowdfunding, also known as peer-to-peer lending, allows individuals or businesses to borrow money from a group of lenders. The borrowers repay the loans with interest over a specified period. This type of crowdfunding provides an alternative to traditional lending institutions, giving borrowers access to funds without the need for extensive paperwork or stringent eligibility criteria. It also offers lenders the opportunity to earn interest on their investments, making it a win-win situation for both parties involved.

As crowdfunding continues to gain popularity, new variations and hybrid models are emerging, catering to different needs and industries. Some platforms focus on specific niches, such as creative projects, social causes, or real estate investments. Others combine multiple types of crowdfunding, allowing creators to customize their campaigns and attract a diverse range of backers. The flexibility and accessibility of crowdfunding have opened up new avenues for innovation, entrepreneurship, and community support.

The Crowdfunding Business Model

Crowdfunding has become a popular method for individuals and businesses to raise funds for their projects. It operates on the principle of the collective, where project creators outline their ideas, set a funding target, and create a compelling campaign on a crowdfunding platform. Backers then have the opportunity to contribute to the project financially. If the funding target is met or exceeded within a specified time frame, the project creator receives the funds and can start working on their project.

How Does Crowdfunding Work?

At its core, crowdfunding is a collaborative effort that brings together project creators and backers. It provides a platform for individuals and businesses to showcase their ideas and gain support from a community of like-minded individuals. The process begins with project creators crafting a compelling project pitch that resonates with potential backers.

Once the project is launched on a crowdfunding platform, backers have the opportunity to contribute financially. They can choose to make a small donation or invest a larger sum, depending on their level of interest and belief in the project. The crowdfunding platform acts as an intermediary, facilitating the collection and distribution of funds.

For a crowdfunding campaign to be successful, it is crucial to have a well-defined funding target that covers the costs of the project. This target should be realistic and achievable, taking into account the resources required to bring the project to fruition. By setting a clear funding goal, project creators can provide transparency and clarity to potential backers, instilling confidence in their ability to deliver on their promises.

Key Components of the Crowdfunding Business Model

The success of a crowdfunding campaign depends on various factors. Understanding and implementing these key components can significantly impact the outcome of the campaign:

• A compelling project pitch: A well-crafted project pitch is essential to capture the attention and interest of potential backers. It should clearly communicate the purpose, goals, and unique aspects of the project, making it stand out from the crowd.
• A well-defined funding target: Setting a realistic funding target is crucial to ensure that the project's financial needs are met. It should cover not only the direct costs of the project but also any additional expenses that may arise during the implementation phase.
• An effective marketing strategy: To reach the target audience and generate interest in the project, a comprehensive marketing strategy is necessary. This may include social media campaigns, email marketing, influencer partnerships, and other promotional activities.
• A diverse range of rewards or incentives: Offering attractive rewards or incentives to backers can motivate them to contribute to the project. These rewards can range from exclusive merchandise and early access to the final product to personalized experiences or recognition.
• Transparency and communication: Maintaining open and transparent communication with backers throughout the campaign is vital. Regular updates, progress reports, and addressing any concerns or questions promptly can help build trust and keep backers engaged.

By incorporating these key components into their crowdfunding campaign, project creators can increase their chances of success. However, it is important to note that crowdfunding is not a guaranteed source of funding. It requires careful planning, effective execution, and continuous effort to attract and retain backers.

Benefits of Crowdfunding

Advantages for project creators.

Crowdfunding offers numerous benefits for project creators:

• Access to capital without the need for traditional funding sources.
• Validation of the project's viability and market demand.
• Building a community of passionate backers and supporters.
• Market exposure and potential for media coverage.

Advantages for Backers

Backers also reap rewards from participating in crowdfunding campaigns:

• Early access to groundbreaking products and services.
• Supporting innovative ideas and helping them come to fruition.
• Opportunities to engage directly with project creators.
• Being part of a community passionate about driving change.

Risks and Challenges in Crowdfunding

Potential risks for project creators.

While crowdfunding offers immense potential, there are risks associated with it:

• Failing to reach the funding target and not receiving any funds.
• Meeting the funding goal but struggling to deliver on promises.
• Managing the expectations and demands of a large number of backers.
• Protecting intellectual property and ensuring confidentiality.

Potential Risks for Backers

Backers should be aware of the following risks when supporting crowdfunding campaigns:

• Projects not meeting expectations or failing to deliver rewards.
• Inability to get a refund if a project fails to materialize.
• Fraudulent campaigns or misleading information.
• Unforeseen delays in project timelines or production.

As you embark on your crowdfunding journey, it is essential to carefully assess the risks and rewards associated with it. By understanding the crowdfunding business model, types of crowdfunding, and the advantages and challenges it presents, you can make informed decisions as a project creator or backer. Crowdfunding has opened up exciting possibilities, offering a platform for creativity, innovation, and community-driven support. So whether you have a brilliant idea in mind or are looking to back the next big thing, dive into the world of crowdfunding and be part of the growing movement that is reshaping the way projects come to life.

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How to market a crowdfunding platform [10 best strategies]

Important: this article is meant for crowdfunding platform owners and not for the fundraisers looking to promote their campaigns at crowdfunding platforms.

As a company that helps financial companies and startups build crowdfunding and investment platforms, we get quite a lot of requests every week. Some of them come from seasoned businesses while others are young entrepreneurs making their first steps.

What we find to be a common mistake for early-stage startups is too little a focus on the marketing plan and customer acquisition strategy.

Technology is the foundation and we don’t deny it, but the platform doesn’t sell itself. Investors and fundraisers will need to find out about the opportunity to earn or get funding in some way, or better yet – in several ways.

Despite different go-to-market approaches, each of the crowdfunding frontrunners has found its audience and is increasing the number of campaigns run through the portal year by year.

GoFundMe has formulated the USP that made it stand out and become “the leader in online medical fundraising”.

At early stages, CircleUp and Crowdcube were finding investors through partnerships with other companies such as SecondMarket and TribeFirst. And Kickstarter’s founders promoted their new project through personal networks and blogs.

Marketing offers a wide selection of tools, and you just need to make the right choice. And if you’re still on the fence about how to launch a crowdfunding platform marketing campaign , we are going to help you.

Why market a crowdfunding platform? Numbers first!

In 2020 and 2021, we ran crowdfunding industry surveys among platforms in the UK and Europe and discovered some interesting trends ( the new 2021 report is out by the way! ):

• on average, crowdfunding companies all over Europe spend at least 89,000 EUR to build a crowdfunding platform ready for market;
• 14% of platforms allocate more than 30% of revenue on marketing activities while 41% of the companies allocate 5% or less; 
• organic search, referrals and partnerships are the most popular marketing channel among the platforms surveyed;
• crowdfunding platforms always use a combination of marketing channels to attract investors; only 4% indicate the use of a single marketing channel.

What is a white-label crowdfunding software and how can it help you launch your own crowdfunding platform faster.

While some types of crowdfunding are spared from the regulation, other types are going to face stricter laws. In this article, we will tell you about the FCA crowdfunding rules in 2020 and where they apply.

It has never been a better time to join the party and try your hand in the crowdfunding business. In this article, we will clear it up and explain how to start a crowdfunding website like Kickstarter!

Crowdfunding platforms surely have distinct design features, but they always boil down to how well you understand your target audience. In this article, you will find examples of crowdfunding platform designs that we think nailed it.

Fixed price and time-and-materials are the two primary methods for business analysts to price the value of services provided to clients. In this article, we'll explain how they differ and what we use when we develop solutions for our clients.

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Crowdfunding Basics for Small Businesses

3 min. read

Updated January 4, 2024

Crowdfunding may seem like a modern funding method, but it’s actually been around as far back as the 1700s. However, the diverse options and viability of crowdfunding didn’t take hold until the introduction and explosive growth of the internet.

Now, it presents a potent alternative to traditional business financing allowing you to raise funds while validating your business idea in real time. 

Crowdfunding offers several dynamic platforms to engage a crowd of potential backers, transforming them into your product’s first customers, your most vocal supporters, and sometimes even shareholders.

This guide will help you navigate the crowdfunding landscape, understand how to run a successful campaign, and explore the specifics of crowdfunding platforms. Let’s get started.

• Things to consider before crowdfunding

Before you dive into raising money through crowdfunding, there are a few things you should consider.

How the crowdfunding process works

Crowdfunding may seem fairly straightforward. However, it’s worth reviewing the setup process, how to operate a campaign, and what happens if you don’t reach your funding goal.

Reasons to not crowdfund your next project

Crowdfunding can be a great alternative method for raising funds. However, it’s not always the best option for every business and there are good reasons not to pursue it.

Should you consider equity-based crowdfunding?

Traditional crowdfunding is considered to be a donation. But another option, known as equity-based crowdfunding, allows you to issue small shares of ownership in exchange for capital. Is this a better fit?

How to create a convincing crowdfunding video for your startup

Campaigns with videos attached to them are far more likely to succeed over those that just describe the product, service, or project with text. You just need to be sure your video connects with potential donors.

Books to read before crowdfunding your business

From the history of crowdfunding to inspiring stories covering successful campaigns—these expert-written books are worth the read.

• Kickstarter explained

When you think of crowdfunding websites, Kickstarter is likely the first thing that comes to mind. While it wasn’t the first, its launch alongside IndieGoGo in the late 2000s signaled the emergence of crowdfunding as a major funding source. 

Here are some of our best resources to help you succeed on the platform.

How to launch a Kickstarter campaign

Launching a successful Kickstarter campaign is anything but easy. But if you understand the platform, have a plan going in, and are willing to take the time to do it right—it can be possible.

Tips for running a successful Kickstarter campaign

What makes some Kickstarter campaigns so successful? Aside from understanding the platform it comes down to six specific traits.

Common reasons why Kickstarter campaigns fail

For all of the hype that surrounds successful Kickstarter campaigns, there are far more that never reach their funding goal. To help you avoid that fate it’s worth knowing what causes a Kickstarter campaign to fail.

• Patreon explained

Patreon is a unique platform in the crowdfunding landscape. While many others focus on funding a singular project, Patreon allows for ongoing funding. If you’re a content creator, artist, or smaller media company this can be a great option. 

How to use Patreon to start and fund your business

What does it take to maintain a Patreon profile that consistently satisfies your patrons and helps grow your business? Transparency, communication, and creativity—which the platform mostly sets you up to do.

Examples of great Patreon profiles

Need inspiration to help launch your own Patreon campaign? Here are a few examples that have made the most out of the platform.

Crowdfunding templates and tools

Resources to help you raise capital through crowdfunding sites.

Free one-page business plan template

Make your crowdfunding campaign a success by mapping out your business idea, outlining marketing strategies, and nailing down how much funding you need with this simple business plan format.

Download Template

Prepare for a crowdfunding campaign with LivePlan

Define your vision, crunch the numbers, and win over backers with a detailed business plan and solid financials.

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.

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How to Write a Business Plan

Crafting a mini business plan for a crowdfunding campaign

From Kickstarter and Indiegogo to GoFundMe and everything in between, crowdfunding platforms offer alternative ways to raise money for your small business. Successful campaigns require you to not only reach a certain funding goal but also present the underlying business idea in ways that attract angel investors and other backers.

When creating your crowdfunding campaign, it’s important to share both your vision and your strategy. This information shows potential investors what the business offers and helps them understand its value.

Consider crafting your crowdfunding campaign as a mini business plan, using specific aspects of a full business plan . Here’s how to approach it:

Start with a bullet-point executive summary

Business owners should focus on highlighting the problem their business idea solves, the value it adds, and what makes it different than any other possible solution. Since you’ll lead with an executive summary , use that to capture investor attention immediately and persuade them to continue reading.

Tell a compelling story about what led you to your idea

This section of the crowdfunding project may be more personal than your business plan, because your goal is to engage potential investors. You can touch on some of the elements from the background section of your business plan as they relate to the idea itself or your company’s origin story. This information helps potential investors understand you better, both personally and professionally.

Consider including a brief video in which you share a compelling story about what led to your new product or service. A well-crafted, authentic video like this will help your audience invest emotionally in what you’re creating.

If you can’t use video, make sure the content is in first person (“I”) so it helps your audience connect with you as the founder.

Summarize your business idea with key pain points and value propositions

Identify audience members who want your product or service and help them connect emotionally with your business idea. You can do this by discussing their pain points and how your business could alleviate those specific problems. Use bullet points to keep this section succinct and focused on what your business model can do for target customers.

Provide marketing and strategic direction about how you plan to launch and grow

Crowdfunding investors most often want to know how their financial support will pay off and help you assist others. Include the main points from the roadmap in your business plan that show how you’ll get your product or service into the right hands. Explain how you’ll differentiate yourself and build the company into a sustainable enterprise.

Describe the marketing strategy and any social media channels or tools you plan to use. This demonstrates to your crowdfunding investors how you’ll build brand awareness. Also, share how you plan to generate leads and convert them into revenue.

Highlight the background and expertise you and your team bring to the table

Crowdfunding investors want to meet you and the rest of your team. Build on the biographical information in your business plan by adding pictures. This enhances credibility with your crowdfunding audience and lets them get to know the talent behind the business idea.

Alternatively, add another brief video to the page where key team members introduce themselves. Potential investors can put a face and personality to the expertise, knowledge, and experience shared in the mini-plan.

Offer a time line for launch

Your business plan should include a time line with important dates, including your product or service launch. Like your business plan for other investors, key deadlines on your crowdfunding page show that you have a strategic plan for the marketing and launch processes.

Your crowdfunding fans are anxious to know when they can expect to experience your offer for themselves. Always keep them in the loop about your progress.

Don’t forget the perks for investors

The perks you offer investors are the one aspect of your crowdfunding campaign mini-plan that won’t be in your business plan. To create these incentives for different funding rates, look through other campaigns to see what companies offer. Consider how you can create a similar “ladder of perks” that fits your startup budget while still engaging the crowdfunding community.

Align with the crowdfunding platform’s requirements

You may need to make more than one version of this mini-plan, especially if you plan more than one campaign. Each platform has its own requirements, including content limits. Check out these requirements so you can adapt your mini-plan to fit each platform.

A plan within a plan

You’ve most likely spent hours putting together your business plan . It’s the comprehensive guide and roadmap for your business idea. Make it do double duty by leveraging relevant components for a crowdfunding campaign.

Not only does using your business plan save you from creating the campaign from scratch, but it also maintains consistent messaging to potential investors across fundraising environments. In this way, you can get a bigger return for all that business plan work.

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3 Comments:

More than a year ago

Hi John, Your articles seem to be eye opener with regard to business plan writing. l have an idea to bring about a positive change among Zambians with usage of ITC. Unfortunately most of the crowdfunding platforms are not applicable to Zambia.Kindly give guidance most appropriate platform which l can go for!! All the best

Hi hi I am startup business food and vegetable processing unit please help me

Amidst the pandemic which is increasing day by day ,I would like to start as service as well as profitable outlet as an online delivery of fish, meat and vegetable hub to suply the commodities at their doorstep up on order.as this kind of buiseness will be going to hit the market as people are reluctant to get out as corona cases are increasing day by day

Crowdfunding for Business: How it Works + Options

Benjamin Debonneville

In today's digital age, as a business owner, you're no longer limited to traditional bank loans when you need to kickstart your venture. Have you heard of crowdfunding?

It's revolutionized the way startups and small businesses raise capital. Over $34 billion has been pooled globally via these platforms, making them a go-to for many founders.

Crowdfunding not only offers funds but can also build a community around your product or service. It's a game-changer, especially for startups and SMEs.

But how does it work, and which platform is right for you? Here is our guide for early founders and business owners.

What is Crowdfunding?

Crowdfunding: it's a word we hear often, but what does it really mean? At its core, crowdfunding is a collective effort. Instead of relying on one or two deep-pocketed investors, a business or individual seeks financial support from a wider crowd.

Imagine numerous backers each contributing a small amount to help get your venture off the ground. These campaigns are primarily run online, using platforms that set specific monetary goals within a defined timeframe.

It's not a one-way street, though. Backers often expect something in return for their support. Whether it's a product, a thank you note, or equity, the reward varies based on the type of crowdfunding you choose.

In essence, it's about harnessing the power of many to make your dream a reality. Think of it as a modern, digital-age twist on the age-old concept of pooling resources.

How Crowdfunding Works for Startups

Thinking of crowdfunding for your startup? Here's how it works for startups:

You start by choosing a platform that connects you to potential backers. Set a financial goal and deadline, and present your pitch, explaining your business idea and what backers will get in return for their support.

Platforms may charge a fee, usually after a successful campaign. The catch? Many operate on an all-or-nothing model. If you don’t hit your target, everyone gets refunded. It's a setup protecting backers from losing money on ventures that can't muster enough support.

A successful campaign not only provides capital but also validates your idea and helps build a customer base, setting a solid foundation for your business launch.

Remember, transparency is crucial. Be clear about your financial details to win and maintain your investors’ trust.

Types of Crowdfunding

For early founders, choosing the right type of crowdfunding can be a challenge. Different methods suit different needs.

Here we'll briefly introduce each type, helping you make an informed decision. Simple, right?

Crowdfunding: Understanding the Main Types

1. equity crowdfunding.

When businesses need capital, they turn to equity crowdfunding. Here, investors pool funds for a startup, and in return, they get an ownership slice or equity. This means they're along for the ride, sharing in both growth and potential profits.

It's an attractive route for mature, growth-focused companies. However, there's a catch: while businesses get the needed capital, they do part with some control.

2. Debt Crowdfunding (Crowdlending)

Think of it as the community stepping in where banks often tread. In crowdlending, investors lend funds to businesses they resonate with. These companies then commit to repaying this loan with interest.

While it shares similarities with traditional bank loans, it’s decentralized — the money comes from multiple sources. The beauty? Businesses secure funds without surrendering ownership.

3. Reward Crowdfunding

Imagine wanting to launch a unique product but not sure if the market's ready. Enter reward crowdfunding. Backers chip in, not for equity or interest, but for non-monetary rewards.

It could be the product itself, exclusive merchandise, or behind-the-scenes access. It's an initial show of support for startups and a great way to test the waters before a full launch.

4. Donation Crowdfunding

This is where the heart meets the wallet. In donation crowdfunding, contributors support a cause purely out of goodwill, expecting nothing tangible in return.

Whether it's for an innovative social project, a community endeavor, or an environmental initiative, this type banks entirely on the noble cause and the trust of its backers.

Other Types to Consider

• Profit-sharing/Revenue-sharing: Here, businesses pledge a portion of their future profits or revenues with those who invest. It’s less about immediate returns and more about future gains.
• Debt-securities Crowdfunding: This is for those with an appetite for specifics. Instead of a general loan, backers get a concrete debt security, often a bond, that the company promises to honor.
• Peer-to-peer Lending: It's a digital age take on lending. Individuals lend directly to businesses via online platforms. It’s Crowdlending's close cousin, emphasizing individual-to-business connections.

Pros and Cons of Crowdfunding

Every funding option has its own set of advantages and drawbacks for startups. Knowing them in-depth helps founders make informed decisions.

So, let's weigh the benefits and potential pitfalls of crowdfunding:

Advantages of Crowdfunding

• Stronger Branding: Crowdfunding on your website boosts your brand identity. It’s all about you, not a third-party platform. This directs all media coverage straight to your brand, ensuring sustained interest post-campaign.
• Avoiding Platform Fees: Third-party sites charge fees, sometimes hefty on bigger campaigns. Independent crowdfunding can offer more financial flexibility, potentially saving funds in the long run.
• Flexible Duration: Going independent? Say goodbye to strict 30 or 60-day campaign limits. You set your timeline, allowing campaigns to adapt and grow organically.
• More Backer Information: Kickstarters limit backer data. With independent crowdfunding, you gain deeper insights, fostering stronger connections with your supporters.
• Ideal for Established Audiences: Got a loyal following? Leverage it! Independent crowdfunding caters to those with established audiences, turning fans into backers.

Drawbacks of Crowdfunding

• No Platform Community Support: Opting out of platforms like Kickstarter means missing out on their vast community of repeat backers, a potential goldmine.
• Loss of Anti-Fraud Measures: Third-party platforms have fraud protection. Going independent might raise trust issues, as backers are assured of no strict vetting processes.
• Own Payment Processing: Handling payments yourself can be technical and daunting. You'll miss the convenience of platforms that manage this for you.
• Demanding Marketing for Newbies: Without an existing audience? Be ready for intense marketing. Building a following while crowdfunding independently can be a herculean task.

10 Best Crowdfunding Options for Founders

For founders, selecting the right platform is crucial. With hundreds to sift through, which truly suits your startup?

Here is our curated list of the 10 top crowdfunding platforms to guide your choice:

1. Kickstarter

Kickstarter has stood tall as the go-to platform for creative ventures since 2009. Having successfully funded over 220,000 projects, it boasts a whopping $6.6 billion in pledges. The platform's allure lies in its straightforwardness: set a goal, share your story, and gather backers.

Though famed for innovative products and artistic endeavors, remember it's an all-or-nothing game – miss your target and backers get their money back.

While setting up is free, a funded project owes a 5% fee, plus processing charges. Its focus? Projects are shared with a community, not charity or equity stakes. An iconic choice for consumer-facing ideas.

2. Indiegogo

Indiegogo offers a flexible take on crowdfunding. Launched in 2008 initially for indie films, it now embraces all ideas, having funded over 800,000 projects worldwide. What sets it apart? The choice between fixed and flexible funding.

Miss your goal? With flexible funding, you still keep the contributions. Plus, they've evolved beyond just campaigns. Their marketplace showcases innovative products, making them a go-to hub for cutting-edge ideas.

While it charges a 5% platform fee, it's a favorite for its adaptability, especially for women-owned businesses. Choose Indiegogo for a tailored funding experience.

Patreon stands as a haven for creatives. Instead of one-off projects, it champions a unique approach: monthly subscriptions. Fans support their favorite artists, podcasters, or musicians by choosing their subscription fee, granting them exclusive content in return.

With a payout exceeding $3.5 billion to its 250,000 creators, it’s fueled by 8 million dedicated “patrons.” This isn't about one-time goals; it's about fostering ongoing relationships between creators and their audiences.

While fees range between 5% to 12%, the platform remains a top pick for those wanting sustained artistic support. Dive into Patreon if you're a creator seeking enduring connections.

4. GoFundMe

GoFundMe shines as the beacon for those in need. Primarily recognized for personal causes - from medical emergencies to dream pursuits - it's also a viable option for service-based businesses or nonprofits.

Founded in 2010, GoFundMe boasts a mammoth $15 billion raised through the generosity of over 100 million donors. Whether it's helping someone offset a medical bill, supporting a farmer's educational journey, or rebuilding after a disaster,

GoFundMe is the virtual jar where people drop in their contributions. If you’re seeking heartfelt support for a cause, this platform stands out as a trusted companion.

5. SeedInvest Technology

SeedInvest stands as a beacon for budding startups. Since its inception, it's cultivated a community of over 700,000 investors, channeling more than $465 million into over 250 startups.

Not just a fundraising platform, SeedInvest garners attention from venture capitalists and angel investors alike. However, it's discerning, ensuring only top-tier startups make the cut after rigorous vetting.

An added boon? If your campaign doesn't hit the mark, there are zero fees. With a legacy of fostering business dreams and having raised its own capital notably, SeedInvest epitomizes the nexus between innovation and investment.

6. ArtistShare

Geared towards dynamic startups, WeFunder is an investment powerhouse that's helped over 3,102 founders accumulate $661 million.

Whether you're aiming for a modest $50,000 or a colossal $50 million, WeFunder provides a vast network of over 1 million investors ready to back innovative ideas. Set up your campaign in a mere 15 minutes and join the ranks of thriving businesses funded through this platform.

While it's free to ignite your fundraising journey, successful Regulation CF campaigns have a 7.5% fee. With its transparent pricing and extensive investor reach, WeFunder is the ideal launchpad for scalable startups.

7. MightyCause

Tailored for nonprofits, MightyCause champions relationship-driven fundraising, aiming to empower organizations to make a difference. Not just for one-time campaigns, it offers year-round fundraising, event-centric drives, and even giving days.

With plans starting at $59/month, nonprofits can effortlessly integrate their campaigns with social media and tap into a comprehensive suite of tools.

Trusted by notable entities like NuDay Syria and Doctors Without Borders, MightyCause is the optimal platform for nonprofits aspiring to connect, inspire, and raise funds.

8. StartEngine

For seasoned entrepreneurs eyeing equity crowdfunding, StartEngine emerges as a top choice. It's not just about raising funds; it's about offering equity to everyday supporters who believe in a vision.

With over $500 million raised and backed by the credibility of Kevin O'Leary from ABC's "Shark Tank" as a strategic advisor, it's a platform that speaks of trust and innovation.

Their recent acquisition of SeedInvest has expanded their reach, boasting a network of 1.7M potential investors and a staggering $1.1B in combined capital. Dive into StartEngine, and let the world invest in your dream.

9. Crowdfunder

Hailing from the U.K., Crowdfunder is making waves with its diverse crowdfunding options.

Catering to both rewards and donation-based campaigns, this platform has successfully garnered over £250 million for an impressive 300,000 projects, thanks to its strong community of 1 million supporters.

For businesses and for-profits, a modest fee of 5% applies, with an additional 2.4% for transactions. With its aim to address societal challenges, they've partnered with over 70 organizations to enhance crowdfunding efforts.

10. Funding Circle

Designed for businesses eyeing expansion, Funding Circle provides flexible loans ranging from $25,000 to $500,000. Catering to diverse sectors, from veterinary clinics to cosmetics, they offer competitive interest rates between 4.99% and 26.99%.

With repayment periods spanning six months to five years, their transparent system ensures no hidden prepayment penalties. An online application process, complemented by a dedicated account manager, ensures a seamless experience.

They stand apart with their quick decisions and an extensive range of loan options, including the pivotal Paycheck Protection Program (PPP) for COVID-19 relief. Get started with just a six-minute application and let Funding Circle guide your financial journey.

Final Thoughts

Crowdfunding is revolutionizing how startups and businesses secure essential funding. By tapping into a global community, entrepreneurs get not only capital but also a chance to test their ideas and gain invaluable feedback.

Whether it's through equity, donations, or rewards, each platform offers its unique edge. But remember, the key isn't just in choosing the right platform; it's in presenting a compelling story that resonates with potential backers.

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Crowdfunding for Business: What You Need to Know

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Crowdfunding allows entrepreneurs to use online platforms to raise money for their small businesses. Interested people can give cash to your cause, often in exchange for rewards or equity in your business after you’ve created your fundraising campaign.

Crowdfunding can be an alternative to a small-business loan . It not only gives business owners a relatively inexpensive way to raise capital, it also helps promote a business product or service and build a base of enthusiastic customers.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

How does crowdfunding work for a business?

After picking the crowdfunding platform — and confirming that it can be used for business purposes — you’ll typically complete a business profile on the website. Some crowdfunding companies may want to review your application before they allow you to use their platforms while others let you develop your campaign immediately.

Campaigns typically involve setting a funding goal and a deadline. Some platforms allow you to keep the funds you raise even if you don’t reach your goal, while others don’t. You pay for using crowdfunding platforms typically through a set percentage of the funds you raise, a monthly fee or possible stock in your business.

What are the benefits of crowdfunding?

For small-business owners, the benefits of crowdfunding are twofold: You find funding for your business idea and also get the word out about your product or service.

Crowdfunding allows you to reach a broader group of potential investors. It often starts with you sharing your request for funding with family and friends via social networks.

Unlike a business loan, crowdfunding doesn’t involve raising funds for your business through debt financing . With crowdfunding, there is no loan obligation or a need to pay back the funds.

» MORE: How to get startup funding

What are the different types of crowdfunding?

The two most common types of crowdfunding for small business owners are rewards-based and equity-based.

Rewards-based crowdfunding

In rewards-based crowdfunding , donors receive a product, service or small gift related to the project, with the value depending on the amount donated. For instance, a $5 donation might be rewarded with a handwritten thank you card, while $50 or $100 might bring early access to your company’s product or service.

Rewards-based crowdfunding can be a good option for small business owners looking to get their business off the ground without giving up equity in their business or taking on loan payments.

Here’s how some of the popular rewards-based platforms work:

Fundable, a crowdfunding site specifically for small businesses, allows you to choose between rewards- and equity-based funding (more on this below).

When using Fundable as a rewards-based platform, it's all-or-nothing. You set a goal, determine a campaign timeframe and pick rewards. If you don’t meet or surpass your goal, you don’t collect any funds. Fundable doesn’t limit your campaign length but does say the average falls between 60 to 90 days. You pay a monthly fee starting at $179 to use Fundable and for rewards-based campaigns, there’s an additional fee of 3.5% per transaction.

Kickstarter

A business can use Kickstarter to raise funds for a project. You need to decide on a funding goal amount, a campaign duration (between one and 60 days) and rewards for contributors. It’s also an all-or-nothing funding model so you won’t receive any money if you don’t reach your goal. Kickstarter takes a 5% fee, and payment processing fees range between 3%-5% per transaction.

Indiegogo is similar to the other two platforms: you decide on a target amount, create rewards for contributors and set a campaign deadline (up to 60 days). However, you have the option to keep the funds you’ve raised with Indiegogo even if you don't meet your campaign goal and you can continue to raise funds after your deadline through Indiegogo InDemand. Indiegogo charges a 5% fee on the funds raised for your campaign plus 3% payment processing fees.

MORE: How to choose between Kickstarter vs. Indiegogo

Equity-based crowdfunding

In equity-based crowdfunding , donors receive shares in the company; the number is based on the amount of the contribution. Contributors typically choose to invest in companies they believe will be successful in the future, as the success of the company directly influences the return on donors' investments.

This method of crowdfunding can be a good option for small businesses with solid growth plans. You’ll be giving up a portion of ownership in your business, but you won’t be taking on any additional debt.

Some studies have indicated that gender can play a role in the success of a campaign based on funding type with women entrepreneurs doing better with rewards-based crowdfunding and men entrepreneurs doing better with equity-based crowdfunding.

Here’s how some of the popular equity-based platforms work:

As we mentioned earlier, in addition to offering rewards-based funding, Fundable also offers equity-based crowdfunding at a monthly fee of $179 to use the platform. Equity fundraising goals can range between $10,000 and $10 million when you use Fundable. There is no deadline for your campaign, but you must renew it every 90 days. Fundable recommends setting smaller goals that are achievable.

Wefunder requires businesses that use its platform to raise a minimum of $50,000 from people they already know before opening up their business campaigns to Wefunder investors. If you don’t meet your goal by the funding deadline, you are offered a one-time extension for up to six months. If you are successful in raising the funds, Wefunder takes 7.9% as a fee and charges $1,000 per year as a management fee.

MORE: Business loans from friends and family

Businesses can raise funding through Republic — if they pass the company’s screening process. Republic says that fewer than 5% of applicants are accepted but that 90% or more of those businesses meet their minimum funding goals. Campaigns can run for 60 days. The platform takes a commission of 7% of the cash money raised and 2% of the securities issued, plus payment processing fees up to 2.25%, typically.

Keys to crowdfunding success

Your business stands out in a crowd: A successful crowdfunding campaign relies on your ability to capture the interest of potential donors or investors. This may mean that you have a unique product that fills a consumer void or a strong personal or business story that compels investors to give you a chance.

Investors value your reward: You’ll want to make sure you offer a reward that is compelling enough to capture interest. Rewards can be a product or service, but they can also include personal coaching, classes or exclusive invitations to attend company events.

You have a wide network: Having family, friends and a business network willing to support and promote your cause can amplify your fundraising efforts. Without a strong promotional base, it's harder to reach your financing goals.

Alternatives to crowdfunding

Crowdfunding may work to secure startup financing and generate interest in your product, but it may not be the best solution for long-term business financing. Here are some other ways to fund your business:

Business loans

For small businesses seeking financing, traditional lenders like banks and credit unions are a good starting point. Generally, a bank loan will offer the most competitive rates and terms, but a good credit score and multiple years in business are often required to qualify.

» MORE: Best banks for small-business loans

SBA loans , backed by the Small Business Administration, can be an alternative when you don’t qualify for a traditional bank loan. These loans offer low interest rates and long repayment terms, but also typically require good credit and multiple years in business. If you need funding of less than $50,000, an SBA microloan may be a good option. Microloans can have more flexible eligibility requirements than other types of SBA loans.

Online lenders

If you don’t qualify for a bank loan or an SBA loan, small business loans offered by online lenders are another option. Online business loans often have less strict qualification requirements with some online lenders providing startup business loans and business loans for bad credit . However, these loans often have higher interest rates and shorter loan terms.

Business credit cards

Because qualification is typically based on your personal credit instead of your business history, a business credit card can be a good option for startup funding. A business credit card gives you access to a revolving line of credit you can use for current and future business expenses. It can also build your business credit, making you more appealing to future lenders.

Personal loans

If your business history is too short to qualify for a bank loan, consider a personal loan to fund your business . Personal loan amounts may be smaller than those available with business loans, but rates can be lower for well-qualified borrowers, in some cases.

Business grants

Startup business grants are another funding option to consider. This free funding is offered through government agencies, private foundations and small-business incubator programs. Business grants can be designed for specific groups such as business grants for women or business grants for veterans . However, competition for grant funds is strong and you’ll need to set aside a significant amount of time for research and applications.

Jackie Zimmerman, a former NerdWallet writer, contributed to this article.

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On a similar note...

The Crowdfunding Business Model Explained

Every entrepreneur with a business idea that they think will work has a vision. Some see the business as a way of providing a better lifestyle for themselves. Others see their product or service disrupting an industry and reaching millions. Whatever the dream may be, they all need to answer this question:

In the past, funding a business venture involved banks, venture capitalists, or using personal funds. But there is another way startups have successfully raised capital. They utilized the crowdfunding finance model. While most people are familiar with the crowdfunding model as a way to raise money for a charitable cause, it has become a way for startups to get the funding they need. This   type of business model  has also proven to provide entrepreneurs and businesses with a boost in exposure.

What is the Crowdfunding Business Model? 

There are several types of crowdfunding associated with this business model. Here are the main types:

How the Crowdfunding Business Model Makes Money

With the popularity of the crowdfunding model, many platforms have emerged in the past 10 years to help creators, startups, non-profits, and individuals raise money for their cause. The platforms themselves are compensated by charging platform and other fees for campaigns. Here are 9 of the most popular and the fees associated with running a campaign. Note that some of these platforms also have processing and other fees that may not be listed below.

Crowdfunding Model Advantages

1. raising capital, 2. market building.

Another benefit of crowdfunding for businesses is the building of a market. As you gain awareness of your business and attract investors, you are also attracting those who see value in your offering. This means that you are either attracting potential customers.

3. Market Validation

4. customer engagement.

Crowdfunding additionally fosters customer engagement. Platforms allow entrepreneurs to engage directly with their backers. This helps create a community of supporters who are emotionally invested in the success of the project. This can lead to valuable feedback. For example, a backer may let you know what they’d like to see in the product before they contribute funds. You’ll also be building customer loyalty. All of which are beneficial for future product iterations or business expansions.

Crowdfunding Model Disadvantages

1. unsuccessful campaigns.

The first risk that everyone thinks of when it comes to discussing this business model is the risk of failure. Simply, crowdfunding campaigns are not guaranteed to succeed. If a campaign does not reach its funding goal, the project may not receive any funds at all. This can be a devastating emotional blow to the fundraisers. Imagine the feeling. All the time, effort, and resources that were invested in the campaign. All may go to waste because a goal was not reached.

2. Risk of IP Property for Idea-Stage Businesses

3. competition.

The level of competition also raises the bar of what is considered a good investment opportunity for backers. High-quality projects with well-developed prototypes, engaging marketing materials, and a strong team often attract more attention and support. This raises the bar for all projects as they strive to stand out from the competition.

4. You Still Need to Find Investors

The crowdfunding business model allows entrepreneurs, innovators, and social activists to access capital and bring their ideas to life. It also allows backers to support projects they believe in and potentially earn a financial return. However, it’s important to note that crowdfunding also involves risks. This model can also be a lot of work. 

10 Types of Ecommerce Business Models and How They Work

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Crowdfunding for business: 17 best sites to get capital for your startup.

As a small business owner, you might be looking for ideas of where to get the capital to take your business venture or startup idea to the next level. After you have made a business plan, invested your own savings, and worked your business as a side hustle for a few months, it is time to raise some real funds.

Heading to the bank for a traditional business loan is not your only option anymore. Crowdfunding platforms where people can invest in your project, idea, or business are all over the internet these days. But what, exactly, is a crowdfunding platform? How do you leverage crowdfunding for business? And, if you do decide crowdfunding platforms are the right move to raise funds for your small business, which websites should you explore?

Let’s jump into everything you need to know about crowdfunding for business: What it is, how to run successful crowdfunding campaigns, and every must-know crowdfunding site out there today for businesses.

What Is Crowdfunding?

First things first. Before we jump into how you can use crowdfunding as a strategy for raising funds for your business, let’s quickly cover what, exactly, crowdfunding is.

Crowdfunding, as the name implies, is when multiple investors (a “crowd”) fund a business or project. So, instead of a small business generating investment from one or two large sources, they appeal to a larger group of potential investors to get the capital they need to move their businesses forward.

But that capital doesn’t always come for free. In exchange for their investment, investors expect something in return—and what that “something” is will depend on the type of crowdfunding a small business decides to use to raise capital.

There are 4 main types of crowdfunding:

• Equity Crowdfunding Equity crowdfunding (also known as equity-based crowdfunding) is arguably the most traditional form of crowdfunding. With equity crowdfunding, small business owners sell equity in their company in exchange for funding.
• Rewards Crowdfunding When you think of the word “crowdfunding,” chances are, you’re thinking of reward-based crowdfunding. Made popular by crowdfunding websites like Kickstarter, rewards crowdfunding is based on rewarding investors with products, experiences, services, or other rewards (hence the name) in exchange for donations from investors.
• Donation Crowdfunding Donation crowdfunding is popular with non-profits and small local businesses. It’s simple: Investors donate money to companies they want to back—and the companies accept the money without any expectation to pay it back.
• Debt Crowdfunding Debt crowdfunding has a similar structure to traditional small business loans—except instead of borrowing money from a bank or lending company, the business borrows money from individuals or small groups of investors. Generally, the terms of debt crowdfunding mirror that of a traditional business loan—including things like a set annual percentage rate and defined payment plan.

Crowdfunding for Business: Best Practices

Now that you know what crowdfunding is (and the different types of crowdfunding), let’s jump into how to make crowdfunding work for your business.

There are a few best practices you’ll want to keep in mind when using crowdfunding to raise capital for your business.

Use the Right Crowdfunding Site

Not all crowdfunding sites are created equal. For example, some are designed as fundraising platforms and are best suited for driving donations, some are designed to create successful campaigns around new product launches, and others are strictly for equity crowdfunding. Before you jump into a crowdfunding venture, make sure to research the different crowdfunding sites on the market, and choose the site that’s the best fit for your needs and business goals.

Create a Clear Strategy to Drive Investor Interest

Crowdfunding has gotten hugely popular in recent years—which means that there are more small businesses than ever using these platforms to raise money. So before you launch a crowdfunding campaign, make sure you’re taking the time to define your strategy . That includes what type of investors you’re targeting, how you’re going to market your crowdfunding campaign and grab the attention of your ideal investors, and how you’re going to convince investors that your business is one they want to invest in.

Communicate With Your Investors

In traditional investing, your business might have one or two investors that have a large sum invested in the company. Crowdfunding is different; depending on the type of crowdfunding campaigns you’re running, you may have hundreds (or thousands!) of individual backers investing small sums. But that doesn’t mean they’re any less interested in their investment—or less entitled to information about how that investment is panning out.

Make sure to regularly communicate with your backers and keep them up to date with how your business/project is progressing. For example, if you’re using rewards crowdfunding to develop and launch a new product, make sure to share regular updates with your investors about how product development is going (including photo and video updates)—as well as up-to-date information about when they can expect to have their product in hand.

Don’t Bite Off More Than You Can Chew

The possibilities for business crowdfunding are exciting. But you don’t want to get so caught up in the excitement that you overpromise. If you want to run a successful campaign, define how much you need in funds raised—and, just as importantly, what you can deliver based on those funds.

For example, if you’re running a rewards-based crowdfunding campaign, set a realistic crowdfunding goal that gives you the capital you need—but don’t accept capital from so many investors that, at the end of the day, you can’t actually deliver the rewards (we’re looking at you, Coolest Cooler). Or, if you’re tapping into equity crowdfunding sites, don’t sell so much of your equity that your business model is no longer sustainable.

Bottom line? A successful crowdfunding campaign can be a great way to hit a funding goal and get financial support for your business—but if you bite off more than you can chew, it can do more harm than good. So define your funding goals, build your strategy accordingly, and don’t go overboard. (That’s how businesses fail with crowdfunding!)

The Best Crowdfunding Sites for Small Businesses

Now that you understand what business crowdfunding is, let’s jump into every crowdfunding site you need to know to effectively manage your next crowdfunding campaign, launch crowdfunding projects, and raise money for your small business:

1. Kickstarter

Kickstarter is arguably the most popular and well-known crowdfunding site on the internet. The company has helped millions of artists, musicians, filmmakers, designers, small businesses, and other creators raise over $6.7 billion to fund more than 225,000 projects successfully. It is an all-or-nothing situation with funding as you have to meet the goal you set within the allotted time or everyone gets their money back.

It is free to create a project campaign on Kickstarter, but if you successfully get funded, a 5% fee is owed from your collected funds. You will also get charged processing fees between 3% and 5%.

2. Indiegogo

Indiegogo doesn’t just offer live crowdfunding campaigns, they also have a marketplace for innovative products. They have helped entrepreneurs raise well over $1 billion for more than 800,000 projects. Find out if your idea has legs—and the foundation for a successful campaign—and raise starter capital with Indiegogo’s “global network of early adopters.”

With this crowdfunding platform, you don’t have to stop raising money at a specific time. There are no fundraising targets or deadlines and you can apply equity, offer securities, revenue-sharing, and even cryptocurrency sales.

Indiegogo charges 5% in platform fees for all projects. If you’re raising money for a cause, you don’t have to pay any fees with Indiegogo’s sister platform—GoFundMe.

3. Crowd Supply

Whether you want to bring a family recipe to market or build electronics, Crowd Supply can help you. Their mission is to “bring original, useful, respectful hardware to life” has come to fruition with 80% of its launched projects being successfully funded (2x more than Kickstarter). The average amount raised per successful project is $61,000 (6x more than Kickstarter for comparable projects). Crowd Supply also boasts that 100% of their successfully funded campaigns have delivered to backers (or are on track to do so)—which is a higher success rate than other platforms.

Crowd Supply helps project owners with everything from launching campaigns to marketing to customer support to order fulfillment. In exchange, you’ll pay a percentage of gross campaign sales (not including processing fees)—typically 12%.

4. Crowdfunder

If you’re based in the U.K., you’ll want to check out Crowdfunder. This crowdfunding supports different types of crowdfunding, including both rewards and donation-based crowdfunding for small businesses. To date, the platform has raised over £250 million for over 300,000 projects. The platform also boasts a community of 1 million supporters.

While Crowdfunder doesn’t charge platform fees for charities and non-profits, any for-profit projects (including business ventures) will pay a 5% platform fee (plus 2.4% in transaction/processing fees).

5. Experiment

This is the platform to fund scientific discoveries and scientific research. Experiment backers fund projects that “push the boundaries of knowledge” like dinosaur fossil evacuations to the historical study of medieval monasteries. They fund project scientists without the overhead costs they would have to otherwise face with university grants (which can be 50%–60%).

To date, the site boasts 1075 funded projects/crowdfunding campaigns, over 52,000 backers, and more than $10 million in funds raised. It’s also worth noting that Experiment is an all-or-nothing platform—so if your crowdfunding campaign fails to hit your fundraising goal, no backers will be charged and the project owner won’t receive any funds.

It is free to start a project, but once you receive full funding Experiment charges an 8% platform fee plus payment processing fees of 3%–5%.

Chuffed helps social causes aimed at helping animals, your community, or the environment. This fundraising platform is for not-for-profit companies and cause-based organizations exclusively. Their most successful campaigns have raised an average of $7,000. Nearly 8,000 campaigns have collectively raised $18 million.

Donors pay your payment processing fees. So, a $100 donation would require a $3 fee from the donor. Plus, all donors are encouraged to make a small donation to Chuffed too.

Patreon helps artists, musicians, writers, and creators of all kinds get paid by running a membership business for their fans. This stream of revenue comes from fans paying you a subscription fee of their choosing in exchange for exclusive experiences and behind-the-scenes content. To date, more than $3.5 billion has been paid out to the more than 250,000 creators on the platform—courtesy of Patreon’s 8 million active monthly investors (known as “patrons”).

Patreon charges creators fees between 5% and 12%, depending on the plan you choose (different plans offer different levels of support from the platform). Patreon also charges payment processing fees between 2.9% and 5%.

8. Fundable

Fundable is a successful crowdfunding site specifically designed for startups and small businesses (to date, the platform has helped users raise over $568 million in pledged funds). To get started, create a profile on Fundable and then choose a program. Consumer-facing companies can raise up to $50,000 with their rewards program that allows entrepreneurs to sell their products (that includes taking pre-orders and selling merchandise).

If you’re looking for a higher level of investment, you’ll want to tap into their equity crowdfunding model, which allows companies to raise between $50,000 to $10 million for their product, service, or B2B-based business by seeking investment from accredited investors.

It’s free to create a company profile on Fundable—and once you decide you want to start raising funds, you’ll pay a monthly subscription fee (starting at $179 per month). There are no success fees, but for rewards-based funding, there is a processing fee of 3.5% + $.30 per transaction.

9. WeFunder

Are you a startup looking to raise a solid amount of money in a relatively short time frame? You’ll want to give WeFunder a try. With WeFunder, you can connect with investors (the platform boasts over 1 million investors!) to raise anywhere between $50,000 and $50 million, with most campaigns wrapping up and hitting their goals between 30 and 90 days.

It is free to create a WeFunder profile and they don’t charge any up-front fees. However, for Regulation CF, founders will pay 7.5% of any successful crowdfunding campaigns. For Regulation A, WeFunder charges a flat fee of $375,000 (the equivalent of 7.5% on a $5 million funding round).

10. SeedInvest

Are you a high-growth, early-stage company looking to raise either convertible note funding or run equity-based campaigns? If so, SeedInvest may be the platform for you.

SeedInvest is a go-to for tech startups. If you plan to target priced rounds of equity, be prepared to provide SeedInvest with your pre-money valuation. If it’s convertible notes you’re after, you’ll have to provide the valuation cap, conversion discount, interest rate, and term length. Currently, SeedInvest has a network of over 697,000 investors—and to date, more than $465 million has been raised on the platform.

One thing to keep in mind with SeedInvest? It can be a lengthy process. Once you’ve created an application, you’ll need to go through a rigorous screening process and conduct due diligence before you can create a profile on the site. Be prepared to devote at least 60 days (potentially more!) to the process.

If you raise money through SeedInvest, you should also expect to pay some fees, including a 7.5% placement fee charged on the total amount raised. (That’s only paid on the successful completion of your campaign.) You can also expect a 5% capital or equity fee based on the amount raised and up to $10,000 to cover legal and administrative expenses (for example, due diligence, escrow, marketing, and legal reimbursement).

If you’re looking to crowdfund a more personal passion project, Fundly could be a good resource. Touted as a crowdfunding platform to “raise money for anything,” Fundly makes it simple to crowdfund anything from a community project to a creative endeavor to a big trip. And best of all, they do it with no raise requirements or startup fees involved.

Fundly also allows you to access your money quickly; payments can be withdrawn within 48 hours of a donation. (You can even set up automatic transfers.)

All Fundly users pay a 4.9% transaction fee on donations—plus a 2.9% credit card process fee and $.030 per transaction in the U.S. and Canada. (Rates in the U.K. and Australia differ slightly.)

12. LendingClub

LendingClub provides both personal loans (up to $40,000) and business loans (up to $500,000). But LendingClub isn’t a bank. Here’s how it works for business loans: Business owners apply for a loan through LendingClub. LendingClub screens the borrower, then connects them with a network of investors that are able to purchase notes that correspond to fractions of loans. The business owner gets the capital upfront (terms range from 1 to 5 years with fixed monthly payments and no prepayment penalties).

LendingClub has stricter requirements than other crowdfunding sites; for example, in order to apply for a business loan, your business needs to be based in the U.S., have been in business for 12 months or more, have annual sales of $50,000 or more, and the loan applicant must own at least 20% of the business.

In terms of fees, LendingClub charges an origination fee of between 3.49% and 7.49%, a total monthly payment per $10,000 borrowed of between $227 and $1,781 with total annualized rates of 9.77% to 35.98%.

13. FundRazr

If you’re looking to raise funds for corporate social responsibility initiatives or employee and/or workplace programs, you’ll definitely want to check out FundRazr. This platform (which also supports non-profits and individuals) is touted for being simple, straightforward, and easy to use. They also offer a suite of tools (including CRM and social media integrations) to help you take your fundraising efforts to the next level.

Platform fees range between 0% and 5%—and all FundRazr users will be required to pay industry-standard third-party payment processing fees (currently, FundRazr offers payment processing through Stripe and PayPal).

14. StartSomeGood

Are you trying to raise funds for a cause-based mission—like a nonprofit or a socially conscious business venture? If so, be sure to check out StartSomeGood.

StartSomeGood offers two types of crowdfunding: One-Off (which, as the name implies, is designed for one-off projects, like hosting a cause-based event or funding the opening of a community center) and Recurring (which is great if you’re looking for ongoing funds to support your business as it does good in the community). They also offer users a ton of support in getting their campaign off the ground—including access to the platform’s 120,000+ social media followers.

StartSomeGood charges a 5% service fee on all successfully processed pledges.

15. GoGetFunding

From Animals & Pets to Community, Sports to Volunteer & Travel, crowdfunding platform GoGetFunding has a huge variety of categories, making it a popular choice for individual crowdfunding campaigns. However, the site does also offer a Business & Startups category—so if you’re looking for crowdfunding for businesses, this platform is definitely worth a look.

Getting started is easy; all you have to do is create a profile with your fundraiser details—for example, the title of your campaign, target, and currency (GoGetFunding does crowdfunding on an international scale)—and you’re ready to launch.

Another perk of GoGetFunding is that their platform fee is lower than many competitors—just 4%.

16. EquityNet

EquityNet is an equity crowdfunding platform that helps business owners raise capital—between $100,000 and $100 million—by connecting them with their network of accredited investors. To date, more than 1,000 companies have raised over $600 million in capital through the EquityNet platform.

One of the perks of EquityNet is that they accept all legal and ethical companies that apply (according to EquityNet, competitors accept less than 5% of applicants). They also only work with high-quality accredited investors (currently, the investor network has over 20,000 investors, including individuals and VCs)—so you know that the backing you get is coming from legitimate, reliable sources.

Unlike other platforms, EquityNet offers flat-fee crowdfunding; instead of taking a cut of your raised funds, EquityNet charges a monthly membership fee (while the platform offers a free option, paid options range from $299 per month to $2,990 per month).

Seedrs offers U.K. businesses the opportunity to crowdfund, both from their audiences (for example, social media followers) and from a network of individual investors—making this a great one-stop shop for small business owners that want to explore both crowdfunding and more traditional investments.

You only pay fees on Seedrs if you run a successful campaign. If you are successful, expect to pay a 6% success fee, a £2,500 completion fee (excl. VAT), and payment processing fees.

Deanna Debara

About the author

Deanna deBara is an entrepreneur, speaker, and freelance writer who specializes in business and productivity topics. When she's not busy writing, she enjoys exploring the Pacific Northwest with her husband and dog. See more of her work and learn more about her services at deannadebara.com .

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How to Crowdfund a Small Business

Fuel Your Small Business Dreams: Expert Tips to Successfully Crowdfund Your Next Venture.

Published: March 28, 2023 | Updated: April 22, 2024

One of the things we can all relate to is that little fluttering feeling that comes around whenever we come up with a meaningful idea. When that idea can be turned into a reality, things get even better. If you’ve been working hard to create a small business,  crowdfunding can give you just the boost you need to turn that idea into a reality. 

No matter how good a business plan is, sometimes money just doesn’t stretch far enough to get the idea going. Getting a loan isn’t always a smart option, either. However, online platforms like Kickstarter and Indiegogo have led a revolution by allowing people to support ideas they like from all across the world.

Crowdfunding allows you to tap into a base of backers and future customers that support your vision, in exchange for a fee that goes to the crowdfunding platform. With fewer strings attached than a loan or other traditional means of investing in a business.

When it comes to crowdfunding your business, you’ll need to have a well-thought-out strategy that clearly communicates your vision and engages with potential backers. If that seems stressful, don’t worry. While it won’t be easy, it’s less complicated than it seems. 

Key Takeaways

Can i use crowdfunding to start a business, should you crowdfund your small business, four types of small business crowdfunding; a breakdown, three stages and tips for a succesful crowdfunding campaign, during the campaign, after the campaign, where to find the best crowdfunding for small business support and expertise online.

• You’ll want to develop a clear and concise communication strategy and crowdfunding pitch that focuses on your unique idea. 
• Setting clear goals, being transparent with potential backers, and having a strategy in place can help your crowdfunding campaign be more successful. 
• Engaging with backers before, during, and after the campaign is essential. Make sure to be transparent and give regular updates.
• Giving backers incentives is a great way to connect with potential customers.

Crowdfunding has been capturing the attention of entrepreneurs for a while now, and it’s not hard to see why. There’s a lot of power in community and crowdfunding harnesses that power to allow backers to feel like they have a stake in your success. Crowdfunding platforms have huge audiences that are always ready to back the next big idea, after all, that’s why they use the platform. 

So, yes. You definitely can use crowdfunding to start a business, but should you?

Crowdfunding is a super valuable resource for those looking to bring their ideas to life and the best part is that they come with less risk than traditional financing options like banks and investors. Crowdfunding allows you to test your idea among potential customers before you invest significant amounts of time and money into building inventory and setting up shop only to find there isn’t as much demand for your product as you thought.

If you’re on the fence about crowdfunding your small business, here are a few pros and cons to help you out.

What Are the Advantages of Crowdfunding for Small Businesses?

• Crowdfunding opens the door to a pool of potential backers, supporters, and customers without relying on traditional financing methods. No borrowing. No interest rates. 
• Setting up a crowdfunding platform and pitch is very accessible, making it a great option for entrepreneurs at every level. 
• A successful crowdfunding campaign can be helpful in validating a product or service before you commit fully. 
• Some crowdfunding pitches can catch the eye of media coverage and gain lots of exposure.
• Crowdfunding can help raise money for a project, but it can also help build a community around your product or service that ensures continued success outside of the platform. 

What Are the Disadvantages of Crowdfunding for Small Businesses?

• Because crowdfunding is so easily accessible, it can be competitive and it may be difficult to stand out from the crowd. 
• Creating a crowdfunding campaign can be time-consuming, but keep in mind that setting up a successful business also takes time and money. 
• It may be hard to match the high expectations of backers and customers.

Believe it or not, there is more than one type of crowdfunding. There are actually four: equity crowdfunding, backer crowdfunding, reward crowdfunding, and lending crowdfunding. This is crucial information if you’re considering crowdfunding as an option, so let’s go through them all. 

Equity Crowdfunding

Equity crowdfunding is when backers invest in a company in exchange for equity or ownership of your project. If you’re looking to expand your team and invite new people in, equity crowdfunding might be the right choice for you. Do keep in mind that this type of crowdfunding means you’ll lose some autonomy over the project. It’s also important to be up to date when it comes to local, state, and federal laws and regulations as well as the rules and regulations of specific platforms that may not allow for this model of crowdfunding.

Backer Crowdfunding

This is the kind of crowdfunding you probably think of when you hear the word and this is the kind that LaunchBoom helps you master. When you raise money this way, backers support your idea because they want to see it become a reality. For projects that offer solutions to backers’ everyday problems and are looking for a community of shared values, this type of crowdfunding is a great option. 

Reward Crowdfunding

Reward crowdfunding is pretty much like backer crowdfunding, with one difference: backers offer their support in exchange for a reward or perk. This could mean getting early access to products and special discounts, among other incentives. This is a good choice if your product or service is tangible because it makes offering perks easier. 

Lending Crowdfunding

Last, but not least, lending, as the name suggests, is when money is borrowed with the expectation that it will be paid back with interest. The reason this is a cool option is that it’s an innovative twist on more traditional financing and loans, and it can also help a business quickly raise the funds it needs to get off the ground.

When it comes to launching a successful crowdfunding campaign, there are three stages involved, each with different responsibilities and needs: the pre-launch, during the campaign, and after the campaign. Let’s dive into these. 

The pre-launch is one of the most important stages because it’s the work that you do here that will determine your success on launch day. In fact, this is where most of the work of the campaign will be done. From validating your product to building a mailing list of supporters to crafting a prototype, this is the stage we like to refer to as the Test Boom.

Establish Your Kickstarter or Indiegogo Platform

First off, you need to decide where the crowdfunding is happening. Kickstarter and Indiegogo are great online platforms that can help set the foundation of your campaign. They are also the most successful platforms with the largest audiences, so these are the platforms we would recommend. 

That said, deciding which one is right for your business is going to depend on the type of business you’re planning to launch. If you have an idea for a board game, for example, you’ll want to go with Kickstarter as this is one of their most successful categories. Indiegogo, on the other hand, would be better suited if your business falls into the tech category. Here is a link that will help you decide which platform suits your business best.

Understand Your Target Audience, Marketing Goals, and Budget

Next, you need to sit down, create a plan, and learn it backward and forwards. This includes understanding who your target audience is by creating a customer profile, getting to know their interests, behaviors, and habits, setting clear and concise marketing goals with a strong presence, and coming up with an intelligent budget that you can stick to and be transparent about.

Finding your audience and validating your product is all about identifying what your ideal customer is missing in their lives and providing it. This can take a few tries and may you require you to tweak your product or even launch a new one you never intended to create. It’s all about filling your customers’ needs. Here is a more in-depth look at how to validate your product.

Set Realistic Goals for Your Small Business

Now that you’ve got a clear idea of what your product is, it’s time to set specific goals for your project. What is your funding goal? How will the money be used? How much money are you asking for? Making sure you know the answers to questions like these can help you more effectively make your dreams come true.

You’ll want to take everything into account including platform fees, fixed costs, variable costs, average order value, and break-even count.

We’ve put together a handy guide here to help you with setting a funding goal.  

Create a Compelling Video Pitch

A video pitch is key. This element might be one of the most time-consuming and creatively-exhausting parts of the process, but it can really make or break the campaign. Make sure you highlight and showcase who you are, what you’re looking for, and why you’re product is the one that will change your backers lives. You’ll want to create a sense of urgency that leaves backers feeling as though they might miss out if they don’t get behind your brand now. This is why it’s more important to focus your message on how the product will affect the customer rather than displaying your passion for your project.

For more info on how to craft the perfect pitch, check out this guide.

Create Launch Strategy That Brings It All Together

Before the campaign launches, you’ll want to come up with a comprehensive launch strategy that combines all the elements that we just talked about. You’ll want to get people excited about what’s to come and start creating a community of hyped backers that are dying to support your idea. 

Roll Out a Launch Strategy

You’ve already got the launch strategy plan in place and now it’s time to have what we call a Launch Boom. Make sure you’re keeping the campaign visible and active on social media, your website, emails, or any other way you can communicate the message. You’ll want to keep in touch with backers, sending regular updates and keeping the community engaged and excited. Don’t lose that momentum! 

Utilize Social Media and Email Marketing Channels

Let’s not kid ourselves, social media and email marketing channels are everything when it comes to getting the word out, and using them strategically and intelligently is the way to make your campaign blow up. The more traffic you drive toward the platform, the better you can ensure success.

In this case, Facebook is one of the most effective ways to control the traffic you get. With the sheer amount of data that Facebook provides, using its ads is a no-brainer that will allow you to craft your message and see the results in real-time allowing you to tweak your messaging and targets.

Provide Frequent Updates to Backers

Once someone decides to support your idea, they’ll want to stay in the know. Let your backers know what’s going on, and how it’s going, and provide all necessary information to be as transparent and communicative as possible with your new crowdfunding family. You’ve spent time building your mailing list, now it’s time to mobilize them for the launch!

Create Engaging Content

GRAB ATTENTION! And hold it! You want to keep the community you’re building engaged and excited about your project. Use your voice in your own way and find out how to connect with backers and potential supporters. This is where knowing and understanding your target audience and what makes them tick is vital to success.

Use Urgency

You’ll want to create a sense of urgency during the crowdfunding campaign. Most platforms allow for the pitch to be active for a few weeks and we recommend a campaign length of 30 days at most. This ensures that potential backers are feeling the FOMO and decide to support you right away. 

Make a Strong Final Push and Raise More With Add-Ons

Just because the campaign is coming to an end, doesn’t mean it’s time to kick your feet up. You can still give it one last adrenaline-packed push to bring it to the next level. Consider offering incentives, rewards, or bonuses to backers that contribute at higher levels. At the end of the day, every single penny counts. 

Deliver on Promised Rewards (Make Sure Your VIP Backers Get Their Product First)

Now that the campaign is over, it’s time to really get to work and deliver on the promises you made. Depending on your project, you might’ve offered a first grab of the product, special discounts, and more. 

Stay Connected with Backers

Keep backers in the loop by sending regular updates that show progress and make sure you always revise the growth and expansion. After all, backers got behind your idea because they want to see it come to fruition.

Utilize Funds for Business Growth

Obviously, the money raised goes nowhere other than your business. You’ve already outlined what the money is going towards, so get that show on the road. Maybe you’re getting new equipment, making prototypes, expanding product lines, or hiring more people for the team. 

Be Transparent

Whatever you decide to do with the funds, you want to be transparent with your supporters. There’s no easier way to ruin your reputation than to be or appear dishonest. Keep the positive vibes in the air by always being transparent and straightforward about what’s going on behind closed doors. 

Thank Your Backers

We’ve all been taught to say “please” and “thank you”, so make sure not to forget your manners when speaking to backers and the community that supported your project. Tap into the sea of gratitude and make sure all backers know how much their contribution means to you and the project.

No doubt about it: crowdfunding has fundamentally changed the way many small businesses are able to get up and running, and it seems this is only the beginning. The right approach can do wonders for an idea by building awareness and excitement, reaching new potential backers, and creating a community that loves your project as much as you do.

As prepared as you may be, sometimes you need a little help. That’s where LaunchBoom comes in. Crowdfunding marketing is our jam. We’re here to make sure that every aspect of your strategy is executed perfectly. 

The LaunchBoom process focuses on every stage of crowdfunding, from the pre-launch to the height of the campaign and all the way to the post-campaign. All along the way, you’ll find expert guidance, data-driven insights, and a strategy that has raised over $100M for our partners, big and small.

Whether you’re looking to build your brand, generate awareness and excitement, tell a story, create compelling content, or showcase your project, LaunchBoom has got your back.

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Sample Crowdfunding Platform Business Plan

Crowdfunding business plan sample.

Being in themselves platforms for connecting would-be entrepreneurs with micro-investors, a crowdfunding business would not stand successfully without a working and comprehensive business plan .

There are entrepreneurs interested in starting a crowdfunding business, but possess little or no skill in writing a working business plan. It is due to this problem that this article is written to help these classes of people write good business plans through availing them this business plan sample to work with.

With this crowdfunding business plan sample, you can effectively write your own unique business plan by following the laid out format. All you have to do is to brainstorm and supply information unique to your own business.

Here is a sample business plan for starting a crowdfunding business.

– Executive Summary – Products and Services – Our Vision – Our Mission – Market Analysis/Trends – Target Market – Competitive Advantage – Sales and Marketing Strategy – Publicity and Advert Strategies – Sources of Income – Sales Projection – Payment Channels – Source of Startup Funding

Executive Summary

Crowdfunding Connect LLC is a crowdfunding business connecting potential entrepreneurs with micro financiers. Our duty is to provide that critical market place or junction where a potential entrepreneur is able to showcase/pitch his/her business to investors with the most impressive business idea getting full funding from the pool of financiers.

We will be getting a commission on every successful completion of business agreement or investment.

Products and Services

Our products and services are mostly online base, as both interested investors and potential entrepreneurs are provided a meeting platform to transact business. This does not come free however, as we would be earning on every submitted project on our site.

Also, whether the transaction between the investor and the potential entrepreneur is successful or not, we will still be paid for services rendered. However, when the business is successful, a bigger fee is paid to us for facilitation.

Our Vision at Crowdfunding Connect LLC is to build the largest crowdfunding business in the United States within our first decade of operations. We intend achieving this through the promotion of our services through different media, such as the use of the internet, local radio and TV stations and also through word of mouth dissemination from satisfied clients who have benefittedfrom our services.

Our Mission

Is to be the foremost crowdfunding business through excellent customer care service provided by highly motivated work staff, who share our goals and objectives.

Market Analysis/Trends

This sector has witnessed tremendous growth in recent years and this growth is predicted not to wane in the coming years, especially as enlightenment grows among potential entrepreneurs about the benefits of using this service for generation of funding.

As a result of the growth, it has witnessed the emergence of several websites providing similar services to both investors and entrepreneurs. It is expected that in no distant time, this option will overtake other well known options used in funding small businesses.

Target Market

Our target market at Crowdfunding Connect LLC is the assorted business segment, especially the small and medium scale businesses and investors. These startups and the investors will be provided a critical platform where both will meet and discuss the terms of their operations.

Our concern is to facilitate this meet and to ensure that both parties enjoy the services provided. We will not be focusing on any particular business niche, but will be open to all business types and investors interested in either a particular business/businesses.

Competitive Advantage

Our competitive advantage over our competitors is that we will be providing a broad range of services across all business niches, with clients expected from every business area. We will also be engaging the services of the very best of crowdfunding professionals and provide adequate motivations through attractive remunerations that will ensure that their very best is given.

Also, the services of a crowdfunding business strategist will be engaged to ensure exceptional services.

Sales and Marketing Strategies

The sales and marketing strategies to be deployed will include committing resources to ensure that our website always appears on the first page of search engines. This will be possible through enlisting the expert services of IT professionals that will ensure that contents on our websites are search engine optimized (SEO).

Also, links from will be shared on all the social media platforms that will always link back to the website whenever they are clicked.

Publicity and Advert Strategies

The publicity and advert strategies to be deployed will include using social media platforms like Facebook, Twitter, Instagram and all other social media platforms that will advertise the services provided by us. These adverts will be made to look attractive.

All these will be managed by the very best hands, the IT department, due to the reliance of the internet as an important tool of business.

Sources of Income

Our main sources of revenue will be solely from the services rendered by us. Whenever an application for funding is indicated, it involves a fee charged. Part of these funds is remitted to us.

Also, for every successful transaction resulting in investment, Crowdfunding Connect will be benefiting from the transaction costs charged these parties for using our services.

Sales Projection

It is projected that within a three year period, we will experience an impressive revenue growth.

However, the effects of recession, natural disasters and other misfortunes are discounted;

– First Year $250,000 – Second Year $660,000 – Third Year $1,200,000 Payment Channels

Due to the nature of our business which is online based, we will be using electronic means of payment for services. These include the use of cards (credit, debit, smart etc), mobile banking, and electronic banking.

Sources of Startup Funding

The sources of funding for this business will come from savings and also through debt financing. 40% of this funding will come from savings while the rest of 60% of the funds will come through debt financing.

This is a crowdfunding business plan sample you can use to write your own very unique business plan. With the steps made available within this business plan, you will be properly guided to accurately brainstorm on what is unique to your own crowdfunding business.

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How to Crowdfund Your Business

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A crowdfunding campaign can offer a great way to get money for your small business. But running a successful crowdfunding campaign takes more work than just asking for money on a fundraising site―you need to carefully develop and execute your campaign.

That’s why we’ve created this guide to the business crowdfunding process. We’ll walk you through every step of a successful crowdfunding campaign―from verifying that crowdfunding can help your business to getting and using your raised funds. 

Let’s figure out how to get your business funded .

How to crowdfund your small business

• Make sure crowdfunding will work for your business
• Choose the right crowdfunding platform
• Plan your crowdfunding campaign
• Launch your campaign
• Use your new funds

1. Make sure crowdfunding will work for your business

Before you get too invested in crowdfunding, you need to make sure crowdfunding is a workable option for your small business.

See, not all businesses are suited to the crowdfunding process. So you’ll want to consider if your business idea makes sense for crowdfunding, make sure you have the resources to run a campaign, and understand (and plan for) the potential for failure.

Business idea

Some kinds of businesses tend to perform better on crowdfunding sites than others.

As a general rule, product-based businesses raise more funds than service-based businesses . For example, a business offering a new board game, women’s jeans with deep pockets, or a fast device charger will likely do better than an attorney’s office, cleaning service, or restaurant.

Now, that’s not always true. You will sometimes see restaurants, nonprofits, and other service-based businesses run a successful crowdfunding campaign. But in those cases, the business usually has a big following and some standout feature (like a celebrity on staff).

For the most part, though, crowdfunding works best for businesses with exciting new products. If that’s not your business, you may want to explore other business funding options .

Let’s say your business idea has what it takes to fundraise. Do you have the resources to run a good crowdfunding campaign?

These resources include things like time, money, and fans. You might want to ask yourself these questions:

• Can my business wait a month or more to get funding?
• Do I have the skills to create a strong pitch and great marketing materials?
• If I don’t have the skills, do I have the money to pay someone to create those materials for me?
• Does my business have loyal customers that will invest in my campaign?
• Do I have a large social network that I can share my campaign with?

If you can’t answer yes to most of those, then it might not be the best time for you to start crowdfunding. Maybe look at a small-business loan or other kind of funding instead.

But if you have the resources, you’re much more likely to have a successful campaign.

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Success rates

Finally, you need to understand that not every business runs a successful campaign .

In fact, some crowdfunding sites have estimated success rates of below 5% (like GoFundMe ). Sure, others (like Kickstarter ) have much higher rates around 35% or so. Either way, though, many crowdfunding campaigns end in failure.

So you need to have a backup plan. What happens if you don’t get the funding you want? And are you okay spending time and money on a potentially unsuccessful campaign?

To be clear, we really hope your business idea succeeds and you get all the money you want. We just know crowdfunding isn’t a guarantee.

But if you still think crowdfunding sounds like a good fit for your business, then let’s move on to the next step.

2. Choose the right crowdfunding platform

The platform you use matters. See, crowdfunding platforms offer different types of campaigns, rules about who can use them, audiences of investors, and so on. So you’ll want to spend some time finding the best crowdfunding site for your specific business.

Campaign types

For starters, think about what kind of crowdfunding platform you want to run.

• Rewards-based crowdfunding has investors pledge money in return for a reward, like merchandise.
• Equity crowdfunding (also called regulation crowdfunding) lets accredited investors and non-accredited investors offer money in exchange for equity in your business .
• Debt crowdfunding has backers contribute money with the understanding you’ll pay them back.
• Donation crowdfunding lets people donate money to your business without getting anything in return.

Most crowdfunding sites use rewards-based crowdfunding or equity crowdfunding. In either case, make sure you’re willing and able to give investors what they want―whether that’s a reward or equity.

Funding options

You’ll also need to decide what type of funding you want.

• All-or-nothing campaigns require you to meet your fundraising goal to keep any money.
• Keep-what-you-raise campaigns let you keep any money you raise, even if you don’t meet your fundraising goal.

Keeping whatever you raise might sound like the better deal. But keep in mind, if you use rewards-based crowdfunding, you’ll have to deliver rewards to your backers even if you don’t meet your fundraising goal. Can you afford to do that? If not, we suggest sticking with all-or-nothing campaigns.

Other factors

You may also want to consider some additional factors.

Is there an audience you’re aiming for? You may want to target angel investors , for example, or to focus on venture capital firms . Or maybe you don’t care about accredited investors, but you do want to focus on women. Either way, that could influence your platform choice.

Don’t forget about platform fees either. Most crowdfunding sites charge fairly standard fees (around 5% of what you raise for rewards platforms and around 7% for equity platforms), but you will see some variation between platforms.

And finally, think about platform requirements. Some platforms, like Republic crowdfunding , have lots of criteria for businesses that want to crowdfund. Others, like GoFundMe, let pretty much anyone crowdfund. So consider whether or not you want to worry about meeting certain criteria―and whether or not you can.

Platform options

With all that in mind, you’re ready to pick a crowdfunding platform.

Best crowdfunding for entrepreneurs

Data as of 3/21/22. Offers and availability may vary by location and are subject to change.

We’ve listed some of our favorite crowdfunding sites in the table above. You can learn more about them and other options in our rankings of the best crowdfunding for startups .

3. Plan your crowdfunding campaign

Once you’ve picked a platform, you’re ready to work on your campaign. But that doesn’t mean launching it immediately―instead, take the time to carefully plan it out.

This means planning out things like these:

• Fundraising goal
• Campaign length
• Reward tiers (if doing rewards-based crowdfunding)
• Campaign materials
• Marketing materials

Pay close attention to those last two. You’ll want to use images, video, and text to entice potential investors. And make sure you have a strategy for where and how you’ll advertise your campaign.

As you make these materials, remember that a well-designed campaign can make the difference between successful fundraising and coming up short. So you may find it worthwhile to invest in professional help.

If you’re using an equity crowdfunding campaign, like Wefunder , you’ll also need to make sure you meet all the legal requirements for regulation crowdfunding―like filling a Form C. (You may even want to meet with an attorney about this.)

Got everything ready? Then it’s time to crowdfund.

4. Launch your campaign

At this point, you can finally launch your crowdfunding campaign.

Everything you’ve done up to this point will come into play. You’ll be on the right platform with an appropriate fundraising goal and deadline. And you’ll have all the materials you need to get eyes on your campaign and then to get investors to back you.

That doesn’t mean your work is over, though. You should be actively advertising your campaign while it’s active. And likewise, you need to actively manage your campaign page. Answer questions, post updates, and find other ways to interact with existing backers and potential investors.

You may even want to add additional reward tiers (if your platform allows you to) if you find your campaign going really well.

And don’t give up if your campaign doesn’t launch with quite the bang you hoped for―lots of campaigns can gain steam (and investors) over time.

With any luck, you’ll meet your fundraising goal. In that case, congrats on your successful campaign! But your crowdfunding journey isn’t over quite yet.

5. Use your new funds

After running a successful campaign, you’ll get the money you raised.

How long this takes depends on your platform. It can be anywhere from a few days to a few weeks.

Regardless, this means it’s time to deliver on your promises.

• With rewards crowdfunding , you’ll need to send rewards out. Sometimes this takes a while, especially if you’re manufacturing a new product, but make sure you keep your backers updated. Staying in touch will help investors feel confident in your business―and make them more likely to back your future campaigns.
• With equity crowdfunding , you may have new reporting requirements. (As with most things related to regulation crowdfunding, this is the kind of thing you may want to work with a lawyer on.)
• With debt crowdfunding (like with Kiva loans ), your repayment term will start. You’ll need to start making regular loan payments.
• With donation crowdfunding , you don’t have to do anything for your backers. But it’s nice to say thank you.

And of course, it’s time to use your new funds to build your business. (Hopefully you already know how you’re going to do this.)

Remember that crowdfunding doesn’t have to be a one-time thing. Plenty of entrepreneurs crowdfund business idea after business idea. So whether or not your first campaign worked out, you can always launch another one. In that case, it’s back to step one.

Browse hundreds of loan options, custom-tailored to your business and budget needs, from a single, simple platform.

The takeaway

Business crowdfunding can get you funding without a loan.

But as a business owner, you’ll want to carefully consider whether or not crowdfunding is a good idea for your specific business. If you choose to move forward, you’ll need to choose the right crowdfunding platform for your goals and then plan a strategic campaign.

If all goes well, you’ll end up with a successful campaign. You may have some obligations to meet at that point. But if you like, then you can start the process over and create a new crowdfunding campaign for your small business.

Crowdfunding isn’t the only way to get free money for your business. Learn more about startup business grants .

Related reading

• 6 Best GoFundMe Alternatives for Business Crowdfunding 2023
• Crowdfunding vs. Peer-to-Peer Lending: Which Funding Option Will Work Better for You?
• Indiegogo Review 2023
• 6 Ways to Self-Finance Your Business
• Small-Business Grants for Women 2023: 5 Programs with Free Money for Women

Business crowdfunding FAQ

Is crowdfunding good for a small business.

Crowdfunding can be good for some small businesses. It tends to work best for small businesses that have a cool new product (like new tech, a fun game, or innovative clothing) and that have the resources to run a good campaign.

Can you crowdfund to start a business?

Yes, you can crowdfund to start a business―theoretically, anyway.

Some platforms have requirements that mean your business needs to be off the ground (like Kickstarter, which requires functional prototypes of your business idea). And many investors are more likely to back established businesses than brand-new startups.

In other words, it may not be easy to crowdfund a new business―but it is possible.

What is the best way to crowdfund?

The best way to crowdfund really depends on your specific business idea. Some businesses will do better with rewards crowdfunding, for example, while others will do better with equity crowdfunding.

That said, we think most businesses should stick to all-or-nothing fundraising. That way, you won’t get stuck with obligations (like fulfilling rewards) that you can’t afford to keep.

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Subscribe for exclusive access, how to crowdfund like the pros and get (lots of) money for your business idea.

Written by Allie Decker | April 18, 2022

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Crowdfunding has revolutionized who can start a business. Instead of rehearsing pitches for big-wig investors or wining and dining wealthy relatives, self-starters can turn to the masses to fund their small business ideas…but only if they do it right.

Crowdfunding simply means funding a project, business, or other venture by raising small sums of money from a lot of people. This method often includes offering incremental rewards to financial backers, depending on how much is contributed.

Developed over 20 years ago, crowdfunding has matured into a go-to method for those looking to get their ideas off the ground. No longer are dreamers, developers, and go-getters stymied by limited capital or resources. Crowdfunding has brought to life countless projects and businesses, from watches  to beehives  to Foundr’s own coffee table book .

Over the years, Foundr has talked to many crowdfunding pros and compiled their best advice for you on how to get crowdfunding for business startups. Now in shiny infographic form!

Want to display this infographic on your site?

Embed this infographic into your website pages by copying and pasting the code below:

<p><strong>Please include attribution to Foundr.com with this graphic.</strong><br /><br /><a href=’https://foundr.com/crowdfunding’ ><img src=’https://foundr.com/wp-content/uploads/2019/07/Foundr-Crowdfunding-Inforgraphic-High-Res-1.jpg’ alt=’How to Crowdfund Like the Pros And Get (Lots of) Money for Your Idea’ width=’650px’ border=’0′ /></a></p>

Still want to go deeper on this topic? Read on.

Entrepreneurs, Here’s Why Crowdfunding Matters to You

Crowdfunding is changing the way entrepreneurs bring products to market. Crowdfunding allows new projects and ventures to raise money, build brand awareness, and gather priceless feedback—all while still working on product and supply chain development. It also provides an open, honest avenue between businesses and backers, a rare commodity afforded to consumers today.

Thanks to crowdfunding, startups are no longer rewarded based on presentations and pitches. Sure, you should be able to present your business well, but you aren’t limited to doing so on stage or in a boardroom. (To those who hate public speaking, rejoice!)

Crowdfunding also uses your audience and fanbase to your advantage. Traditional methods of startup funding (VCs, bank loans, rich uncles) didn’t care how many Instagram followers or email subscribers you had. Now, crowdfunding allows you to leverage your fans and followers to grow your business, offering rewards in exchange for support.

Crowdfunding has blazed an advantageous trail for entrepreneurs and small businesses. Let’s talk about how to hop on this trail and use crowdfunding to start and fund your venture.

Crowdfunding is Competitive—Make Sure Your Product is Killer

Before we venture too far into the weeds, let’s back it up.

Whatever you’re crowdfunding for, it needs to be awesome . And by awesome, we mean jaw-dropping, eye-opening, flabbergasting … you get the gist.

And we’re not kidding. With over 600 crowdfunding platforms around the world and countless projects entering the crowdfunding scene every day, the competition for both attention and funding has never been greater. In order to stand out, your product has to stand up, tall.

What makes for a good product or venture?

• It meets a need
• It solves a problem
• It excited people
• All of the above

Answer: There isn’t one answer.

Any of these choices would be correct, but you’ve got to pick at least one. (Or, even better, all of them!) Without one of these stipulations, your product could fall through the cracks and be swallowed up by the loud, busy world of crowdfunding. It doesn’t matter which answer you choose, as long as it’s relevant and important to your audience.

Now, determining what’s important and distilling that into a message are two different ballgames. Here’s where to start:

• Determine your target audience and do some research on their demographics and psychographics . Ask yourself questions as they pertain to your product. For example, if you were crowdfunding for a desk accessory ( Gather , for example), you’d want to know your audience’s work habits, organizational preferences, design tastes, and financial capabilities. Gather this information through forums, social media, in-person interviews, or good ol’ fashioned surveys.
• Construct your Value Proposition (VP) . Your value proposition is basically a simple statement that summarizes why someone should buy your product. This statement should convince a backer that your particular offering will add more value than a similar product would. For example, take a look at Arsenal , a current Kickstarter campaign for a digital camera assistant. Their VP reads “Capture amazing images in any conditions and get complete control of your DSLR or mirrorless camera—all from your smartphone.” It summarizes the gist of the product while simultaneously begging you to continue reading.
• Build your crowdfunding campaign around your VP . As you describe your product, communicate with your backers, and post on social media, always return to your VP and how your product is meeting needs, solving problems, and/or exciting people.

Crowdfunding is Won or Lost Before Your Campaign Begins

So, you’ve got a great product that you know  your audience appreciates. What now?

It’s time for the planning and prep phase. This is, hands down, the most important part of crowdfunding.

What’s Your Endgame?

To begin, start at the end. What is the end goal of your campaign? Envision the perfect outcome. Figure out exactly what you need to do to get there. List specific action steps, not broad goals.

Let’s say your end goal is to fund your business and expand your product line. Backtracking to pinpoint specific tasks, you’d have to grow your audience on social media and email so to build awareness around your coming campaign, create marketing and promotional materials for your campaign, such as videos, GIFs, images, and copy, and determine your rewards for financial backers and secure all means of production and distribution.

This list is far from exhaustive. From these tasks, you’d need to backtrack further into weekly and monthly deliverables that ensure you remain on task and adhere to your timeline.

Start Early

Speaking of a timeline, the next step in the planning phase is to start early. (This isn’t so much a step as it is a strong  recommendation.) Planning a campaign is complex and can hardly be completed in a month, much less a few days. Give yourself more than enough time to perfect it.

We’ve heard some say to start planning two to three months before launch, but even six months in advance wouldn’t hurt. Some pieces of campaign preparation can’t be forced or fast-forwarded, so it’s best to give them more time than you think necessary. These include:

• Securing press for your campaign.  Writing a press release and pitching your product and campaign take time, not to mention how long it takes for journalists to respond (or don’t) and schedule your campaign into their content calendar. Because most crowdfunding campaigns are limited to one or two months, don’t wait until your campaign begins to start seeking press. It’s better to have your audience waiting on you than you waiting on press.
• Creating promotional materials.  A crowdfunding campaign is super important and should be treated as such. Subpar photography and copy won’t do, especially if this is your audience’s first impression of your business and/or product. You may have limited funds, but this is where you should invest a good amount. Hire a good photographer and copywriter or do work-for-trade.
• Garnering attention on social media and over email. “Good things take time” hasn’t been truer than when applied to building an audience on social media or growing an email list. And a sizeable audience on both platforms can make or break campaign success. As Khierstyn Ross, crowdfunding product launch specialist, told us, “If you launch your campaign with zero audience, you are launching to crickets.” Launching a campaign to a dependable audience will help you hit the ground running, fast.

Decide What Kind of Funding

It’s important to decide what kind of funding you want for your campaign. The choices are fixed or flexible funding. Fixed funding means that you only keep the money if you raise at least 100% of your funding goal. Flexible funding means that you keep whatever money you raise, even if it doesn’t hit your goal. The choice is entirely up to you, although some crowdfunding platforms only allow one or the other.

Most entrepreneurs go with fixed funding. Why? Well, most projects require a minimum amount of funds to enter production. (This is also how campaigns decide on their funding goal, but more on that later.) Fixed funding ensures that projects can’t be required to deliver if the necessary funding isn’t raised.

When deciding between the two options, look at your overall production and distribution costs. If you can’t create and distribute your product without raising a certain amount of money, we’d encourage fixed funding. But, if you can afford to complete your project if only half the amount is raised, or the product is easily scalable, maybe flexible funding is right for you.

Pick a Platform

Now, it’s time to consider what campaign platform you’ll use. Kickstarter  and Indiegogo  are the top dogs, although there are over 600 available worldwide. Some other cool sites include TeeSpring  (for t-shirts, obviously), Patreon , and Australia-based Pozible .

What’s the difference between Kickstarter and Indiegogo? Between the 2, Kickstarter has a bigger market share. Indiegogo allows a wider range of projects to be crowdfunded, whereas Kickstarter requires that projects create something that can be shared with others. Kickstarter offers fixed funding only, while Indiegogo offers both. If you reach your funding goal, Indiegogo takes 4%, and Kickstarter takes 5%. (Both charge a 3-5% fee on credit card and PayPal payments.)

Other platforms vary in the same ways, offering different packages based on product, project, funding preference, and fees. When determining what’s best for you, make sure you return to step one of the planning processes and remember your campaign’s end goal.

Set Your Funding Goal

After choosing a platform, calculate your funding goal. How much money will it take for your dream to become a reality? (This is the most math you’ll do while reading this post, we promise.)

Time to put your numbers to work. While calculating this, consider everything from production, to shipping, to supplies, to labor. If you’ve paid for advertising or creative help while building your campaign, include this, too, so that you can stay in the green. Don’t forget to factor in fees, and always (always!) add a cushion.

Account for everything, and be sure to analyze every step in your post-funding plan to ensure you’ll have enough money to work with. (Foundr tip: pay extra special attention to shipping costs!)

Create a Killer Project Page

Last, but most certainly not least, create an awesome project page. A professional-grade page that leverages all sorts of media (video, GIFs, images) will do wonders for your campaign. Remember: This is most likely your audience’s first impression of your business and/or product. You may not be pitching to an investment firm, but you should still ensure your brand always puts its best foot forward. Your campaign page is no exception.

As we stated above, shaky photography and last-minute copy just won’t do. You may have limited funds going into this campaign, but this is where you should invest them. Hire solid independent contractors  or do work-for-trade. You should at least feature three main mediums:

An Engaging Video

On Kickstarter and Indiegogo, your video will literally be the first thing your visitors see. They’ll most likely watch this before moving down the page. These few minutes should tell the story of your business, product, and the people behind it. (Remember how we said crowdfunding creates an honest avenue between you and your backers? This video is a chance to capitalize on that.) Be simple and straightforward; don’t waste time on a cheesy commercial-esque film. Be passionate and honest—that’s what sets us apart as entrepreneurs, anyhow. To see an example of a great Kickstarter video, check out Gravity ’s Kickstarter campaign.

Beautiful Visuals

People love  pictures, and your visitors will want to see your project in action. Capture plenty of images to share on the campaign page, and consider creating a few GIFs for fun. Don’t forget about using branded infographics  to break down the more complicated parts of your campaign, such as your proposed distribution timeline or perhaps how your product idea was conceived. Foundr’s own Kickstarter campaign  used visuals to not only showcase its product but also embolden certain words and phrases, effectively catching the attention of every reader and driving their VP home.

Flawless Copy

Professional sales copy can make or break a major marketing campaign, not to mention the small corner of the Internet that is your crowdfunding page. Because your backers and visitors will be looking for clarity and assurance in your copy, this is not the place to cut corners.

Make sure that your writing answers all potential questions and mentions (multiple times) your project’s value proposition. Remind your readers time and time again why they should support your campaign. For a great example, read up on the Indiegogo campaign “ Good Night Stories for Rebel Girls .” It may have you buying a children’s book, even if you have no kids (not speaking from experience or anything).

Make Your Crowdfunding Campaign Soar From the Start

Cue Michael Buffer’s “Let’s Get Ready to Ruuuumble..”

It’s time for your planning and preparation to pay off, literally. After spending months building a beautiful campaign, how do you ensure your efforts don’t nosedive? Listen up.

Day one is critical. In fact, successful campaigns don’t use nearly the entire time allotted to hit their goal. They nail most, if not all, of their target early on with a big initial surge, and this builds a chain reaction of momentum. The week before you launch, remind your audience on social media and email that your campaign is about to begin. Don’t let them forget!

Shoot for lots of funding on day one. Encourage your friends, family, and anyone else close to you to support you early on. Crowdfunding is great in this respect because people outside your target audience can still “donate” to the cause. Funding can have a snowball effect and bump your campaign to the top of the list if successful early on. Consider holding a launch party so that everyone can rally around the campaign as it takes off.

Next, don’t neglect your press coverage. If you’ve contacted writers, bloggers, and journalists, keep your eyes and ears peeled for publications that mention your name. Set up a Google alert so that you don’t miss anything, and be sure to share (read: brag about) any mention of your campaign. This will boost your authority and drive even more backers to your page.

If you can afford it, consider hiring a PR agency with specific crowdfunding experience. An agency, albeit pricey, can point out holes in your promotional strategy and help you fill them while you focus on the bigger picture of the campaign. PR firms focused on crowdfunding can differ in many ways, and the answers to these questions can help you decide which firm is best for you:

• Do they “get” you and understand why you’re pursuing your project?
• Do they understand your target market and have access to this audience?
• Do they have ample storytelling skills?
• Do they have experience with reward planning?

If you’re considering an agency, check out firms like Enventys Partners , Funded Today , CrowdBooster , GoGoStarters , and Agency 2.0 .

Another way to garner press is by reaching out to industry influencers. If you understand where your audience hangs out, you’ll know which influencers can help spread the word about your campaign. A heads up: Most influencers will want your product for free, but that’s a small price to pay for promotion to an extended audience.

Regardless of how you or the press discusses your campaign, always keep your message consistent and clear. Never deviate from your and your project’s story, and stay true to your value proposition message.

Finally, remain open and humble. Crowdfunding will draw a crowd (literally) of commentary and feedback. It invites a kind of spotlight and scrutiny that many people are not ready for.

Most of this will be priceless to you (some corporations have to pay for focus groups to gather that type of intel), but some of it will be hurtful and negative. Sadly, that’s the emotional price to pay when putting yourself out there on the Internet. Stay open-minded and be open to connections with others. You never know how others can help you.

Turn Your Launch into a Sustainable Business

There’s no secret formula to the art of crowdfunding. If you’ve got an awesome product to share with the world, crowdfunding can not only help you make it a reality, but it’ll also transform the way you bring it to market and interact with your audience. To make the most out of a crowdfunding campaign, it’s best to be prepared, consistent, and humble.

Check out our catalog of free business courses , from copywriting to Facebook ads, our instructors will provide you with the strategies to transform your launch into a sustainable business.

About Allie Decker

Allie is a content marketer and freelance writer . She develops high-converting content for HubSpot and has collaborated with the folks at Entrepreneur , Neil Patel, Kogneta, and, BounceX, and more. Her words are bookmarked by entrepreneurs, small business owners, and marketers worldwide. Follow her on LinkedIn and Twitter .

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Crowdfunding For Business: Best Crowdfunding Platforms In 2022

When you need funding to launch your startup or pilot an existing business through the next phase of growth, loans are an obvious choice. But not every business can qualify for a small business loan. Crowdfunding can be an option worth considering. 

How does crowdfunding work for business?

What is crowdfunding? In a nutshell, it means raising capital to fund a business venture from a pool of individuals or groups of investors. Crowdfunding essentially connects business owners who need money with those who want to fund their efforts. For example, you might launch a campaign to raise $100,000 and receive contributions of $1,000 each from 100 individual investors. 

Crowdfunding platforms have brought this type of fundraising for small businesses into the mainstream, with entrepreneurs reaping many of the benefits. Understanding the ins and outs of how it works and what your options are can increase the odds of realizing crowdfunding success. 

7 Best Crowdfunding Platforms

There are a slew of crowdfunding sites that help connect businesses with individuals who want to support them. Here’s a rundown of some of the best crowdfunding sites, along with a brief overview:

• Kickstarter
• StartEngine 
• Republic 

1. Kickstarter

Kickstarter is best known as a platform for individuals and small businesses seeking to raise money for creative projects. Kickstarter campaigns often appeal to filmmakers, podcasters, musicians, artists, gamers, and food and beverage businesses.  The company reports that from 2009 through 2020, nearly 19 million people pledged over $5.4 billion to more than 190,000 projects. 

2. Indiegogo

Indiegogo’s platform is all about fueling and funding creative innovation, primarily for start-up businesses in tech and design. The focus here is on raising money for start-ups and small business owners who are developing or have developed clever and unconventional products. Indiegogo offers entrepreneurs numerous tools to maximize the odds of a successful crowdfunding campaign, including an expert design team and marketing resources. 

3. WeFunder

WeFunder makes investment crowdfunding widely accessible as campaigns can be funded with as little as $100. It aims to be the “pre-Nasdaq stock market.” This popular crowdfunding site caters to a wide range of businesses looking to raise money including healthcare and biotech, consumer products, tech and more.

3. StartEngine

StartEngine is an equity (or investment) crowdfunding platform that allows people to invest in early stage startups. For founders, StartEngine is unique in that companies can raise their first funding round on StartEngine and subsequently give shareholders the opportunity to trade, all on the same site. According to Crowdfund Capital Advisors, it was one of the top five investment crowdfunding platforms in the third quarter of 2020. 

4. Republic 

Republic vets startups and then allow investors to back those ventures starting with as little as $10. Republic says that less than 3% of startups that apply pass through its due diligence and investment committee. Republic Crypto allows investments using the Token DPA — a loan issued by the company

6. SeedInvest 

Seedinvest is also a top 5 equity crowdfunding platform. It features vetted startups (evaluated before allowing them to raise funds on the platform) and the minimum investment is as low as $500. 

7. Kiva 

Kiva is a microlender that allows small businesses to borrow up to $15,000 in the U.S. at 0% with no fees. You’ll raise this money using their platform that allows lenders to lend as little as $25 to support a small business. Backers don’t make money lending on Kiva; instead they are motivated to help small businesses succeed. If you need a small amount of business financing, this can be an excellent option. 

What Are the Benefits of Crowdfunding?

There are several aspects of using crowdfunding websites to raise capital that might appeal to small business owners. 

1. Flexible

Crowdfunding does not typically require the same qualifications as small business loans and other traditional financing options: good credit scores, strong revenues, and/or at least two years in business. In fact, it can be an excellent alternative to startup loans, at least for certain types of businesses. 

If you’re been trying the fundraising route, you’ve probably discovered that very few businesses are successful landing funding through venture capitalists or angel investors . Crowdfunding can be a more accessible option for businesses that want to raise money but don’t have the connections those types of fundraising require. 

This campaign can be used to attract accredited investors (or non-accredited investors if the platform allows it). An investor can review your campaign and decide whether to fund your business, versus you having to make pitch after pitch to raise capital. And keep in mind that some VCs and angel investors participate in crowdfunding campaigns.

2. Find fans 

One of the best benefits of crowdfunding is that backers become fans. They don’t just support your business financially; they may also help promote your business on social media or to friends and family. After all, they want you to succeed.

3. Minimize debt

There are several different types of crowdfunding, which we’ll get to momentarily. But an interesting facet of most of the available crowdfunding options is that the capital raised doesn’t need to be paid back. 

That’s appealing if you need money to get your business up and running but you’re not comfortable taking on debt right out of the gate. Keeping your budget as lean as possible, at least in the beginning, allows you to funnel money into things that can help fuel growth. 

4. Multiple funding options

Crowdfunding isn’t one-size-fits-all and you have the opportunity to choose a funding option that’s best suited to your business needs. That’s helpful if you’ve been wary of taking on a loan because you aren’t generating steady cash flow yet or you only need to raise a small amount of money for your business. You can even start with crowdfunding, and, as your business grows, qualify for small business loans. 

What Are the Different Types of Crowdfunding?

There’s more than one way to raise money from the crowd and some may appeal to your business needs than others. Here’s a comparison of the various avenues for crowdfunding a business. 

• Rewards (or Incentive) Crowdfunding
• Equity (or Investment) Crowdfunding
• Donation Crowdfunding
• Debt Crowdfunding

Reward-Based Crowdfunding

Reward crowdfunding revolves around the idea of exchanging funding for a reward of some type for your backers. Say, for example, your business is developing a brand-new type of reusable water bottle that you think will be a huge hit. You could set up a rewards crowdfunding campaign and once it’s fully funded, use the money from your backers to manufacture 1,000 water bottle prototypes. As a reward, you’d offer each of your backers one of the water bottles. This could be one of the least expensive ways to raise capital for your business, depending on the incentive that’s offered. 

Best Candidates for Reward Crowdfunding

• Businesses with a B2C product they want to bring to market
• Businesses that have refined their pitch
• New businesses seeking validation for a business idea

Equity-Based Crowdfunding

Equity crowdfunding (also referred to as “investment crowdfunding”) offers a way to raise money from investors, rather than focusing exclusively on venture capital, angel investors or loans.Similar to rewards crowdfunding, there’s a trade-off involved with equity crowdfunding campaigns. Your funders become investors, typically in the form shares or debt.  If that’s something you’re comfortable with, equity crowdfunding portals could allow you to raise a significant amount of capital for your business. 

Best Candidates for Equity Crowdfunding

• Businesses that want to build a community and gain exposure to venture capital and angel investors
• Businesses that have some previous experience with fundraising
• Startups with solid business plans that demonstrate how they will scale
• Businesses that have demonstrated viability for their products and/or services

Donation-Based Crowdfunding

If you’ve ever contributed to a GoFundMe, you’re likely already familiar with donation-based crowdfunding. Campaigns launched on donation-based crowdfunding platforms are funded through–what else–donations. The upside of donation-based crowdfunding is that since money is donated, it doesn’t need to be repaid. But you may not be able to raise as much money through donations as you would with equity or debt crowdfunding. 

Best Candidates for Donation Crowdfunding

• Businesses in crisis that already have a loyal customer base
• For-profit businesses focused on philanthropic causes

Debt-Based Crowdfunding

Debt crowdfunding offers an opportunity for investors to crowdfund loans for small businesses and startups. With this type of crowdfunding, you’d be responsible for paying back the money from investors that funded your campaign, typically with interest. Kiva is one example, but many equity crowdfunding sites also allow the campaign to be structured as debt. This type of crowdfunding allows you to sidestep having to turn over equity in your company while investors benefit from the money they earned on their investment. 

Best Candidates for Debt Crowdfunding

• Businesses that have sufficient cash flow to manage debt repayment
• Businesses that may have been unsuccessful in seeking traditional small business loans
• Pre-revenue startups with strong potential to scale
• Established businesses that are looking for sustainable and continued growth

Keys to Crowdfunding Success

Being successful with crowdfunding requires a few things, beginning with a careful analysis of the various types of crowdfunding as well as an understanding of how different fundraising platforms work. 

You will need to start by marketing to your existing network, whether that is business colleagues and friends and family, or to your customers. If you’re afraid to do that, or if you haven’t established a way to keep in touch with your network (email or social media, for example), you will probably have a difficult time crowdfunding. 

You have to decide what’s more important to your business, both in the short- and long-term. In gauging whether your business has what it takes to be a crowdfunding success, here are a few points to keep in mind:

• Your business needs to stand out. There are millions of businesses, individuals and nonprofits jostling for funding in the crowdfunding arena. Making sure that your business is unique and that your project is something that people will want to fund is essential when angling for a fully-funded campaign. A good marketing video and campaign will be essential.
• Investors need to value your incentive or reward . If you’re interested in rewards-based crowdfunding, the reward has to be something worthwhile to your backers. While a handwritten thank you note may be sufficient for some backers, others may only be satisfied by a quality product or service. 
• You need to have a wide network . Networking is an integral part of raising capital for your business when relying on investors. The more people you’re able to connect with, the more you can spread the word about your project and generate interest. 

Crowdfunding for Small Business: Final Word

Crowdfunding, whether it involves rewards, equity, debt or donations, can be a powerful way to raise funds for your business. Whether you’re launching a brand-new start-up or nonprofit or seeking to grow a business beyond the seed stage, business crowdfunding can make it possible. 

You may also be able to use crowdfunding to supplement other small business financing such as business credit cards , invoice factoring or even SBA loans.

Can you crowd fund a business?

In short, yes, you can crowdfund a business. Most successful crowdfunding campaigns for business are not donation crowdfunding like GoFundMe, but instead allow supporters to either pitch in to earn specific rewards or incentives (such as merchandise or an early version of the product) or to become lenders or investors. 

How much does crowdfunding cost?

Costs vary depending on the type of crowdfunding you use and the amount of money you are trying to raise. There will likely be platform fees, payment processing fees (for backers who want to pay by credit card), and typically a fundraiser fee that is a percentage of the amount raised will be charged as well. Equity crowdfunding campaigns typically involve legal fees as well. 

The biggest expense, though, may turn out to be your marketing costs. You’ll need to produce a compelling video and you may need to invest in email marketing, social media marketing etc. 

Can I crowdfund my startup?

Crowdfunding can be an excellent way to fund a startup, but it will take work to find and connect with those who want to support your new business. It’s not the easiest way to get money, but it can be easier than a startup small business loan. Find more startup financing options here. 

Do you pay back crowdfunding?

Crowdfunding structured as a loan will require you to repay the loan. Other types of crowdfunding do not.

This article was originally written on January 30, 2020 and updated on January 4, 2022.

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Gerri Detweiler

Education Consultant, Nav

Known as a financing and credit expert, Gerri Detweiler has been interviewed in more than 4000 news stories, and answered over 10,000 credit and lending questions online. Her articles have been widely syndicated on sites such as MSN, Forbes, and MarketWatch. She is the author or coauthor of five books, including Finance Your Own Business: Get on the Financing Fast Track. She has testified before Congress on consumer credit legislation.

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Business Plan for crowdfunding platform

Business plan for crowdfunding platform has been written for a start up business, launching crowdfunding platform for creative projects in MENA regions.

The aim of this business plan is to assess the most viable entry points to the crowdfunding market from the perspective of a newly founded business entity, identify a sustainable long term business strategy as well as a relevant cost effective marketing approach, while elaborating on the basic underlying ideas with the predicted revenue streams based on the selected business model.

The secondary aim of this business plan is to acquire an initial seed investment for the company to initialise its operations.

The mobile market has seen yet another booming year with 23% year-on-year growth rate in 2015. This market is largely dominated by Japanese, American and Chinese companies and is predominantly free-to-play.

In all, crowdfunding platforms have raised some $5.3 billion and successfully funded more than a million campaigns in 2015, according to a Massolution report, with an 81% increase to $9.1 billion expected for 2017. By 2025, the global crowdfunding market could reach between $90 billion and $96 billion — roughly 1.8 times the size of the global venture capital industry today, according to a study commissioned by the World Bank.

This is a short version of Business Plan, please do not hesitate to  contact us  to make an order or have a consultation for your business.

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