There are a growing number of websites dedicated to raising money for creative and entrepreneurial projects, and fund raising.
While Venture Capital (“VC”) companies invest in multi-million companies that are looking for additional sources of capital, and private high-wealth “Angels” invest in start-up companies as seen in the hit TV Show “The Shark Tank,” VC’s and Angels take ownership in the companies they are investing, and many times they want the controlling interest.
There are other alternatives to consider. Many individuals look to the Internet for crowdfunding sites to obtain start-up capital. Crowdfunding has the potential to revolutionize how entrepreneurs raise money. Every crowdfunding site targets particular industry segments, for profit, and non-profit. Each crowdfunding site is different and the project creator and investors needs to carefully examine each site’s playbook. For many sites, if people like the proposed project they can pledge money to make it happen. If the project succeeds in reaching its funding goal, all backers’ credit cards are charged when time expires. If the project falls short, no one is charged. Not all crowdfunding sites are created equal. Here’s the breakdown on which may be the right one for you.
- Kickstarter – Everything from films, games, and music to art, design, and technology so long as it is for profit venture. One of the most popular sites, boasts that over 9 million people have pledged $2.1 billion and over 96,000 projects have been funded. Kickstarter supports projects projects in arts, comics, crafts, dance, design, fashion, film & video, food, games, journalism, music, photography, publishing, technology, and theater. Kickstarter’s charter is simple: Funding on Kickstarter is all or nothing. The majority of initial funding usually comes from the fans and friends of each project. How does Kickstarter make money? They receive a 5% fee to the funds collected, plus 3-5% of payment processing fees.
- Indiegogo – A very popular fund raising site for profit and non-profit had over 275,000 campaigns launched. Pricing is similar to Kickstarter.
- GoFundMe – For those individuals who are looking to raise money for medical bills, educational expenses, memorials, volunteer trips, and youth sports. Cost: GoFundMe deducts a 5% fee from each donation that you receive plus a 3% processing fee.
Navigate through the following chart to see which of 22 crowdfunding sites may be the best solution for you or click here.
Note: As with any investment, perform your due diligence and research. As an example, Quirky, one of the leading companies shown in the above Inc Magazine article, ran out of money and filed for bankruptcy.