By now, most have heard of the fairly recent phenomenon that is crowdsource funding. It is a platform whereby start ups and entrepreneurs with an innovative idea, business, invention, cause or other novel project needing funding can turn to the public to raise the money to advance the venture or get it to market. It is traditionally used by those with no connections in the venture capital world, who are raising small amounts of money and/or have sought private equity capital and failed at it getting it.
There are several crowdfunding websites that enable networks of friends, colleagues and like-minded individuals pitch in to fund entrepreneurs.
On AngelList.co for example, start ups provide a detailed project description, which could be considered a loan or donation. Those startups then spread the word to their contact list about their request.
The majority of crowdfunding sites fund entrepreneurs on an all-or-nothing basis. If the project is fully funded when the deadline arrives, the money is given to the entrepreneur. If it is not fully funded, it is returned to the donors to keep or donate to another project. So it’s important to have a compelling project or story and to be a skillful marketer and networker to ensure that word about your project reaches enough potential donors to fully fund the project before the deadline. If you’re confident that your social enterprise has what it takes to become a crowdfunding success story, you may find crowdfunding to be the perfect option for your fundraising efforts.
Here is a list of crowdsourcing sites to consider using now that this law is well into being finalized. I will be signing up my projects as soon as possible.
- 33needs
- AngelList
- AppBackr
- Buzzbnk
- CauseVox
- ChipIn
- Crowdcube
- Crowdfunder
- CrowdRise
- Diaspora
- FundingForLearning
- FirstGiving
- Give.fm
- GoGetFunding
- GreenFunder
- Indiegogo
- Invested.In
- Kickstarter
- MyMicro
- Peerbackers
- ProFounder
- Quirky
- RiceBowl
- RocketHub
- Razoo
- Somolend
- Sponsume
- Spot.us
- Start Some Good
- Webiversity
Management of Money has a massive lists of dozens of crowdfunding sites to consider. And Crowdfunding PR has a list of the top 100 Crowdfunding sites ranked by web traffic.
Good luck!
Below is an infographic that explains how crowdfunding works and the pros and cons of it, compliments of intuit.
