6 Best Crowdfunding Websites on the Web

You’ve probably already heard about successful crowd fundraising stories. At the moment, a lot of people are raising large sums of money online. Numerous websites are dedicated to finding funds for entrepreneurial projects that are creative and up-and-running – we’re talking about crowdfunding sites. Let’s learn more about the concept behind these platforms and your best options.

The idea behind the crowdfunding industry

Web collaboration is a realm that has an immense growth potential, and there are two distinctive models of crowdfunding. The first of them is known as donation-based funding. This is how crowdfunding got its start. Funders make donations via a collaborative aim, in exchange for perks, rewards and products.

The second and latest model is known as investment crowdfunding. In this scenario, entrepreneurs seeking capital will sell ownership stakes on the web, in the form of equity or debt. Afterward, the individuals who want to fund will become either shareholders or owners, with the possibility of financial return, as opposed to the previous model.

The truth is that crowdfunding sites differ, and they were created to fulfill different needs. Some of the sites are best at raising funds for an a project or invention. Others are better at helping people to raise money for a charity or a person in need. Hence, here’s a classification of the very best crowdfunding sites so that you can establish which one suits your needs best.

1. Kickstarter

Kickstarter is among the most popular crowdfunding sites, being almost synonymous with this concept. It has assisted over 80,000 projects, so, it comes as no surprise that it has nearly 13 million visitors per month. It is a site that enables creative projects to rise donation-based funding. These projects vary a lot. In fact, they support any unique, original concept such as a cool watch, an art installation, a pre-selling music album, namely, an idea that seems to have real potential. Or not. Some of Kickstarter’s gag campaigns have generated a lot of attention in the last few years.

However, Kickstarter was not created for supporting causes, businesses, charities, or personal financial needs. Due its ever-growing popularity, one may benefit from recognition and increased visibility with Kickstarter, both features that account for bonuses. Notwithstanding, one of the main drawbacks associated with the platform is that it’s an all-or-nothing funding model. In other words, if you don’t accomplish your funding target you won’t get your hands on the pledged funds.

Regarding the fees, Kickstarter typically collects a 5 percent fee per successfully funded project. Stripe processes the payments and gets an additional 3 to 5 percent of the total amount.

2. Indiegogo

While Kickstarter preserves a fixed focus on supporting creative projects; Indiegogo acclaims donation-based fundraising campaigns for next to anything – charities, music, hobbyists, personal financial needs, and many others. Investment is the exception. Due to their flexibility, they have relished international growth lately. 4 percent of the funds acquired through a successful project go to the site. On the other hand, if the project isn’t as successful as expected, you are charged 9 percent. The site is available for users from all countries, and there’s no application required.

3. Crowdrise

Crowdrise enables you to design an online fundraising campaign for supporting your favorite cause. It’s based on a flexible funding model, allowing you to keep all pledged donations. It’s acknowledged as one of the largest, most significant crowdfunding sites, having supported some of the most prominent non-profit organizations such as UNICEF, Red Cross, as well as the Boston Marathon. On top of that, it provides its users with a particular system that allows you to track the impact of a charity, through the reporting numbers.

There are three distinctive pricing plans on Crowdrise – the Basic Plan, the Featured Plan, and the Royale Plan – each being crafted to specific needs. The Basic Plan doesn’t involve an annual fee; however, it charges 5 percent per transaction, to that adding credit card fees of 2.9 percent per transaction. Moving on to the Featured Plan – one pays a monthly fee of 49 dollars, but the donation fee is diminished to 4 percent, adding up the credit card charges. And lastly, the Royale Plan implies a monthly fee of 199 dollars, with a lowered donation fee of three percent as well as credit card fees. What’s great about these plans is that the fee charged is actually much lower than many other places on the web. That means that an increasing number of charities are funding themselves using Crowdrise’s platform, and getting more money because of that.

4. Fundable

Fundable is part of the crowdfunding platforms that provide equity and reward-based crowdfunding. An interesting and attractive feature of the platform is that it doesn’t charge the user according to the amount of money the campaign raises. In other words, that means that you keep the pledged money.

The site is a genuinely attractive option, especially to those who intend on raising substantial sums. But what does Fundable charge its users? $179 per month, and also a processing fee of 3.5 percent per transaction – that applies to reward-based crowdfunding. When it comes to equity crowdfunding campaigns, the site charges the same sum.

5. Seedinvest

Seedinvest is a platform that facilitates equity-based crowdfunding. Nonetheless, one thing to bear in mind – crowdfunding campaigns have to reach their funding goal. Concurrently, companies should anticipate taking at least 60 to 90 days for completing the crowdfunding action. There are no investor fees, and the platform enables one to invest together with institutional investors. What about the costs? There’s a 5 percent placement fee, which depends on the value of the fundraising. Simultaneously, a sum between $3000 and $5000 in due diligence, marketing, escrow, and legal expense reimbursement.

6. WeFunder

WeFunder is another leading equity crowdfunding site. It provides low minimums when it comes to investments. One has to be in the position of an accredited investor to get involved. However, investing as little as $100 is a possibility WeFunder offers you. Startups get a significant part of the funds committed, except for the admin fee. Concurrently, investors pay somewhere between $10 – $75 in admin costs, apart from the investment. The platform charges 10 percent carried interest and a nominal fee that may range from $2000 to $4000.

Learn Why Over 300 Companies Have Used Our Entrepreneur Program “Six Steps To Success” To Grow Or Pivot Their Business.

 

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How to Find a Small Business Grant

Grants versus Loans

When starting a new small business, funding is one of the most important elements. It’s imperative to know the difference between grants and loans. The primary difference is that a loan needs to be repaid, whereas a grant does not.

Keep in mind that any small business loan that you acquire must be used for start-up costs. A small business grant is generally given to a small business indirectly through the federal government with the understanding that the business is there to assist a community.

Small Business Grants

Most small business grants are through the federal government, not directly but indirectly through organizations that support certain industries. There are also grants available through local government, either at the city or state level.

Corporate grants as available but are harder to locate. This is all contingent upon the location, the industry, and how the new business will help the community.

Grants are typically given so that small businesses can bring more attention to an industry. If the new business will provide representation and assistance, it is more probable that one would qualify for a grant.

Conditions Apply

While it’s true that grants do not need to be paid back, it is also a fact that grants are not just given to anyone or any small business. It is an application process and the application will determine the eligibility. It is based on specific conditions that the potential new small business owner must present to the grantor, indicating that the funds are necessary to get the business up and running.

Grantors require applicants to show their need for funding the small business. In most situations, the conditions include itemizing and accounting how every dollar is spent. There can be additional requirements, depending on which organization is potentially providing funding.

Keeping Records/Accounting

If you qualify for a small business grant, and you expect the funding to continue from the grantor, then they will ask you to provide continual accounting records, as well as potential future projections of the business plan.

If the small business, once it is operational, is not doing well, then the grantor has the right to withdrawal future funding. All of the details are drawn up with each specific grant agreement.

Searching for Grants

There are websites that list federal grants for certain industries and organizations. They have a variety of grants depending on specific interests that the government supplies assistance for; including energy, defense, science, education, transportation and more.

Thoroughly search through the lists of grants to see which one(s) your business qualifies. Within those categories, there are more specific grants listed. Enter the type of grant into the search engine to help narrow down the options. Examine the requirements needed and apply.

Keep in mind that it is a good idea to apply for several grants that you qualify for because funding is limited and the money is disbursed promptly.  

Types of Small Business Grants to Pursue:

    • Local – If the location of your small business is in a small town or village, there might be many opportunities in the vicinity. It is a good idea to see if there are any grants available through the local town government that fit your small business needs.  
    • City – Cities will often support their residents with small business grants if there is a need for it in the area, especially if that business can benefit the community. Keep in mind, that the larger the city, the more opportunities are available.
    • State – By researching the state government’s website, you might be able to locate grants within your district. The advantage of state grants is that it benefits all parties involved. It sees a potential market to create jobs, which, in turn, increases tax revenues. All sides involved are supported in aiding the community. Don’t forget; only apply for grants in your district.
    • Federal – While the federal government doesn’t directly offer small business loans, they do indirectly by funding organizations and certain industries such as education programs, energy, science, transportation and more. The grants on the federal lists are available online with detailed explanations of eligibility requirements.  
    • Corporate – This takes a bit more research, but you can find that most major corporations have grants and other financial assistance opportunities for small businesses that want to help the community. It can benefit you to check with the local corporations first, and then spread your search radius from there.  
    • Internet – There are a significant amount of benefits to searching for grants on the internet. It’s as simple as typing keywords into a search engine. The other bonus is that the speed of current and up-to-date information is provided through this technology and can assist you in finding potential funding for your small business.
    • Networking – If you get a chance to attend a local business function, it helps to introduce yourself to the people you meet. Networking helps by allowing you to get suggestions, ideas, references, and recommendations for potential opportunities in business. With each new individual that you meet, you are expanding your network and knowledge base. It is essential to meet professionals in several different industries, as this might open doors for you down the road.
    • Library – This is a vital and sometimes under-utilized resource. The library holds so much information through reference material, books, and on the computer as well. The reference librarian is someone who knows how to find the specific tools to help you with your research.  

Searching for Loans

First things first, your business plan should already be in place before you begin searching for loans.  This is essential for when you find one that fits your small business needs. Make sure you qualify for the loan before submitting it. In your loan application, include a description of the proposed business, the nature of the business, how you qualify, financial projections and estimates of how the money will be spent.

Attention to Detail

  • It is crucial to always make sure that you meet the criteria for the grant/loan before submitting documentation for the application.
  • Always provide several different types of current contact information.
  • Some information may need to be verified through other members of your business. If this is the case, remember to include, in detail, exactly who should be contacted for any questions.
  • Be prepared to send additional documents per request of the grantors /bank.
  • Many applications for grants/loans involve an essay, elaborating on your small business proposal. Be sure to indicate the necessity of how the business will benefit through either type of funding.  
  • Remember who your competition is, as this may be a vital indicator on the need of your small business in your chosen location. Some grants/loans will deny the application if there are too many competitors in the same location.
  • Explain your research in your essay portion of the application.
  • Pay close attention to any and all details when submitting the grant/loan application.

Online Applications for Small Business Grants

More than likely, the federal grants for organizations and certain industries involve submitting your application online. Due to the nature of online interactions, most of your communicating will be through email. There will be confirmation of submission, and updates as the application is processed.

Note: This will take some time as the application process can be slow due to many reasons such as excessive pending applications, the grantor waiting on missing components of an application, the grantor waiting on a response from a background check, etc.  

Approval

If you are approved for the grant/loan, you will be contacted with all the information from the individual grant/loan provider. This information will comprise of how the grant/loan will arrive, the date, and any additional material that is in the grant/loan agreement.

Don’t Give Up

If you were denied the grant/loan, it’s okay. Don’t give up. Even if you are having trouble locating a grant/loan that is right for your small business, keep trying. There are so many types out there, and most are very specific in their requirements for eligibility.

Small business grants can help increase the quality of a growing small business which in turn, can help the local community. It will take time and effort to search for the best grant that fits your needs. This process can be tedious, and it takes a lot of heart and commitment to reach the end goal of having funding for your small business.

Don’t be discouraged by the face of rejection. Just remember that there are others out there, in the same situation as you. They are also seeking assistance for their small businesses. Don’t give up, keep trying and you’ll be able to succeed.  

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