You’ve got a great, unique idea for a product and know that somewhere, there is a need. You must raise money quickly for surgery bills insurance does not cover. Maybe you lack the cash required to get that one-of-a-kind film into production.
Ordinary folks and entrepreneurs alike are flocking to crowdfunding sites to try and raise money and generate the interest that will bring their projects to life. With hard work, ingenuity, and help from crowdsourcing companies, people are donating – or not — to help decide which projects come to fruition.
All crowdfunding sites operate on a similar model. A person/group submits a project idea, complete with a written description, funding needed, deadline for donations, and pictures or a video. If accepted, they create a project webpage that is listed on the crowdfunding site. By being a part of the site’s integrated social media network, the product creator also gets back-end support. Additionally, they receive not only money, but interest, word-of-mouth advertising, and even technical assistance from their backers.
Backers, on the other hand, receive varying rewards. Sometimes they get a small gift for their financial support; other times an advisory board position; and often, just the satisfaction of knowing they helped a good cause get off the ground.
Kickstarter.com might be the most recognized name in the crowdfunding world, but it’s not the only player. In addition to providing you with the “who, what, how,” for 6 Kickstarter competitors, we spoke with each founder personally and asked them to share their advice about selecting the right crowdfunding site for your venture.
How it Works: CircleUp is an online social marketplace that helps high growth small consumer and retail companies raise money directly from a community of accredited individual and institutional investors. Investors are able to review financial and marketing materials for a select group of consumer/retail companies and have the opportunity to make equity investments directly through the CircleUp’s website.
Who it Serves:
1. Retail/consumer companies (food, personal care, pet products, apparel) and retail/restaurants with a tangible good; or a retail outlet that a person can touch, taste, use, or visit. Companies served typically have $1-10 million in revenue in the current year, a track record of success, and strong leadership teams. Only a small percentage of companies applying get accepted to the site.
2. Accredited investors receive access to private investment deals that previously were difficult to find.
What it Costs: No fee to join or to make an investment. Companies pay CircleUp a percentage of the capital raised from the online campaign.
Who’s in Charge: Ryan Caldbeck, founder and CEO; Rory Eakin, founder and COO
Advice: Make sure you have a strong understanding of the crowd funding platform's investor base.
First CircleUp Venture: 18 Rabbits, a manufacturer and distributor of granola and granola bars made from clean, premium ingredients, raised $500,000 on CircleUp. The bars are the bridge between health and a treat and are now available at retailers from San Francisco to NYC.
Bragging Rights: Prosperity Organic Foods, manufacturers of Rich & Creamy Melt® Organic butter alternative, raised a $1,000,000 investment round to help expand operations, and recently received an order for national distribution in Whole Foods.
How it Works: A user signs up, creates a crowdfunding website with photos and video, and shares the link with friends and family. Organizers are encouraged to treat supporters as a part of their story by posting Update messages and sending thank-you notes using the site's features.
Who it Serves: Anyone
What it Costs: Five percent of each donation
Who’s in Charge: Co-founders Brad Damphousse and Andrew Ballester
Advice: Entrepreneurs already have their hands full with their own projects - crowdfunding shouldn't be an added burden.
First GoFundMe Venture: America's Tallest Man, Igor Vovkovinskiy, raised over $46,000.00 for custom shoes to aid his mobility.
Bragging Rights: Clint’s Hotdog Cart, a local street vendor in Lansing, MI had his equipment destroyed by rowdy protestors. Americans are standing-up for this small business owner, raising over $30,000.00 in just over day.
How it Works: Inventors and entrepreneurs sign up for a TechMoola Inventor account and then complete a questionnaire about their idea/invention. The TechMoola team reviews all questionnaires and if the project is accepted, the inventor provides campaign details including funding needs and deadlines. TechMoola also provides support to help get publicity across multiple web platforms.
Who it Serves: Projects involving energy, medical, webtech, software, electronic, communications, computer hardware, and sports/games.
What it Costs: Ten percent of raised funds for successful projects.
Who’s in Charge: Cofounders Solomon Nabatiyan and Tom Kelly
Advice: Choose a crowdfunding site with good traffic and the right target audience for your project. If there is a specialized crowdfunding site for your type of project, then you are better off with niche attention.
First TechMoola Venture: Airmote & Airnect raised $20,000 of its $25,000 goal to fund production of its gesture-based mouse with an integrated keyboard.
Bragging Rights: Cervia Diagnostic is a social entrepreneurship company that is devoted to developing a new low-cost, rapid & accurate point-of-care diagnostic for screening of cervical cancer in women of all ages at risk for the disease.
How it Works: Users post their project using various social media on the platform. They set their own funding goal and timeframe, and explain what they will give (goods or services) in exchange for funds.
Who it Serves: Art, science, business and social good projects
What it Costs: If goals are met, 4 percent commission, plus 4 percent credit card handling fee. If goals are not met, 8 percent commission, plus 4 percent credit card handling fee.
Who’s in Charge: Founder, Brian Meece
Advice: Pick a platform that excites you, that will support your endeavor, and will educate you on how to maximize your success with the crowdfunding model.
First RocketHub Venture: Laura Boyd Studio raised about $6,000 to launch her photography business.
Bragging Rights: Andy Krafsur raised $42,000 to launch Spira, a new line of spring powered shoes. Spira was subsequently featured in the Wall Street Journal and quickly became the 9th most searched for running shoe on the Internet.
How it Works: The project creator produces a draft on Rockthepost.com complete with 3 components: a short video, a personal profile with images, and a reward list. Each draft is reviewed by RockThePost’s editorial and video teams so that they are optimized for success. All ideas are welcome, but projects must have a tangible end goal.
Who it Serves: Any small business owners or entrepreneurs are welcome to create a campaign.
What it Costs: 5% fee of amount raised; 2.9% credit card processing fee; 4% flat fee for philanthropies.
Who’s in Charge: Alejandro Cremades, CEO, Tanya Prive, COO and Jonathan Block, CTO
Advice: Do your research. Each crowdfunding platform is focused on a specific group of projects, and it’s important to find the platform that fits your project.
First RockThePost Venture: Villy Custom Bicycles ran a campaign to crowd test its new line of glow in the dark bicycles before they were manufactured and successfully raised just over $10,000 in two weeks.
Bragging Rights: Abracadabrapp, launched by the Honest & Smile agency in Spain, partnered with Moleskine® to create a unique iPhone video application. They were successfully funded within a week and have been featured on Tech Crunch, PSFK and more.
How it Works: Fundable is a platform for business-minded startups, founded by startup veterans. Companies exchange rewards and equity for funding to grow and launch their business.
For a rewards fundraise, startups create a profile providing a company and project overview, fundraising goals, and perks they are willing to provide potential backers. Backers can offer support in the form of cash pledges and receive rewards in exchange. Rewards can be anything from a pre-order of a new product, to a T-shirt or advisory board position.
For an equity fundraise, startups create a public profile providing a company overview as well as a private profile housing their business documents and deal terms. They can then grant access to accredited investors to review their private profile. Once access is granted by the startup, investors can review the company's deal terms and make a commitment to invest.
Who it Serves: Business-minded startups looking for early stage capital.
What it Costs: $99 per month during active fundraising; plus 3.5% credit card fee of amount raised (if fundraising goals are met)
Who’s in Charge: Wil Schroter, founder, CEO; Eric Corl, co-founder, president
Advice: Spend time assessing what you’d like to get out of a crowdfund and instead, thoroughly research a platform that meets your needs, and offers you guidance and support throughout the funding process. Also, it's important to realize that crowdfunding isn't a magical source of money. Even the most passionate and hardworking entrepreneurs need support during their fundraise.
First Fundable Venture:
Elevation Training Mask surpassed their fundraise goal in 72 hours. The training masks mimic the effects of high altitudes for athletes who want to improve their endurance and performance.
Fleksy, an app which improves iPhone typing accuracy, closed a $900,000 round to support further product development. Fleksy has been featured in Tech Crunch, Venture Beat, Fast Company among others.
How it Works: Each project creator sets up a page to address the “who, what, where, when and why.” Users are encouraged to add video, a personal storyline, plus perks for funders to make the campaign compelling.
Who it Serves: Anyone can use Indiegogo to raise funds for any idea or project, which are categorized into three areas: creative, cause-related and entrepreneurial campaigns. No application required.
What it Costs: Free to join. Fixed and flexible funding options available:
For fixed, Indiegogo takes a 4% fee of the money raised, but only if the goal is reached. No fees are taken if the funding goal is not met.
For flexible, Indiegogo takes a 4% fee if the goal is reached. If the goal is not met, Indiegogo takes 9%, but the campaign owner keeps what they’ve raised.
Who’s in Charge: Co-founders include Slava Rubin, Danae Ringelmann and Eric Schell.
Advice: Fund your passion.
First Indiegogo Venture:
In its pre-launch phase, IndieGoGo sought developmental feedback from a wide range of filmmakers and industry leaders. FLOW: FOR LOVE OF WATER, directed by Irena Salina and produced by Steven Starr, was selected by IndieGoGo to be its first Showcase project and was subsequently selected to World Premiere in competition at the 2008 Sundance Film Festival.
Before 10 year old Jackie Evancho dazzled audiences on America’s Got Talent, she and her mom used IndieGogo to help power her star performance by raising money to produce her second album.