Crowdfunding

At its simplest, crowdfunding is using an online platform to raise funds. It usually works by allowing several people to contribute small amounts until the person running the crowdfunding campaign achieves their financial goal. Some crowdfunding platforms take an "all or nothing" approach, which means you only get the funds if you raise the total amount required. Others allow people running crowdfunding campaigns to keep all the funding raised, even if they don't reach the funding goal.

Crowdfunding is a hugely popular way to finance a new business venture, so there are plenty of crowdfunding sites for startups. Kickstarter is one of the best-known crowdfunding sites. While Business.org suggests it is especially good for creative businesses, you'll find businesses offering all kinds of products and services on Kickstarter. Other popular crowdfunding sites include Indiegogo, which is great for tech projects, RocketHub, for social good projects, GoFundMe for charitable causes, and IFundWomen, for funding women-owned startups.

The four main types of crowdfunding are donation-based crowdfunding, reward-based crowdfunding, equity-based crowdfunding, and debt-based crowdfunding. In donation-based crowdfunding, all funds are donations, with nothing but goodwill and gratitude in exchange. Reward-based crowdfunding offers different rewards for different contributions. This type of crowdfunding is often used by product creators. Equity-based crowdfunding offers shares in a company in exchange for funding. And debt-based crowdfunding is better known as peer-to-peer lending, where lenders supply funds in exchange for interest on their loan.

If you want to get crowdfunding for your business, you'll need to create a pitch that attracts donors, investors, or lenders. This will identify the problem, say how your business idea will solve it, and let people know why yours is a good business to contribute to. It's also important to create a video for your crowdfunding page, as this gets more attention. And you'll need to specify the benefits for funders, such as rewards or shares for contribution levels.

Hiring a crowdfunding consultant can be a smart move, especially if you need to raise a large sum of money. When you use a crowdfunding service provider, you'll get professional advice on the best way to present your pitch to achieve success. A professional crowdfunding consultant can guide you through the process of running your campaign, so you get more donors, funders, investors, or lenders. Make sure your crowdfunding consultant has great reviews and ratings before making your final choice.