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Skip The Banks & Get The Funding Your Small Business Needs From One Of These Crowdfunding Platforms

    Jason Vissers
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Crowdfunding has received lots of attention in recent years for its ability to raise money for medical emergencies and other pressing human needs. However, you should know that crowdfunding for business projects is taking off as well.

Though the rate of startup business creation in the US is at a 40-year low, young companies have raised billions of dollars from (mostly) ordinary people through crowdfunding campaigns. In fact, Kickstarter — the biggest rewards crowdfunding platform — has facilitated the raising of $4.9 billion since its birth in 2009.

This means that entrepreneurship is widely popular among Americans today, if only as a spectator sport and not a participatory one. This creates lots of opportunity for business crowdfunding. With business crowdfunding, people can be readily persuaded to financially support new businesses if they stand to benefit from that support.

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Best for small businesses generally, particularly those making a consumer product
Best for small businesses generally, particularly those making a consumer product

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Best for online content creators -- podcasters, musicians, video game streamers, etc.
Best for online content creators -- podcasters, musicians, video game streamers, etc.

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Best for new businesses due to the lack of barriers to entry
Best for new businesses due to the lack of barriers to entry

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Best for business startups, as you can raise funds without paying a platform fee
Best for business startups, as you can raise funds without paying a platform fee

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Best for business expansion -- you can host either a rewards or an equity campaign
Best for business expansion -- you can host either a rewards or an equity campaign

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Other Featured Options:

  • GoFundMe: Best for businesses with a humanitarian mission or a compelling origin story
  • Crowdfunder: Best for buzzy seed-stage companies that have already attracted industry attention
  • Kiva U.S.: Best for businesses looking for an interest-free loan of $10K or less

Read more below to learn why we chose these options.

What Is Crowdfunding For Business?

Crowdfunding for business involves campaigning for the public’s money on a crowdfunding website (or, in some instances, your own website or social media page). It has the benefit of both helping you receive business funding and spreading awareness of your business.

However, not every business crowdfunding platform is created equal.

Crowdfunding For Business: The Basics

Before you start crowdfunding for your business project, know that there are distinct types of crowdfunding and that while one type of crowdfunding may stand to benefit your particular business, another type may not.

Types Of Crowdfunding

Crowdfunding platforms don’t generally label themselves as one type of crowdfunder or another, yet we can differentiate between four fundamentally different types of business crowdfunding.

  • Rewards Crowdfunding: This is what most people think of when you talk about crowdfunding for business purposes. It’s how Kickstarter works — you solicit funding from would-be backers, and in exchange for money, you reward the backer with a tangible product. It’s how countless board game designers funded their projects.
  • Equity Crowdfunding: At the moment, equity crowdfunding is more of a niche field than rewards crowdfunding, but it is expanding quickly. With equity crowdfunding, instead of backing a project in exchange for a board game, prototype device, or some other reward, the backer becomes an investor who receives an ownership stake in the business doing the crowdfunding.
  • Debt Crowdfunding: With debt crowdfunding, the backer is akin to a lender. The backer sends money to the business in question, and in return, the backer is repaid by the business on a fixed schedule with interest. Essentially, instead of borrowing from a bank, you’re borrowing from a crowd of investors.
  • Donation Crowdfunding: This is how most GoFundMe campaigns work. The campaigner raises money from backers and does not actually give anything to the backer in return. It’s how people raise money for medical emergencies and other personal reasons, but it can also be done by certain types of businesses: those with a sympathetic origin story or those who perform a humanitarian or charitable service, for instance.

For a much deeper dive into the different types of crowdfunding and how they differ, check out our article, Types Of Crowdfunding For Businesses: Rewards, Equity, Debt, & Donations.

I should mention that many crowdfunding platforms allow for more than one of these types of crowdfunding campaigns — therefore, you can’t neatly divide crowdfunding sites by the type of crowdfunding they allow.

When To Use Crowdfunding For Your Business

While just about any business can try its hand at crowdfunding, there are certain types of businesses that may be better positioned to succeed at it than others. Here are some examples of such businesses:

  • Businesses producing a tangible product to offer (crowdfunding has rejuvenated the board game industry)
  • Business startups with exponential growth potential (particularly tech-industry startups)
  • Businesses with a substantial/passionate following on social media
  • Businesses that attract attention by being unique/unusual
  • Businesses with a humanitarian mission and/or a touching origin story

If your business project exhibits none of these qualities, your crowdfunding campaign may have a hard time gaining traction.

The Best Crowdfunding Platforms For Business

When thinking about crowdfunding for business, it’s important to consider your particular business project and how well it matches up with each of the major crowdfunding platforms. Let’s discuss the crowdfunding sites that best fit your particular business needs, whatever they may be.

1. Kickstarter: Best Overall For Small Businesses

Kickstarter



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  • Type of campaign: Rewards
  • Target industries: Businesses making a consumer product
  • Rules for funds raised: All-or-nothing
  • Funding duration: 1-60 days
  • Platform fee: 5% of total funds raised & 3% + $0.20 per pledge for payment processing

Since its 2009 launch, Kickstarter has become synonymous with business crowdfunding. Having raised over $4.8 billion USD for business projects to date, no other crowdfunding platform has directed as much money into the hands of aspiring businesses.

Kickstarter isn’t for everybody, however. Kickstarter’s rules state that in order to use its platform, campaigners must be in the business of creating something to share with others. To use Kickstarter, you must be in the business of creating something that can be offered to backers as a reward, whether that be some kind of tech gizmo, artwork, music, film, or video game.

Kickstarter’s rules are more stringent than those of other platforms. Kickstarter mandates all-or-nothing funding, which means that if you don’t reach your target amount of funds raised within your campaign’s specified time frame, you receive none of the funds raised and your backers get their money back. Your campaign can last anywhere from 1-60 days, though Kickstarter recommends a time frame of 30 days for your best chance at success.

Pros:

  • More money has been raised for businesses on Kickstarter than on any other platform
  • Good for larger businesses
  • Industry-standard fees
  • Great media outreach

Cons:

  • Only all-or-nothing campaigns — no keep-what-you-raise campaigns
  • Your business project must be approved by Kickstarter before you can start your campaign — this takes up to 3 days
  • Limited customer support

Read our in-depth review

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2. Patreon: Best For Online Businesses & Content Creators

Patreon



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  • Type of campaign: Rewards
  • Target industries: Artists, podcasters & others in the business of releasing online content
  • Rules for funds raised: Keep-what-you-raise
  • Funding duration: Unlimited/continuous
  • Platform fee: 5-12% of total funds raised & ≈5% for payment processing

Patreon works differently than most crowdfunding sites. Instead of launching a one-time online fundraiser, Patreon has you raising money on a continuous basis from your followers. In exchange, you grant your paid followers — called “patrons” — access to exclusive content. It’s a crowdfunding model that has paid off handsomely for scores of artists, podcasters, musicians, and other online content creators.

With Patreon, your patrons subscribe to your content and can choose to pay you on either a per-month or per-creation basis. As for platform fees, Patreon differs from other rewards crowdfunding platforms in that it offers three different subscription tiers, each with its own platform fee. Basically, the more features you get, the higher fee you pay.

  • Patreon Lite subscribers pay a 5% platform fee and get access to a hosted creator page, communication tools, and workshops.
  • Patreon Pro subscribers pay an 8% platform fee and in return for paying more, they get access to advanced features like membership tiers (for their patrons), unlimited app integrations, and priority customer support (along with all Lite features).
  • Patreon Premium subscribers pay a 12% platform fee and get access to a dedicated partner manager, Merch for Membership, and team accounts (along with all Lite and Pro features).

Keep in mind that Patreon charges payment processing fees along with a platform fee. These processing fees typically come out to around 5% of what you earn.

Pros:

  • Get continuous, ongoing funding, not just funding for a one-time project
  • Platform facilitates reward-giving
  • Advanced features for higher-tier subscribers
  • Fewer content restrictions than some other crowdfunders

Cons:

  • Some creators report issues when attempting to collect funds
  • Fuzzy content guidelines/inconsistent enforcement
  • Limited help section

Read our in-depth review

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3. Indiegogo: Best For New Businesses

Indiegogo



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  • Type of campaign: Rewards or donation
  • Target industries: Filmmakers, gadget-makers and other entrepreneurs
  • Rules for funds raised: Keep-what-you-raise or all-or-nothing
  • Funding duration: 1-60 days
  • Platform fee: 5% of total funds raised & 2.9% + $0.30 per transaction for payment processing

Indiegogo is best described as a more flexible Kickstarter. With Indiegogo, the structure of your business crowdfunding campaign is similar to that of Kickstarter, but you have more leeway to run the kind of campaign you want.

With Indiegogo, you have the option of running an all-or-nothing funding campaign (where you only keep what you raise if you meet your funding goal) or a keep-what-you-raise campaign (in which you keep whatever you raise whether or not you meet your funding goal). The choice is yours. Likewise, while you can offer rewards to your backers, it’s not mandatory — though you certainly should in most instances.

Unlike Kickstarter, new campaigns don’t require approval from Indiegogo — you can set up your campaign and start raising money without having to wait for an application or approval process. This is good for new businesses that might not be as well-resourced as Kickstarter likes to see. Indiegogo also offers a program called InDemand, which allows you to keep raising money from backers after your initial crowdfunding campaign ends. You can use InDemand even if your initial campaign wasn’t done with Indiegogo.

In addition to the above, Indiegogo offers more comprehensive customer support than does Kickstarter, along with other perks such as a pre-launch page, Google Analytics integration, and a manufacturing partnership with Arrow Electronics. On the downside, Indiegogo’s lack of campaign vetting means that shaky campaigns are more likely to get through, and, accordingly, some backers never receive their promised rewards, thus lowering Indiegogo’s reputation in the backer community.

Pros:

  • Businesses have the freedom to run the kind of campaign they want
  • No vetting process — you can set up your campaign and start raising money immediately
  • Industry-standard fees
  • Good customer support for campaigners

Cons:

  • Limited communication between campaigners and backers
  • Indiegogo’s reputation in the backer community is not great — you may have to work extra hard to establish trust with your backers
  • Less site traffic than Kickstarter

Read our in-depth review

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4. FundRazr: Best For Business Startups

FundRazr



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  • Type of campaign: Rewards or donation
  • Target industries: Good for a wide range of businesses and entrepreneurs
  • Rules for funds raised: Keep-what-you-raise or all-or-nothing
  • Funding duration: You can choose whatever campaign length you want
  • Platform fee: 0-5% of total funds raised & 2.9% + $0.30 per transaction for payment processing

FundRazr is a crowdfunding outfit from Canada with a lot to offer startups and others looking for an easy crowdfunding experience. You can run a keep-what-you-raise campaign or an all-or-nothing campaign, offer rewards if you like, and can choose whatever campaign length you like.

What truly makes FundRazr stand out for business startups is the fact that you can run a campaign without paying any platform fees whatsoever (standard payment processing fees will still apply though). Under the free model, you won’t get access to FundRazr’s more advanced features, but you can raise money while paying a 0% platform fee. Not too shabby! If you want access to such features as recurring donations, charity eCommerce storefronts, advanced analytics, and embedded donation forms, you’ll need to use FundRazr’s standard crowdfunding model and pay the industry-standard 5% platform fee.

Pros:

  • No platform fees if you choose the free package
  • No vetting process
  • Campaigns can last as long as you want
  • Excellent public reputation

Cons:

  • FundRazr gets less site traffic than its major competitors
  • Some support materials are dated

Read our in-depth review

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5. Fundable: Best For Business Expansion

Fundable



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  • Type of campaign: Equity or rewards
  • Target industries: Good for fast-growing, high-revenue businesses
  • Rules for funds raised: All-or-nothing
  • Funding duration: No set limit
  • Platform fee: $179/month (no percentage fee), 3.5% + $0.30 payment processing fee for rewards campaigns

Not to be confused with FundRazr, Fundable is a great crowdfunding platform for when you want to take your business to the next level. Fundable offers equity crowdfunding, which is great for businesses with a proven track record who are looking for investors to facilitate expansion (read this piece to learn more about equity crowdfunding). Thankfully, Fundable offers rewards crowdfunding as well.

Fundable will have to approve your profile before you’re allowed to start crowdfunding, so the process isn’t instant. Likewise, all Fundable campaigns are all-or-nothing, so you’ll need to meet your funding goal in order to collect any funds. Another distinguishing feature of Fundable is that you pay a flat $179/month fee to use the platform instead of a 5% platform fee. Obviously, this isn’t good for small businesses with few resources, but for larger businesses, this pricing scheme can see you paying less money than you would with a flat fee.

Payment processing fees are only assessed to rewards campaigns, because with equity campaigns, all funds are transmitted offline.

Pros:

  • Both equity and rewards crowdfunding available
  • Fee structure is great for large businesses
  • Good customer support
  • Prescreening of campaigns benefits backers

Cons:

  • Flat monthly fee hurts unsuccessful campaigners
  • You have to wait for Fundable to approve your campaign
  • Campaigns can only be all-or-nothing in terms of funding

Read our in-depth review

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6. GoFundMe: Best For Compassionate Businesses

GoFundMe



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  • Type of campaign: Donation or rewards
  • Target industries: Good for businesses with a humanitarian mission and/or a touching origin story
  • Rules for funds raised: Keep-what-you-raise
  • Funding duration: No set limit
  • Platform fee: No platform fee, 2.9% + 30¢ per transaction processing fee

I’m sure you’ve heard of GoFundMe by now. What you may not know is that while GoFundMe’s brand has become synonymous with crowdfunding for personal emergencies and other human needs, you can also use GoFundMe to raise money for a business.

It’s true that GoFundMe is a platform devoted to supporting compassionate causes. However, this doesn’t preclude it being used for business crowdfunding. If your business is seen as an essential benefit to the community (like a struggling independent book store or a coffee shop that provides opportunities for disabled or disadvantaged workers), or if you have a compelling personal history of overcoming hardship, you may find success on GoFundMe with a business crowdfunding campaign.

GoFundMe does not charge any platform fees — only standard payment processing fees. You’ll be able to keep whatever you raise, regardless of whether you meet your funding goal. And while you don’t have to offer rewards to your backers, GoFundMe does allow you to do so. The platform is set up so as to benefit the widest possible variety of users. Most large businesses and tech startups will find GoFundMe to be a poor fit for their campaigns, however.

Pros:

  • No platform fee
  • Can collect funds without meeting your funding goal
  • Worldwide brand recognition
  • Nonprofit crowdfunding also available

Cons:

  • Poor customer support
  • Must give your SSN to withdraw funds
  • Some campaigners have trouble withdrawing funds

Read our in-depth review

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7. Crowdfunder: Best For Businesses & Startups With Exponential Growth Potential

Crowdfunder



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  • Type of campaign: Equity
  • Target industries: Seed-stage companies with very high growth potential
  • Rules for funds raised: Keep-what-you-raise
  • Funding duration: No set limit
  • Platform fee: $299-499/month fee

The generically-named Crowdfunder isn’t for just any business. Crowdfunder is an exclusive equity crowdfunding platform suited for, in Crowdfunder’s words, companies that have “already received some validation from customers, investors, and entrepreneurship programs (incubators and accelerators).” Only the cream of the crop need apply.

With Crowdfunder, you can set up a “private deal room” ahead of your campaign for free. You can create your company profile, store your deal documents, and invite your team members. However, to actually take your campaign public and start crowdfunding, you’ll need to purchase one of the two monthly subscription packages available. These packages — $299/month and $499/month respectively — give you the ability to leverage your existing network to raise funds, though the more expensive package is touted as a means of letting you leverage Crowdfunder’s own network of investors. This package also entitles you to hands-on company support.

Pros:

  • Good for seed-stage companies
  • Crowdfunder charges a flat fee instead of a percentage fee
  • Keep-whatever-you-raise funding

Cons:

  • High monthly cost
  • Most businesses don’t meet Crowdfunder’s standards
  • Limited customer support

Read our in-depth review

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8. Kiva US: Best For Businesses Looking For A Crowdfunded Loan

Kiva U.S.



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  • Type of campaign: Debt
  • Target industries: Any business in need of funding
  • Rules for funds raised: All-or-nothing (though your campaign length can be extended if you haven’t hit your funding goal yet)
  • Funding duration: 15-day private funding period and a 30-day public funding period (though the public funding period can be extended)
  • Platform fee: None, though you are asked to lend at least $25 to another borrower

Kiva US cuts a unique path in the world of business crowdfunding. Kiva US is a nonprofit microlender offering crowdfunded interest-free loans to borrowers. Essentially, it’s free money! So, what’s the catch?

Well, with Kiva, you may be waiting up to 60 days to get funded — not that long in crowdfunding terms, but definitely longer than it takes to get funded with most lenders. Additionally, the maximum borrowing amount is $10,000 — if you want to raise more money, you’ll have to go with another crowdfunding platform.

The amount of funding you qualify for is based on such factors as time in business, your revenue levels, and your online presence. Companies with stronger metrics are eligible for more funding than companies with weaker metrics.

Pros:

  • No fees/interest
  • No credit score requirements
  • Good customer support

Cons:

  • Lengthy application process
  • Not suited for large businesses
  • Typical time to funding: one to three months

Read our in-depth review

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How To Get Crowdfunding For Your Business: Tips For Launching A Campaign

If you’re on the fence about whether crowdfunding is the right path to funding for your business, this list of tips should help you decide whether or not this route is right for you. Remember, a majority of crowdfunding campaigns do not reach their funding goals, so you have to be prepared to put in the work necessary for success.

1) Choose The Right Type Of Crowdfunding

Your choice of crowdfunding type and platform is crucial to your ultimate success. If you’re looking to fund a board game or action figure collection, equity crowdfunding is a poor fit — you’ll want to try a rewards crowdfunding platform or perhaps even debt crowdfunding. Likewise, if you run a seed-stage tech startup that has already gotten attention from investors, you’ll want to seek out an equity crowdfunding platform, or perhaps Kickstarter. A platform like GoFundMe or Kiva would be a poor fit for what you do.

2) Research Successful Campaigns

One benefit of platforms like Kickstarter and Indiegogo is that every past crowdfunding campaign is preserved on the platform’s website. Imagine how helpful it would be if, when applying for a bank loan, you could review the loan applications of every firm that has applied for a loan and see which ones were accepted and which were not. Well, with crowdfunding, that’s pretty much what you can do.

Look around for examples of crowdfunding campaigns from businesses similar to yours. Note the differences between campaigns that succeeded vs. campaigns that did not. You can also do research to find interviews with business owners who have had success with crowdfunding to see just how they achieved that success.

3) Leverage Your Existing Personal & Professional Networks

When running a crowdfunding campaign, it never looks good to outsiders if you haven’t managed to secure some initial funding. That’s why it’s important to get the word out about your business to those who already know you.

Before you officially launch your campaign, it’s wise to get some commitments from those in your personal and professional networks. You may want to set up a newsletter or mailing list for this purpose. Additionally, it goes without saying that having a sizable social media following is a big advantage should you decide to start crowdfunding. If you can get your existing social media followers excited about what you do and can inspire them to want to become a part of it, that will help your crowdfunding campaign immensely.

For more helpful tips on launching a successful crowdfunding campaign, check out my article, Crowdfunding For Startups: 8 Tips For Launching. For some Kickstarter-specific tips (though much of the advice is widely applicable!), have a look at Launching A Kickstarter Campaign? Here Are 10 Things You Need To Know.

Not Sure If Crowdfunding Is Right For Your Small Business? Learn About Other Business Funding Options

If, after reflecting on what will be required of your business, you decide that crowdfunding isn’t right for your business or you’d like to explore some other options before deciding, have a look at these resources. They should help you decide which path to business funding is right for you and your business endeavor.

In Summary: The Best Crowdfunding Platforms For Business

  1. Kickstarter: Best for small businesses generally, particularly those making a consumer product
  2. Patreon: Best for online content creators -- podcasters, musicians, video game streamers, etc.
  3. Indiegogo: Best for new businesses due to the lack of barriers to entry
  4. FundRazr: Best for business startups, as you can raise funds without paying a platform fee
  5. Fundable: Best for business expansion -- you can host either a rewards or an equity campaign
  6. GoFundMe: Best for businesses with a humanitarian mission or a compelling origin story
  7. Crowdfunder: Best for buzzy seed-stage companies that have already attracted industry attention
  8. Kiva U.S.: Best for businesses looking for an interest-free loan of $10K or less
Jason Vissers

Jason Vissers

Expert Analyst & Reviewer at Merchant Maverick
Jason Vissers has been researching, analyzing, and writing about small business software and finance since 2015. His financial expertise has been cited in numerous publications, including The Ladders. Jason graduated with a Political Science degree from San Diego State University in 2001.
Jason Vissers
View Jason Vissers's professional experience on LinkedIn.
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