Crowdfunding is rapidly becoming big business. As of 2012, $2.7 billion was raised to support more than 1 million individual campaigns across the globe. Who would have imagined 20 – or even 10 – years ago that the web could be such a huge source of fundraising?
This trend was birthed by contributors who donated collaboratively to get a product off the ground. Their payoff? Usually the product, a perk or a reward. A prime example of this was the Lammily Doll, the first fashion doll made of realistic proportions. Designed by an artist who was seeking to create an alternative to the Barbie doll, the project raised more than $225,000 through crowdfunding alone.
A newer model of crowdfunding is investment crowdfunding. In this model, businesses raise capital by selling equity or debt to investors. Similar to an IPA, these investors become shareholders or owners hoping to financially benefit from the business’s growth.
With literally hundreds of crowdfunding sites on the web, how can one know the best sites to participate in? First you must decide what area(s) of interest to support. Artists use different crowdfunding platforms than businesses, which use different platforms than charities.
Below are the Top 5 Crowdfunding Sites to research:
- Kickstarter – one of the earlier crowdfunding platforms, Kickstarter is used by creatives such as designers or musicians to promote their latest projects. It has enjoyed strong growth and played a role in many large-funded campaigns in recent history.
- CrowdRise – this is the go-to site to support a wide variety of charities and causes. You can donate to anything from animal rescue groups to the American Red Cross to individual runners raising money for causes like pancreatic cancer.
- Crowdfunder – one of the fastest-growing networks for investors. This platform offers equity crowdfunding and was involved in the JOBS Act Legislation. Individuals, angel investors and venture capitalists have made this site one of the largest investing platforms to date.
- Somolend – another platform participating in the JOBS Act Legislation, Somolend provides investment funding to pre-established businesses in the U.S.
- Quirky – the Einstein of crowdfunding platforms, Quirky is the place for inventors and designers. In addition to raising funds, this site allows for collaboration into the actual process of bringing an idea from conception to completion.
As with any financial investment (charity or business), be sure to fully research the company or charity in question before making any type of financial commitment.