What Are Popular Crowdfunding Platforms and How They Work

Crowdfunding has become a popular way for artists, entrepreneurs, and inventors to raise funds for their projects. Kickstarter is one of the most well-known platforms, with over $5 billion pledged by more than 18 million people since its launch in 2009.

Platforms like Indiegogo and GoFundMe allow creators to set a funding goal and deadline, with the option to keep the project's funds even if the goal isn't met. This is in contrast to platforms like Patreon, which focuses on ongoing support from fans and backers.

Some popular crowdfunding platforms cater to specific needs, such as medical expenses or education. GoFundMe, for example, has helped raise millions for medical emergencies and other causes.

Recommended read: Top-rated Platforms for Reits Investing

Crowdfunding websites like Kickstarter, Indiegogo, and GoFundMe have made it possible for people to create or support new projects, attracting hundreds of thousands of people worldwide.

Kickstarter and Indiegogo are two of the most popular platforms, with Kickstarter supporting over 175,000 projects and raising over £100 million on Crowdfunder.

Crowdfunder itself has a unique approach, dividing fundraising into three causes: donation, rewards, and community shares.

Patreon is a popular crowdfunding platform that's perfect for artists who want to grow their fanbase and launch their professional careers. It's especially great for small groups and individual creatives like content creators, performers, writers, podcasters, and game designers.

One of the best things about Patreon is that it allows creators to connect with their fans through social media and direct messages. This helps build a community and can lead to some amazing collaborations.

Patreon's fees are a bit steep, though. For the Pro plan, you'll pay 8% of your earnings, plus applicable fees ranging from 2.9-3.9% of most transactions. The Premium plan is even more expensive, with a 12% fee.

Here's a breakdown of Patreon's fees:

Overall, Patreon is a great option for artists who want to build a loyal fanbase and earn some extra money. Just be aware of the fees, and make sure you understand how they work before you get started.

Mightycause is a crowdfunding platform that's perfect for nonprofits and social causes. It's mainly targeted at organizations looking to make a meaningful difference, and it also serves teams and individuals.

Mightycause offers donor management tools and real-time donation reports, which is a huge plus for organizations that need to track their donations closely. It also partners with organizations to run community-led "Giving Days".

One of the standout features of Mightycause is its customizable donation campaign, led by an experienced team. This means that organizations can tailor their campaign to fit their needs and goals.

Mightycause has two price models: Essential ($79/month) and Accelerate ($119/month). This can be a bit pricey, but it's worth it for organizations that need the extra features and support.

Here's a comparison of Mightycause's pricing models:

Crowdfunder is a platform that supports organizations at all stages of their campaign, having backed over 175,000 projects in raising more than £100 million in total.

It divides fundraising into three causes: donation, rewards, and community shares. This flexibility is a key feature of Crowdfunder.

Platform fees are 0% for charitable causes and non-profit campaigns, with transfer fees at 1.9%. For-profit campaigns, on the other hand, incur platform fees of 5% and transfer fees of 2.4%.

Crowdfunder's flexible pricing is a major pro, allowing for different types of crowdfunding projects to be priced accordingly.

Crowdfunding platforms work by facilitating the payment process between investors and the fundraiser. They achieve this by working with networks of partners and systems to offer various deals to fundraisers.

These deals can include variable percentage rates or lower fees, making it easier for fundraisers to access the funds they need. Fundraisers can then use these funds to pursue their goals, whether it's launching a new product or creating a community project.

Rewards-based crowdfunding platforms, for instance, might offer perks to backers, such as free swag, credits, or exclusive discounts.

Expand your knowledge: Top-rated Impact Investing Platforms

Crowdfunding sites generate revenue from a percentage of the funds raised. For example, Kickstarter applies a 5% fee to the funds collected.

Investors can choose from numerous projects and invest as little as $10. This allows a wide pool of investors to participate in funding opportunities.

One project on Kickstarter raised over $55,000 from 6,911 backers for a humorous goal of creating a new potato salad recipe.

Additional reading: Why Are Index Funds Such a Popular Investing Option

Crowdfunding platforms can be a great way for businesses to raise funds, but how do they work? As of 2021, there are over 1,478 crowdfunding groups in the United States alone.

These platforms vary in the types of projects they support, and some, like Kickstarter, have funded over $5.6 billion worth of projects as of January 2021. Kickstarter, in fact, has supported more than 197,425 projects.

In 1997, Marillion became one of the first bands to use crowdfunding, raising $60,000 (£39,000) from fans to fund a North American tour. This pioneering effort paved the way for other artists and businesses to explore crowdfunding as a viable option.

Crowdfunding platforms can be categorized into different types, such as those that focus on charitable causes, for-profit campaigns, or creative projects. For example, Crowdfunder offers flexible pricing for different types of crowdfunding projects and has supported over 175,000 projects in raising more than £100 million in total.

Here's a breakdown of some popular crowdfunding platforms and their features:

Keep in mind that fees and funding types vary across platforms, so it's essential to research and choose the one that best suits your business needs.

Crowdfunding platforms offer various types of funding to suit different needs. Rewards-based funding is a popular choice, where backers receive rewards in exchange for their contribution.

Kickstarter's all-or-nothing model is a great example of rewards-based funding, where projects only receive funding if they reach their goal. This approach encourages creators to set realistic funding targets.

Equity funding, on the other hand, allows backers to receive a share of ownership in the project or company. Platforms like Seedrs and Crowdcube offer equity-based funding options.

Platforms like Seedrs and Crowdcube have successfully facilitated equity funding for numerous projects and companies.

Check this out: What Plan Is Popular for Angel and Venture Capital Funding

Kiva offers 0% interest loans through public and private crowdfunding with no fees attached.

Borrowers must recruit lenders through their private networks in 15 days for the campaign to go public.

Loans are limited to $15,000.

This type of loan can be life-changing for small business owners, allowing them to keep full equity and profit sharing.

However, it may not be enough for brands with aggressive growth plans.

The platform stresses "social capital", making it most effective for those with strong communities or networks to support the fundraising efforts.

To get started on Kiva, you'll need to share personal and business information, including name, age, and bankruptcy history.

You'll also need to select how much you'd like to borrow and submit your application.

Here are the basic requirements to apply for a loan on Kiva:

Revenue and profit sharing are great options for companies looking to raise capital without sacrificing equity. Republic's revenue and profit sharing models allow companies to hold onto equity while still raising significant funds.

Here's an interesting read: Equity Crowdfunding Pros and Cons

With Republic, you can raise capital before or during venture capital fundraising, giving you more flexibility. You can start fast, with the option to publish a teaser page in minutes and launch a campaign in a matter of days.

Revenue and profit sharing allow you to raise funds without giving up equity. This can be a good option for companies that want to maintain control and ownership.

Here are some key benefits of Republic's revenue and profit sharing models:

Just keep in mind that only LLCs and C-corporations based in the U.S. can fundraise on the platform, and your accounting must be GAAP-compliant.

Comparing crowdfunding platforms is a crucial step in finding the right one for your needs. To effectively compare platforms, directly compare specific features such as marketing integrations, marketing consultations, or on-platform reach-boosting features.

Assessing potential costs is also essential. Crunch the numbers for each platform based on your target fundraising goals and ideal deadline, adding up monthly fees, payment processing fees, and platform percentage fees based on estimated performance.

Some platforms only charge fees if you successfully meet your target goal and access the funds, but this can also come with all-or-nothing models, where you could walk away with nothing after investing heavily into marketing campaigns.

To evaluate deadline options, consider what works best for your immediate and long-term needs. Some platforms give you a strict 60 days, while others allow you to extend deadlines or keep fundraising indefinitely.

Here's a quick rundown of the key factors to consider when comparing platforms:

StartEngine is a crowdfunding platform that's geared towards serious start-ups looking to grow their operation. It allows investors to buy, sell, and trade shares of eligible companies.

Their focus is on fundraisers with a strong grasp of the investing process and business practices. This might be a good fit for those with some experience in the field.

One of the pros of using StartEngine is their well-known leadership team with a proven track record of success in their professional ventures. This can give investors some peace of mind when deciding where to put their money.

However, it's worth noting that StartEngine seems less diverse than other companies, and their website can be a bit less user-friendly than competitors.

In terms of fees, StartEngine offers two plans with two different levels of service: Regulation Crowdfunding and Regulation A+. These plans allow you to raise up to $5 million or $75 million, respectively.

Here's a breakdown of their pricing models:

It's worth noting that their pricing models are a bit more complex, as you need to pay for a financial review/audit of your company. For more information, you can check out StartEngine's FAQ page.

Comparing crowdfunding platforms can be a daunting task, but knowing what to look for can make it much easier. You want to choose a platform that offers the types of fundraising and features that matter most to you.

To effectively compare different platforms, directly compare specific features from platform to platform. Some platforms may offer marketing integrations, while others offer marketing consultations or on-platform reach-boosting features.

Assessing potential costs is also crucial. Crunch the numbers for each platform based on your target fundraising goals and ideal deadline. Add up monthly fees, payment processing fees, and platform percentage fees based on estimated performance.

Consider potential risk and reward. Some platforms only charge payment processing or platform fees if you successfully meet your target goal and access the funds. These platforms, however, may also have all-or-nothing models, so you could theoretically walk away with nothing after investing heavily into marketing campaigns.

Evaluating deadline options is also important. Some platforms only give you a strict 60 days, others allow you to extend deadlines, and some allow you to keep fundraising indefinitely. Consider what works best for your immediate and long-term needs.

To get a better understanding of each platform's performance, look at their performance data. Most platforms include metrics such as applicant acceptance rates, successfully funded project rates, and average funding amount.

Finally, don't forget to read reviews online. Some platforms may have reviews from business owners and contributors on their site, and you can also look at platforms like TrustPilot to get a better idea of the true user experience.

Customizable fundraising options are a game-changer for ambitious businesses. Fundable is a crowdfunding site that offers this flexibility, with a flat monthly fee of $179 plus potential payment processing fees.

One of the benefits of Fundable is that it's cost-efficient for businesses with big fundraising goals. Paying a flat fee can be more affordable than a percentage of raised funds, which can add up quickly.

Fundable also allows interested investors to message you directly, giving you a chance to connect with potential supporters. This can be a great way to build relationships and get your business in front of more people.

If you're looking to raise equity, Fundable offers convertible debt and debt funding options through equity fundraising. This can be a good option if you need to raise between $10,000 and $10 million.

Here are some key features to consider when choosing a crowdfunding platform with customizable fundraising options:

Crowdfunding platforms are subject to specific regulations designed to protect investors, including limits on how much non-accredited investors can invest within a 12-month period.

These limits are based on income and net worth, which is a key factor to consider before investing. You should always conduct thorough research before investing.

Crowdfunding platforms must register with the Securities and Exchange Commission and FINRA to ensure compliance with securities laws. This registration status can be checked on FINRA’s Funding Portals page.

Companies offering securities through crowdfunding must provide detailed information about their business, financial condition, and risks in a document called Form C. This document is a crucial resource for investors.

Here are some key investor protections on crowdfunding platforms:

Investors have a 48-hour period to cancel their investment before the offering closes. This is an important safeguard to ensure investors can change their minds if needed.

The crowdfunding industry has a complex regulatory landscape. Crowdfunding platforms were largely unregulated when they first became popular, but countries like the United States began placing restrictions on certain types of crowdfunding.

These restrictions apply to who can fund a new business and how much they are allowed to contribute. The JOBS Act, enacted on April 5, 2012, established equity crowdfunding in the U.S. and initially limited it to accredited investors.

Provisions like Title IV and Title III later expanded access to non-accredited investors and early-stage startups. The SEC oversees these regulations, ensuring transactions occur through registered intermediaries.

Many crowdfunding projects offer rewards to investors, such as participating in a product launch or receiving gifts. A filmmaker might offer a behind-the-scenes tour of the movie set, while a chef launching a new cookbook might provide a private cooking class.

These experiential rewards aim to create a personal connection between the project and its supporters.

Kickstarter is one of the most popular crowdfunding platforms, with over $5 billion pledged by more than 18 million people since its launch in 2009.

Kickstarter's fees are 5% of the total amount raised, with payment processing fees of 3-5%.

Indiegogo, another well-known platform, charges a 4% fee on the total amount raised, with payment processing fees of 2.9% + $0.30 per transaction.

To get started, you'll need to create a project page that includes a compelling pitch, a clear budget, and a realistic timeline.

For example, the Pebble smartwatch raised over $10 million on Kickstarter in 2012, with a campaign that lasted just 30 days.

Before launching your campaign, make sure you have a solid plan in place, including a marketing strategy and a team to help you manage the project.

The average Kickstarter project raises around $6,500, but some projects have raised millions of dollars.

There are many popular crowdfunding platforms out there, but some stand out from the crowd. One such platform is Crowdfunder, which has supported over 175,000 projects in raising more than £100 million in total.

Crowdfunder focuses on supporting organizations at all stages of their campaign, and it's known for its flexible pricing for different types of crowdfunding projects. The platform offers three causes: donation, rewards, and community shares.

For charitable causes and non-profit campaigns, Crowdfunder charges 0% platform fees and 1.9% transfer fees. For-profit campaigns, on the other hand, pay 5% platform fees and 2.4% transfer fees.

If you're looking for a more general overview, here are the top 50 crowdfunding platforms: RankPlatform NameTarget LocationModel1Abundance InvestmentUnited KingdomDebt Based2AnaxagoFranceEquity Based3Arctic IslandCanadaReward Based

The world of crowdfunding is vast and exciting, with many platforms to choose from. There are over 175,000 projects that have been supported by Crowdfunder alone, raising more than £100 million in total.

One of the most popular platforms is Kickstarter, which has been around for 15 years and has helped raise almost $8 billion for over 250,000 projects. Kickstarter focuses on creative projects and start-ups, making it a great option for artists and entrepreneurs.

Here are some key facts about the top 50 crowdfunding platforms:

Crowdfunder offers flexible pricing for different types of crowdfunding projects, with platform fees ranging from 0% to 5% depending on the type of project. For charitable causes and non-profit campaigns, platform fees are 0% and transfer fees are 1.9%.

Crowdfundr is a crowdfunding site that's perfect for creators and independent businesses. It's been around since 2012 and has already served over 200,000 campaigns, raising over $250 million.

One of the things that sets Crowdfundr apart is its flexible fee structure. Organizers can choose how the platform will get paid, which is a big plus for those who want to keep more of their funds. Here's a breakdown of the different fee options:

With Crowdfundr, you have the freedom to choose how you want to fund your project, which makes it a great option for those who want to maintain control over their finances.

CrowdStreet is a fundraising site for real estate investors, having listed over 177 deals from 343 different sponsors.

It's raised over $4.3 billion in investment capital since its founding.

This platform is geared towards accredited investors looking to build a portfolio in private real estate.

Accredited investors may find CrowdStreet appealing due to its potentially less risky nature compared to investing in the stock market.

However, it's essential to note that CrowdStreet is solely focused on UK-based businesses and projects.

Additionally, the platform's fees are tailored to each fundraiser and its needs, with no general information available on the website.

A fresh viewpoint: How Does Real Estate Crowdfunding Work