In recent years, crowdfunding has become a popular and often effective means of raising money to start a business or a project. Although it may seem like a new concept, its roots actually date back hundreds of years. It is generally performed online through a number of websites specifically designed for fundraising purposes, but it can also be executed through other means, such as benefit events, solicitation letters, and the like. Is crowdfunding a good option for you? Find out more about raising money on Kickstarter, GoFundMe and Indiegogo. Crowdfundsocial will walk you through the history of and how people use the crowdfunding platforms differently.
Raising Money on Kickstarter
Kickstarter is one of the most popular crowdfunding platforms currently active. It was launched in the U.S. in 2009, and has gathered momentum from there, attracting investors and donors from other countries.
Best For: Kickstarter focuses on raising funds for creative projects, such as music, publishing, films, video games, photography, technology, shows, and even food-related endeavors.
What You Need to Know: If you want to raise money through Kickstarter, your project must qualify in one of 13 categories and must follow the site’s rules on prohibited uses. You must only enter a project, not something that has already been produced, manufactured or sold.
If you are asking assistance for a project that involves hardware or product design, there are additional requirements you must follow, including providing a manufacturing plan and a physical prototype of the product. You must also provide a target amount and a deadline for the project. You are also required to state the challenges and risks associated with producing your project.
A note: There is a 5% fee calculated based on the total amount of funds you raise, plus a 3% to 5% fee applied through their payment processor.
Raising Money on GoFundMe
GoFundMe was initially called CreateAFund in 2008. When the site was founded in 2010, the name was changed, and more features and upgrades were added to make transactions easier. With GoFundMe, you can create your own website to inform potential donors of the purpose of your fundraiser and your target amount. You may also include videos or photos.
Best For: GoFundMe focuses on collecting funds for events and not projects. These events can include life events such as illnesses, loss of a job or loss of a home, school tuition, medical bills and other causes.
What You Need to Know: Raising money on GoFundMe is slightly different than on Kickstarter in that the site is not incentive-based. GoFundMe charges a fee of 5% for each donation. Its payment proecessor, WePay, also deducts 2.9% and US$0.30 out of each transaction. Note that as of 2015, the site no longer supports funding for legal defense.
Raising Money on Indiegogo
Indiegogo was founded in 2008 and is one of the earliest websites to promote crowdfunding. It has partnered with other companies such as MTV New Media, Metamorphic Ventures, MHS Capital and ff Venture Capital, along with Startup America to expand its crowdfunding activities.
Best For: Raising money on Indiegogo allows you to fund startup businesses, charities, goals or even an idea.
What You Need to Know: You have to be at least 18 to start a campaign through Indiegogo independently. Otherwise, consent from a parent or guardian is required. The site is popular due to a less stringent list of guidelines and excellent customer support. Indiegogo charges a fee (5%) on contributions you receive through the site. This is on top of other fees that may be charged by PayPal and credit cards used. It also has a system that rewards donors, customers and investors.
Good to Know: There is also a sister platform that the company launched called Indiegogo Life (renamed Generosity.com) that allows people to raise funds for life events such as celebrations, medical bills and emergencies.