Crowdfunding for Business: 17 Best Sites To Get Capital for Your Startup
As a small business owner, you might be looking for ideas of where to get the capital to take your business venture or startup idea to the next level. After you have made a business plan, invested your own savings, and worked your business as a side hustle for a few months, it is time to raise some real funds.
Heading to the bank for a traditional business loan is not your only option anymore. Crowdfunding platforms where people can invest in your project, idea, or business are all over the internet these days. But what, exactly, is a crowdfunding platform? How do you leverage crowdfunding for business? And, if you do decide crowdfunding platforms are the right move to raise funds for your small business, which websites should you explore?
Let’s jump into everything you need to know about crowdfunding for business: What it is, how to run successful crowdfunding campaigns, and every must-know crowdfunding site out there today for businesses.
What Is Crowdfunding?
First things first. Before we jump into how you can use crowdfunding as a strategy for raising funds for your business, let’s quickly cover what, exactly, crowdfunding is.
Crowdfunding, as the name implies, is when multiple investors (a “crowd”) fund a business or project. So, instead of a small business generating investment from one or two large sources, they appeal to a larger group of potential investors to get the capital they need to move their businesses forward.
But that capital doesn’t always come for free. In exchange for their investment, investors expect something in return—and what that “something” is will depend on the type of crowdfunding a small business decides to use to raise capital.
There are 4 main types of crowdfunding:
- Equity Crowdfunding
Equity crowdfunding (also known as equity-based crowdfunding) is arguably the most traditional form of crowdfunding. With equity crowdfunding, small business owners sell equity in their company in exchange for funding.
- Rewards Crowdfunding
When you think of the word “crowdfunding,” chances are, you’re thinking of reward-based crowdfunding. Made popular by crowdfunding websites like Kickstarter, rewards crowdfunding is based on rewarding investors with products, experiences, services, or other rewards (hence the name) in exchange for donations from investors.
- Donation Crowdfunding
Donation crowdfunding is popular with non-profits and small local businesses. It’s simple: Investors donate money to companies they want to back—and the companies accept the money without any expectation to pay it back.
- Debt Crowdfunding
Debt crowdfunding has a similar structure to traditional small business loans—except instead of borrowing money from a bank or lending company, the business borrows money from individuals or small groups of investors. Generally, the terms of debt crowdfunding mirror that of a traditional business loan—including things like a set annual percentage rate and defined payment plan.
Crowdfunding for Business: Best Practices
Now that you know what crowdfunding is (and the different types of crowdfunding), let’s jump into how to make crowdfunding work for your business.
There are a few best practices you’ll want to keep in mind when using crowdfunding to raise capital for your business.
Use the Right Crowdfunding Site
Not all crowdfunding sites are created equal. For example, some are designed as fundraising platforms and are best suited for driving donations, some are designed to create successful campaigns around new product launches, and others are strictly for equity crowdfunding. Before you jump into a crowdfunding venture, make sure to research the different crowdfunding sites on the market, and choose the site that’s the best fit for your needs and business goals.
Create a Clear Strategy to Drive Investor Interest
Crowdfunding has gotten hugely popular in recent years—which means that there are more small businesses than ever using these platforms to raise money. So before you launch a crowdfunding campaign, make sure you’re taking the time to define your strategy. That includes what type of investors you’re targeting, how you’re going to market your crowdfunding campaign and grab the attention of your ideal investors, and how you’re going to convince investors that your business is one they want to invest in.
Communicate With Your Investors
In traditional investing, your business might have one or two investors that have a large sum invested in the company. Crowdfunding is different; depending on the type of crowdfunding campaigns you’re running, you may have hundreds (or thousands!) of individual backers investing small sums. But that doesn’t mean they’re any less interested in their investment—or less entitled to information about how that investment is panning out.
Make sure to regularly communicate with your backers and keep them up to date with how your business/project is progressing. For example, if you’re using rewards crowdfunding to develop and launch a new product, make sure to share regular updates with your investors about how product development is going (including photo and video updates)—as well as up-to-date information about when they can expect to have their product in hand.
Don’t Bite Off More Than You Can Chew
The possibilities for business crowdfunding are exciting. But you don’t want to get so caught up in the excitement that you overpromise. If you want to run a successful campaign, define how much you need in funds raised—and, just as importantly, what you can deliver based on those funds.
For example, if you’re running a rewards-based crowdfunding campaign, set a realistic crowdfunding goal that gives you the capital you need—but don’t accept capital from so many investors that, at the end of the day, you can’t actually deliver the rewards (we’re looking at you, Coolest Cooler). Or, if you’re tapping into equity crowdfunding sites, don’t sell so much of your equity that your business model is no longer sustainable.
Bottom line? A successful crowdfunding campaign can be a great way to hit a funding goal and get financial support for your business—but if you bite off more than you can chew, it can do more harm than good. So define your funding goals, build your strategy accordingly, and don’t go overboard. (That’s how businesses fail with crowdfunding!)
The Best Crowdfunding Sites for Small Businesses
Now that you understand what business crowdfunding is, let’s jump into every crowdfunding site you need to know to effectively manage your next crowdfunding campaign, launch crowdfunding projects, and raise money for your small business:
Kickstarter is arguably the most popular and well-known crowdfunding site on the internet. The company has helped millions of artists, musicians, filmmakers, designers, small businesses, and other creators raise over $6.7 billion to fund more than 225,000 projects successfully. It is an all-or-nothing situation with funding as you have to meet the goal you set within the allotted time or everyone gets their money back.
It is free to create a project campaign on Kickstarter, but if you successfully get funded, a 5% fee is owed from your collected funds. You will also get charged processing fees between 3% and 5%.
Indiegogo doesn’t just offer live crowdfunding campaigns, they also have a marketplace for innovative products. They have helped entrepreneurs raise well over $1 billion for more than 800,000 projects. Find out if your idea has legs—and the foundation for a successful campaign—and raise starter capital with Indiegogo’s “global network of early adopters.”
With this crowdfunding platform, you don’t have to stop raising money at a specific time. There are no fundraising targets or deadlines and you can apply equity, offer securities, revenue-sharing, and even cryptocurrency sales.
Indiegogo charges 5% in platform fees for all projects. If you’re raising money for a cause, you don’t have to pay any fees with Indiegogo’s sister platform—GoFundMe.
3. Crowd Supply
Whether you want to bring a family recipe to market or build electronics, Crowd Supply can help you. Their mission is to “bring original, useful, respectful hardware to life” has come to fruition with 80% of its launched projects being successfully funded (2x more than Kickstarter). The average amount raised per successful project is $61,000 (6x more than Kickstarter for comparable projects). Crowd Supply also boasts that 100% of their successfully funded campaigns have delivered to backers (or are on track to do so)—which is a higher success rate than other platforms.
Crowd Supply helps project owners with everything from launching campaigns to marketing to customer support to order fulfillment. In exchange, you’ll pay a percentage of gross campaign sales (not including processing fees)—typically 12%.
If you’re based in the U.K., you’ll want to check out Crowdfunder. This crowdfunding supports different types of crowdfunding, including both rewards and donation-based crowdfunding for small businesses. To date, the platform has raised over £250 million for over 300,000 projects. The platform also boasts a community of 1 million supporters.
While Crowdfunder doesn’t charge platform fees for charities and non-profits, any for-profit projects (including business ventures) will pay a 5% platform fee (plus 2.4% in transaction/processing fees).
This is the platform to fund scientific discoveries and scientific research. Experiment backers fund projects that “push the boundaries of knowledge” like dinosaur fossil evacuations to the historical study of medieval monasteries. They fund project scientists without the overhead costs they would have to otherwise face with university grants (which can be 50%–60%).
To date, the site boasts 1075 funded projects/crowdfunding campaigns, over 52,000 backers, and more than $10 million in funds raised. It’s also worth noting that Experiment is an all-or-nothing platform—so if your crowdfunding campaign fails to hit your fundraising goal, no backers will be charged and the project owner won’t receive any funds.
It is free to start a project, but once you receive full funding Experiment charges an 8% platform fee plus payment processing fees of 3%–5%.
Chuffed helps social causes aimed at helping animals, your community, or the environment. This fundraising platform is for not-for-profit companies and cause-based organizations exclusively. Their most successful campaigns have raised an average of $7,000. Nearly 8,000 campaigns have collectively raised $18 million.
Donors pay your payment processing fees. So, a $100 donation would require a $3 fee from the donor. Plus, all donors are encouraged to make a small donation to Chuffed too.
Patreon helps artists, musicians, writers, and creators of all kinds get paid by running a membership business for their fans. This stream of revenue comes from fans paying you a subscription fee of their choosing in exchange for exclusive experiences and behind-the-scenes content. To date, more than $3.5 billion has been paid out to the more than 250,000 creators on the platform—courtesy of Patreon’s 8 million active monthly investors (known as “patrons”).
Patreon charges creators fees between 5% and 12%, depending on the plan you choose (different plans offer different levels of support from the platform). Patreon also charges payment processing fees between 2.9% and 5%.
Fundable is a successful crowdfunding site specifically designed for startups and small businesses (to date, the platform has helped users raise over $568 million in pledged funds). To get started, create a profile on Fundable and then choose a program. Consumer-facing companies can raise up to $50,000 with their rewards program that allows entrepreneurs to sell their products (that includes taking pre-orders and selling merchandise).
If you’re looking for a higher level of investment, you’ll want to tap into their equity crowdfunding model, which allows companies to raise between $50,000 to $10 million for their product, service, or B2B-based business by seeking investment from accredited investors.
It’s free to create a company profile on Fundable—and once you decide you want to start raising funds, you’ll pay a monthly subscription fee (starting at $179 per month). There are no success fees, but for rewards-based funding, there is a processing fee of 3.5% + $.30 per transaction.
Are you a startup looking to raise a solid amount of money in a relatively short time frame? You’ll want to give WeFunder a try. With WeFunder, you can connect with investors (the platform boasts over 1 million investors!) to raise anywhere between $50,000 and $50 million, with most campaigns wrapping up and hitting their goals between 30 and 90 days.
It is free to create a WeFunder profile and they don’t charge any up-front fees. However, for Regulation CF, founders will pay 7.5% of any successful crowdfunding campaigns. For Regulation A, WeFunder charges a flat fee of $375,000 (the equivalent of 7.5% on a $5 million funding round).
Are you a high-growth, early-stage company looking to raise either convertible note funding or run equity-based campaigns? If so, SeedInvest may be the platform for you.
SeedInvest is a go-to for tech startups. If you plan to target priced rounds of equity, be prepared to provide SeedInvest with your pre-money valuation. If it’s convertible notes you’re after, you’ll have to provide the valuation cap, conversion discount, interest rate, and term length. Currently, SeedInvest has a network of over 697,000 investors—and to date, more than $465 million has been raised on the platform.
One thing to keep in mind with SeedInvest? It can be a lengthy process. Once you’ve created an application, you’ll need to go through a rigorous screening process and conduct due diligence before you can create a profile on the site. Be prepared to devote at least 60 days (potentially more!) to the process.
If you raise money through SeedInvest, you should also expect to pay some fees, including a 7.5% placement fee charged on the total amount raised. (That’s only paid on the successful completion of your campaign.) You can also expect a 5% capital or equity fee based on the amount raised and up to $10,000 to cover legal and administrative expenses (for example, due diligence, escrow, marketing, and legal reimbursement).
If you’re looking to crowdfund a more personal passion project, Fundly could be a good resource. Touted as a crowdfunding platform to “raise money for anything,” Fundly makes it simple to crowdfund anything from a community project to a creative endeavor to a big trip. And best of all, they do it with no raise requirements or startup fees involved.
Fundly also allows you to access your money quickly; payments can be withdrawn within 48 hours of a donation. (You can even set up automatic transfers.)
All Fundly users pay a 4.9% transaction fee on donations—plus a 2.9% credit card process fee and $.030 per transaction in the U.S. and Canada. (Rates in the U.K. and Australia differ slightly.)
LendingClub provides both personal loans (up to $40,000) and business loans (up to $500,000). But LendingClub isn’t a bank. Here’s how it works for business loans: Business owners apply for a loan through LendingClub. LendingClub screens the borrower, then connects them with a network of investors that are able to purchase notes that correspond to fractions of loans. The business owner gets the capital upfront (terms range from 1 to 5 years with fixed monthly payments and no prepayment penalties).
LendingClub has stricter requirements than other crowdfunding sites; for example, in order to apply for a business loan, your business needs to be based in the U.S., have been in business for 12 months or more, have annual sales of $50,000 or more, and the loan applicant must own at least 20% of the business.
In terms of fees, LendingClub charges an origination fee of between 3.49% and 7.49%, a total monthly payment per $10,000 borrowed of between $227 and $1,781 with total annualized rates of 9.77% to 35.98%.
If you’re looking to raise funds for corporate social responsibility initiatives or employee and/or workplace programs, you’ll definitely want to check out FundRazr. This platform (which also supports non-profits and individuals) is touted for being simple, straightforward, and easy to use. They also offer a suite of tools (including CRM and social media integrations) to help you take your fundraising efforts to the next level.
Platform fees range between 0% and 5%—and all FundRazr users will be required to pay industry-standard third-party payment processing fees (currently, FundRazr offers payment processing through Stripe and PayPal).
Are you trying to raise funds for a cause-based mission—like a nonprofit or a socially conscious business venture? If so, be sure to check out StartSomeGood.
StartSomeGood offers two types of crowdfunding: One-Off (which, as the name implies, is designed for one-off projects, like hosting a cause-based event or funding the opening of a community center) and Recurring (which is great if you’re looking for ongoing funds to support your business as it does good in the community). They also offer users a ton of support in getting their campaign off the ground—including access to the platform’s 120,000+ social media followers.
StartSomeGood charges a 5% service fee on all successfully processed pledges.
From Animals & Pets to Community, Sports to Volunteer & Travel, crowdfunding platform GoGetFunding has a huge variety of categories, making it a popular choice for individual crowdfunding campaigns. However, the site does also offer a Business & Startups category—so if you’re looking for crowdfunding for businesses, this platform is definitely worth a look.
Getting started is easy; all you have to do is create a profile with your fundraiser details—for example, the title of your campaign, target, and currency (GoGetFunding does crowdfunding on an international scale)—and you’re ready to launch.
Another perk of GoGetFunding is that their platform fee is lower than many competitors—just 4%.
EquityNet is an equity crowdfunding platform that helps business owners raise capital—between $100,000 and $100 million—by connecting them with their network of accredited investors. To date, more than 1,000 companies have raised over $600 million in capital through the EquityNet platform.
One of the perks of EquityNet is that they accept all legal and ethical companies that apply (according to EquityNet, competitors accept less than 5% of applicants). They also only work with high-quality accredited investors (currently, the investor network has over 20,000 investors, including individuals and VCs)—so you know that the backing you get is coming from legitimate, reliable sources.
Unlike other platforms, EquityNet offers flat-fee crowdfunding; instead of taking a cut of your raised funds, EquityNet charges a monthly membership fee (while the platform offers a free option, paid options range from $299 per month to $2,990 per month).
Seedrs offers U.K. businesses the opportunity to crowdfund, both from their audiences (for example, social media followers) and from a network of individual investors—making this a great one-stop shop for small business owners that want to explore both crowdfunding and more traditional investments.
You only pay fees on Seedrs if you run a successful campaign. If you are successful, expect to pay a 6% success fee, a £2,500 completion fee (excl. VAT), and payment processing fees.
About the author
Deanna deBara is an entrepreneur, speaker, and freelance writer who specializes in business and productivity topics. When she's not busy writing, she enjoys exploring the Pacific Northwest with her husband and dog. See more of her work and learn more about her services at deannadebara.com.