Types of Crowdfunding Platforms: 

Rewards:

The most popular type of crowdfunding in the media. Enterepenues have used rewards based crowdfunding to presale and launch products. Have a great idea, but need financing to produce it. Pre-sell your innovation on sites like Indiegogo and Kickstarter. 

In rewards-based crowdfunding, backers contribute typically small amounts of money (typically between $1 and $1,000 but sometimes more) in exchange for a reward. This reward is often, but not always, the item being produced, such as a watch, an album or a film. Kickstarter and Indiegogo are the two most popular rewards-based crowdfunding platforms but there are LOTS of other platforms.

Equity:

The newest crowd financing solution. It originated in the UK in 2009 to overcome the connection issues between startups and potential investors. It is described as a win-win for both investors and entrepreneurs. Like rewards based, except participants get equity instead of a product.

In equity-crowdfunding, investors give larger amounts of money (at least $1,000 and often a lot more). When investors give the money, they don’t get a reward, but instead, a small piece of equity in the company itself.

Donation:

 In donation-based crowdfunding, donors generally donate small amounts (again, typically between $1 and $1,000, but sometimes more). Like the name suggests, in a lot of donation-based crowdfunding, there isn’t always a reward beyond the gratitude of the project creator or beneficiary (and possibly a tax deduction). Donation-based crowdfunding is typically used to raise money for a non-profit or a cause, like drilling a well or building a school in Africa or for a personal campaign like an individual’s treatment or medical bills. GoFundMe and Crowdrise are two popular donation-based crowdfunding platforms but there are lots of others. You can also do donation-based crowdfunding on Indiegogo and even Kickstarter but you have to be within each platform’s guidelines. For instance, on Kickstarter, you can’t promise to donate funds raised to a charity or cause.

Debt:

Debt crowdfunding is also known as microlending. It is the largest part of crowd financing but is currently not covered by our crowdfunding series.  In debt-crowdfunding, it’s not “backers” or “donors” who give money, but lenders (sometimes these lenders are called investors).

Unlike other forms of crowdfunding, it’s NOT an exchange for a reward or equity. The investors don’t get a reward and they don’t get a piece of equity in the company, but instead, they make a loan with the expectation to get paid back the principal plus interest.

So it’s a lot like a loan from the bank, but instead of borrowing one larger amount of money from one bank, you borrow smaller amounts of money from multiple people.

Debt-crowdfunding can be used to raise money for lots of reasons, like credit card refinancing, debt consolidation, home improvement, a car or other reasons.

Table of Crowdfunding sites

 

Entity Website Platform Type Campaign Type Focus Campaign Fee Processing Fee Cost Details How It Works
CrowdFunder http://www.crowdfunder.co.uk/ Equity, Debt, Rewards AoN Small and medium-sized businesses 5% 1-3% http://www.crowdfunder.co.uk/payment-options/crowdfunder-fees http://www.crowdfunder.co.uk/how-it-works
CrowdRise https://www.crowdrise.com/ Donation KiA Charities, causes 5% https://www.crowdrise.com/charities/choose https://fundraising.crowdrise.com/nonprofit-pricing https://www.crowdrise.com/fundraising-events
Fundable http://www.fundable.com/ Equity, Reward AoN Business crowdfunding $99 per month during your active campaign 3.50% https://www.fundable.com/faq/pricing-and-fees https://www.fundable.com/about/how-fundable-works
GoFundMe http://www.gofundme.com/ Donation KiA or AoN Local businesses 5% 2.9% + $0.30 per donation https://support.gofundme.com/hc/en-us/articles/203604294-GoFundMe-Guide-Fees-Pricing https://www.gofundme.com/tour/
Indiegogo https://www.indiegogo.com/ Donation, Reward KiA or AoN Allows a broad range of projects. Anyone with ideas and willingness to compete against thousands of others 5% 3% + $0.30 applies. $25 fee for international wire https://support.indiegogo.com/hc/en-us/articles/206212618-Details-on-Fees All events have their own profile page, with a video, a written summary, descriptions of levels for funders, a fundraising goal, and a deadline (up to 120 days from the launch date). Businesses get to keep whatever they raise, even if the goal is not reached. Contributions can be made via check, credit card, or PayPal.
Kickstarter https://www.kickstarter.com/ Reward AoN Artists, designers, and inventors with creative projects. 5% 3-5% + $0.20 applies. https://www.kickstarter.com/help/fees/ Each project on Kickstarter gets a fundraising page, which includes the funding goal, a video explaining the venture, and the deadline (one to 60 days after the launch). Campaigns are expected to offer “rewards”  (or levels) to contributors.  Kickstarter is a all or nothing platform.
Lending Club https://www.lendingclub.com/ Debt AoN Loans and investments 1.11-5% 1% to investors, plus 30-35% collection fee if the late payments are recovered https://www.lendingclub.com/public/borrower-rates-and-fees.action https://www.lendingclub.com/public/how-peer-lending-works.action
Patreon http://www.patreon.com Donation KiA Musicians, Podcasts, Vloggers, Youtubers, Webcomics 5% 4% https://patreon.zendesk.com/hc/en-us/articles/204606125-How-do-you-calculate-fees- https://patreon.zendesk.com/hc/en-us/articles/204606315-What-is-Patreon-
Prosper http://prosper.com Debt AoN Loans and investments 0.5-4.95% 1% annual loan servicing fee https://www.prosper.com/help/contextual/fees/ https://www.prosper.com/welcome/how-it-works
Rockethub http://www.rockethub.com/ Reward, Donation KiA art, business, science, and social 4% 4% If you reach your goals, the commission is 4 percent, plus a 4 percent credit card handling fee. If you don’t reach your goal, the commission goes up to 8 percent, plus the card handling fee. http://www.eleqtgroup.com/about#rockethub
Seed&Spark http://www.seedandspark.com/ Donation, Reward 80%oN Movies and TV 2.5-5% 3% https://www.seedandspark.com/faq#what-are-your-crowdfunding-fees https://www.seedandspark.com/how-to
Tilt https://www.tilt.com/ Reward AoN Events, Gifts, Projects, Fundraisers, Social Experiences 2.50% 2.5% to givers for Credit Card processing https://www.tilt.com/learn/fees https://www.tilt.com/learn
YouCaring http://www.youcaring.com/ Donation KiA Medical expenses, memorials and other personal and charitable causes 5% 2.9% + $0.30 applies https://www.youcaring.com/free-fundraising https://www.youcaring.com/crowdfunding
Dreamfunded https://www.dreamfunded.com/ Debt, Equity AoN Focus on Real Estate Entrepreneurs https://www.dreamfunded.com/how_it_works
Campaign types

KiA (Keep It All): Model involves the entrepreneurial firm setting a fundraising goal and
keeping the entire amount raised, regardless of whether or not they meet their goal, thereby
allocating the risk to the crowd when an underfunded project goes ahead

AoN (All Or Nothing): Model involves the entrepreneurial firm setting a fundraising goal and keeping nothing
unless the goal is achieved, thereby shifting the risk to the entrepreneur

Cumming, Douglas J. and Leboeuf, Gaël and Schwienbacher, Armin, Crowdfunding Models: Keep-It-All vs. All-Or-Nothing (May 31, 2015). Available at SSRN: https://ssrn.com/abstract=2447567 or http://dx.doi.org/10.2139/ssrn.2447567

Resources:

Manny Fernandez, cofounder and CEO, DreamFunded. He has been an angel investor and a keynote speaker on investing in Silicon Valley and was ranked #14 of the Top 100 Angel Investors to Follow on Twitter. Slides( Sacramento ECF keynote 6-20 – $1,000,000 – Manny)

Michael Zeligs, founder, StartMotionMEDIA, who has helped entrepreneurs raise over $13 million through rewards-based crowdfunding campaigns. Links from talk 1 2 3 4  Course

Christopher Russell, Partner, Stoel Rives, LLP.  With a broad transactional and corporate governance experience, Chris guides entrepreneurs and business leaders on corporate issues related to all aspects of its business and their fiduciary duties in significant transactions. slides (Crowdfunding Regulation – Chris Russell Stoel Rives)

 

Additional Resources

Open Crowdfunding Community online

7 Things 

https://www.inc.com/magazine/201111/comparison-of-crowdfunding-websites.html

https://www.inc.com/magazine/201306/eric-markowitz/how-to-choose-a-crowdfunder.html


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