5 Tips for Picking the Best Crowdfunding Platforms
Crowdfunding is growing faster than venture capital with estimated spending at $34 billion in 2015.
Crowdfunding is a way of raising money for a project through a large number of people. It changes traditional funding models by allowing you to be in touch with new supporters directly online.
Certain options may be better for you. It depends on if you’re helping a cause you support, an entrepreneur funding a business or start-up, or a musician raising money for recording costs.
You’ll need to engage your personal networks no matter what method you use. But the investors on a particular site are looking for certain types of projects.
Usually, sites focus on charitable giving, creative projects, or business ventures. Access to those new investors could definitely increase the value of your campaign.
Here are 5 things to look for when picking a crowdfunding platform:
Easy to Use
If you’re an individual raising money for your half-marathon to support a charity, you’ll need to contact your personal networks. That means, friends, family, and others who support grassroots efforts or particular causes.
You’re looking for a platform that’s easy to set up, easy for others to donate money, and that can track multiple projects.
Crowdrise categorizes charity projects by civil rights and social action, education, poverty, religion, and spirituality, etc. This helps donors interested in your cause to find the project and contribute.
Crowdfunding platforms may charge administrative fees for connecting you and your donors or investors.
The crowdfunding platform you choose should have a fee structure that works for you and your project.
When people give money, whether to a friend or a cause, they usually like to be kept in the loop. Besides fees, you may need to share quarterly or monthly updates with investors.
Check the details of the agreement carefully.
If you’re funding a start-up or business venture, you’ll want to select a crowdfunding platform that works for your industry. Not only will the site connect you to great investors, but you might be able to build partnerships with strategic investors.
Whether you’re raising money for a business or a charity, look at what companies and nonprofits are connected to the site. You’ll want to find platforms that have connections to established companies and charities.
For tech start-ups, access to feedback from registered investors might be important.
Select a crowdfunding platform with security protections for financial transactions.
But if this is a business venture, you’ll want more legal and financial options. You may need escrow services, investor diligence, and feedback.
The best crowdfunding platforms will address the particular needs of your project or campaign. Have you ever used a crowdfunding platform to raise money for a business or a cause? Please share any tips in the comments?
Have you ever used crowdfunding to raise money for a business or a cause? Please share any tips in the comments?