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Crowdfunding is a relatively new source of raising capital – but has taken off like the latest of trends. Many crowdfunding sources have been established and are quickly forming a track record which indicates the trend will continue.
By some estimates, as many as 500 crowdfunding sites are operating today. However not all of these are showing similar results as those at the top. It genuinely takes significant community to form behind a crowdfunding source before it reaches a 'critical mass' and reliably funds projects.
Which crowdfunding site is right for your project?
A brief overview of the industry and primer on different types of crowdfunding follows so you will be able to better determine those which might align well with your specific funding needs.
The Crowdfunding Industry
Collaboration on the Internet is an area of significant growth with respect to project funding at the seed level in particular. Crowdfunding, or collaborative funding via the Internet, was one of early promises of an economy recovery after the largest economic recession since the depression.
One Crowdfunding Industry Report (Massolution) includes data showing overall crowdfunding industry has raised $2.7 billion in 2012, in over 1 million individual campaigns. In 2013 some projections estimate growth to $5.1 billion.
Among the most interesting developments in crowdfunding expected to grow in the months and years ahead, include: investment crowdfunding (becoming a shareholder in a company), localization (funding focused on participants in specific cities and neighborhoods), and group-based approaches.
The JOBS Act that was passed in April of 2012 paved the way to investment crowdfunding, but the JOBS Act Rulings by the SEC have yet to be fully implemented to formally kick the market off. Expect big movement and activity in this area in 2013 and 2014.
There are 2 primary modes or types of crowdfunding. These include donation-based funding. The birth of crowdfunding has come through this model, where funders donate via a collaborative goal based process in return for products, perks or rewards.
A second and more model relates to investment crowdfunding, where businesses seeking capital sell ownership stakes online in the form of equity or debt. In this model, individuals who fund become owners or shareholders and have a potential for financial return, unlike in the donation model.
Crowdfunding Sites To Choose From
Business owners are using crowdfunding sites which are different than those used by musicians and futher those used by charities. Below listed are several of the more promenant crowdfunding sites that have different models and focuses. You may be able to find from this list those that can help you with your crowdfunding goals.
Kickstarter is a site where creative projects raise donation-based funding. These projects can range from new creative products, like an art installation, to a cool watch, to pre-selling a music album. It’s not for businesses, causes, charities, or personal financing needs. Kickstarter is one of the earlier platforms, and has experienced strong growth and many break-out large campaigns in the last few years.
While Kickstarter maintains a tighter focus and curates the creative projects approved on its site, Indiegogo approves donation-based fundraising campaigns for most anything — music, hobbyists, personal finance needs, charities and whatever else you could think of (except investment). They have had international growth because of their flexibility, broad approach and their early start in the industry.
Rockethub powers donation-based funding for a wide variety of creative projects.
What’s unique about RocketHub is their FuelPad and LaunchPad programs that help campaign owners and potential promotion and marketing partners connect and collaborate for the success of a campaign.
Crowdrise is a place for donation-based funding for Causes and Charity. They’ve attracted a community of do-gooders and and fund all kinds of inspiring causes and needs.
A unique Points System on Crowdrise helps track and reveal how much charitable impact members and organizations are making.
Somolend is a site for lending for small businesses in the US, providing debt-based investment funding to qualified businesses with existing operations and revenue. Somolend has partnered with banks to provide loans, as well as helping small business owners bring their friends and family into the effort.
With their Midwest roots, a strong founder who was a leading participant in the JOBS Act legislation, and their focus and lead in the local small business market, Somolend has begun expanding into multiple cities and markets in the US.
If you want to build the next new mobile app and are seeking donation-based funding to get things off the ground or growing, then check out appbackr and their niche community for mobile app development.
If you’re a tech startup with a shiny lead investor already signed on, or looking for for Silicon Valley momentum, then there are angels and institutions finding investments through AngelList. For a long while AngelList didn’t say that they did crowdfunding, which makes sense as they have catered to the investment establishment in tech startups, but now they’re getting into the game. The accredited investors and institutions on AngelList have been funding a growing number of select tech startup deals.
Crowdfunder is the crowdfunding platform for businesses, with a growing social network of investors, tech startups, small businesses, and social enterprises (financially sustainable/profitable businesses with social impact goals).
You might want to create your own crowdfunding community to support donation-based fundraising for a specific group or niche in the market. Invested.in is a Venice, CA based company that is a top name “white label” software provider, giving you the tools to get started and grow your own.
If you’re an inventor, maker, or tinkerer of some kind then Quirky is a place to collaborate and crowdfund for donation-based funding with a community of other like-minded folks. Their site digs deeper into helping the process of bringing an invention or product to life, allowing community participation in the process.
These 10 crowdfunding sites cover most campaign types or funding goals you might have. Whether you’re looking to fundraise or not, go check out the sites here that grab your attention and get involved in this collaborative community.
How Crowdfunding Is Shaping A New Economy
Crowdfunding has revitalized the Arts at a time when public programs that support it are steadily dying off.
Crowdfunding is growing a market for impact investing in social enterprises, marrying the worlds of entrepreneurship and philanthropy, and helping a broader base of investors to back companies for both profits and purpose.
Crowdfunding is accelerating angel investing and creating an entirely new market for investment crowdfunding for businesses.
So get involved and join a crowdfunding community today. You’ll make a difference for a project or business owner, and also help build a new and more collaborative economy.