Obtaining funds for personal or business purposes without collateral can be very difficult and difficult, especially if the amount required is huge. Crowdfunding offers a unique opportunity for people and budding startups to raise large funds quickly.
Crowdfunding is raising money for a project or cause through a large group of people online
Crowdfunding brings the problem of financing to the masses via the Internet. An individual or entrepreneur can pitch their ideas through an online platform and request small monetary contributions from supporters.
The business or individual usually sets fundraising goals to reach a benchmark by a certain date. Once this fundraising goal is reached, the sponsorship platform administers the fund.
Suggested reading: How the SEC plans to regulate crowdfunding in Nigeria to reduce investor risk
Types of crowdfunding
There are generally three types of crowdfunding: reward, debt, and equity crowdfunding. With reward crowdfunding, funds are raised by contacting friends and supporters. Crowdfunding of debt provides quick loans to be repaid within a specific timeframe and crowdfunding in actions where a share of the business is given to the people providing the funding.
When choosing a crowdfunding platform, certain factors such as fees, popularity, and ease of use should be taken into account. Below are some of the best crowdfunding platforms you can use.
The GoFundMe platform is very popular on social media. You’ve probably seen it used for emergencies and charitable causes, but businesses can use it as well.
The crowdfunding site is very easy to use and popular with influencers on twitter. The platform charges a processing fee of 2.9% and 30 cents for each donation. However, there is no personal campaign finance fee for those based in the United States.
GoFundMe is the best crowdfunding platform for personal fundraising
The platform has seen many successful campaigns including the recent fundraiser for Erika, BBNaija’s disqualified roommate. Plus, because it’s an all-or-nothing platform, it lets you hold onto whatever you breed.
Kickstarter is known for helping tech and creative entrepreneurs fund their projects before raising money from venture capitalists. The platform is very easy to use. It has raised over $ 1 billion in funding from 5.7 million donors and completed more than 189,000 projects funded since its inception in 2009.
Kickstarter âorganizesâ its projects, which means that before your campaign starts, you will need to be approved by Kickstarter. For each amount of money raised per individual, you should also define a small gift or personal experience for your donor.
Kick Starter is one of the largest crowdfunding platforms in the world
The platform charges a payment processing fee of 3-5% per transaction and a 5% fee to be taken from funds raised. In addition, it has a 14 day waiting period for funds and only accepts projects based in the US, UK, Canada, Australia and New Zealand.
Patreon is one of the most popular crowdfunding platforms among digital creatives. Instead of one-off donations, Patreon creates a subscription model where fans can regularly contribute a set amount of money, either per month or per creation.
The site is very easy to use and has over two million active patrons and over 100,000 active creators. The site also allows YouTubers, bloggers and other content creators to build relationships with their fans.
Patreon is the best crowdfunding platform for creators
Patreon charges a 2.9% fee and 35 cents on each pledge. It even allows creators to offer exclusive content as an incentive for funding to their subscribers. One downside is that creators have to regularly share their work on your personal platform if they don’t want fans to unsubscribe.
Suggested reading: Strictly for registered SMSE and FundMe platforms, new crowdfunding regulations could disrupt public fundraising in Nigeria
CircleUp has spared many entrepreneurs and startup founders the hassle of funding to grow their businesses. The platform offers both equity financing and loans and has raised more than $ 260 million for 196 startups.
The platform is easy for an entrepreneur to use as the platform provides a network of experts, retailers, other entrepreneurs and accredited investors, who have a net worth of at least $ 1 million.
CircleUp is the best crowdfunding platform for equity crowdfunding
The platform offers different prices depending on the offers and the selection process and is quite competitive. However, the platform is best for entrepreneurs looking to scale rather than develop their ideas, as you need to have a turnover of at least $ 1 million to be listed on the platform.
Lending Club is not as popular as the other platforms listed above, but it does have some great business deals. The platform offers a form of crowdfunding that is easy to obtain and faster than normal bank loans. Lending Club has provided up to $ 40,000 for personal loans and up to $ 5,300,000 for business loans.
Interest rates for loans, however, can be high depending on your credit score – total annualized interest is typically between 10.68% and 35.89%.
Lending Club is the best crowdfunding platform for business loans
The platform can provide 3 or 5 year loans and does not require VC formalities such as business visits or plans and projects. However, the business must be over a year old and have annual sales of $ 50,000.
Suggested reading: Donate-ng makes crowdfunding easy, but it has a strict approval process
Causes is the premier online crowdfunding platform for social, political and cultural issues. This means that it is the perfect platform for NGOs and other nonprofit causes. The platform practically wants to help raise funds to make the world a better place.
Causes is the best crowdfunding platform for NGOs and associations
The platform is very easy to use and provides a large community of donors. In addition to fundraising, Causes is a social networking platform that allows you to find people with common interests by browsing categories such as animals, human rights, and the environment. The platform has over 186 million users in 156 different countries.
The platform is free, but it serves paid advertisements.
In summary, Crowdfunding platform can be a great way to raise a large amount of money in a short period of time. Depending on how you want to use the funds, you can choose from several platforms. However, be sure to check the fees as they can add up. This helps you make sure that using the platforms is worth it.
Keep in mind that you need to market your fundraising campaign so that people can donate.
If you would like to be featured on our Entrepreneur Spotlight, click on here to share your startup story with us.
Receive the latest tech news, reviews, business-related content with a deliberate focus on the African narrative and insightful Nigeria analysis – straight to your inbox.