Choosing the Right Crowdfunding Platform
The meteoric rise in popularity of crowdfunding means you have choices when it comes to crowdfunding platforms. Choosing the right crowdfunding platform for your idea, your brand, and your target audience is crucial for your campaign to get started effectively. Each platform offers distinct advantages and disadvantages, and you’ll generally want to base your options around only one source, so do your research and choose carefully.
Kickstarter is the top name in the crowdfunding industry for a reason. Hosting more than 13 million active visitors every month, Kickstarter is by far the most popular crowdfunding platform, and it’s fairly easy to get started with a campaign. Over 80,000 projects have been funded using Kickstarter so far, with more funded every day. However, in order to be accepted, you have to have some tangible creation, like a product or an event—social causes and personal endeavors aren’t allowed. Kickstarter also has an all-or-nothing model, so if you don’t hit your goal, you’ll forfeit all your donations.
(Image Source: Kickstarter)
(Image Source: Kickstarter)
- By far the biggest user base and highest visibility
- Easy campaign creation and management
- Limitations for campaign types
- All-or-nothing payment model
- 5 percent for any successfully funded project, plus another 3 to 5 percent for payment processing.
IndieGoGo is another major player worth considering. It’s host to about 9 million monthly visitors, making it slightly less popular than Kickstarter. However, it has better support for international funders, and has a slightly higher track record of successfully funded projects (for what that’s worth). IndieGoGo also allows any legal project, cause, or idea to be funded—including personal needs and charitable donations.
(Image Source: IndieGoGo)
- Better international options
- A wider variety of campaign possibilities
- Lower campaign visibility and reputation
- Lower monthly traffic
- Variable, depending on the nature of your campaign, but you can count on 9 percent for funds below your goal and 4 percent for successfully funded campaigns. This puts it roughly on par with Kickstarter.
Fundable is a differentiated platform because it offers both equity and non-equity crowdfunding options. It has a much lower user base and is less well-known, but it doesn’t charge any percentage-based fees, making it an attractive platform for brands looking to raise large amounts of capital. Participants keep any and all funds raised.
- No percentage-based fees
- Equity and non-equity options
- Lower visibility and potential
- Less developed platform
- $179 per month, plus a monetary transaction fee for non-equity crowdfunding contributions.
GoFundMe is a popular platform, almost as visible as Kickstarter or IndieGoGo, but its main focus is individual initiatives, such as funding trips, medical bills, or personal creative goals. Accordingly, it’s not an appropriate platform for most companies, organizations, or brands. Like Kickstarter, it offers an all-or-nothing model.
- Ideal for personal causes or charities
- High visibility
- All-or-nothing platform
- Inappropriate for most businesses and organizations
- 5 percent, plus a processing charge for all payments received.
WeFunder is an exclusive platform for equity crowdfunding. As per current regulations, you must be an accredited investor to use WeFunder as a contributor, but almost any entrepreneur or startup can use it to gather equity capital.
- Offers equity crowdfunding
- Minimal campaign flexibility and limited user base
- High fee structure
- 10 percent carried interest rate, plus a nominal fee (variable) upon successful completion of a campaign.
AngelList isn’t quite a crowdfunding platform, but if you’re considering equity crowdfunding, or if you’re looking to fund a business from scratch, it’s an important site to note. Here, you’ll be able to network with potential angel investors, as well as find potential incubators and accelerators in your area. You can also network with other entrepreneurs.
Fees aren’t applicable to entrepreneurs or startups, making this platform appealing for equity fundraisers. However, angel investors pay a substantial referral fee for the opportunity to invest.
Conclusion: Which is best?
Ultimately, your two best bets are going to be Kickstarter and IndieGoGo, unless you have specialty needs. This is due to their high visibility, flexibility, success rate, and ease of entry. This article will mostly focus on campaigns created using one of these two platforms, with most examples coming from Kickstarter.