Of course, while we can expect banks, loan sharks, credit cards and the bank of mum and dad to continue to be important source of venture capital for years to come, there can be no doubt that crowdfunding will be an important source of venture capital in the future.
Crowdfunding is literally where an entrepreneur goes to a crowd-funding platform, uploads their idea and invites investment from the general public. It’s kind of reverse engineering the share buying process, e.g. rather than the public buying shares in a publicly listed business, they can effectively buy a bite-size amount of shares for in a publicly listed idea, and if enough people buy shares, going through a kickstart threshold, funds are released and the project gets off the ground. It has revolutionized the business start-up and investment process. Just recently, The DAO project collected a staggering $160,000,000 through crowd-funding, which is the current record. Star Citizen, a video game, comes next having crowd-funded $127,000,000.
Crowd-funding – The Venture Capital Standard of The Future
Research shows that the total funding volume of the crowd-funding industry has doubled year on year since 2012, and is worth around $40 billion globally now, and is expected to grow at a CAGR of 26.87% between now and 2020. At this point, it’s thought that it won’t be just entrepreneurs who’ll be using it to kickstart ideas, larger companies will use it to crowd-fund their R&D strategies. It’s clear that crowd-funding could be the venture capital standard of the future.
So, if you want to get ahead of the game and start using the futuristic crowd-funding strategy today to fund your business, here’s the top 5 crowd-funding sites for entrepreneurs.
1.Kickstarter. You know it, you love it, it’s kickstarter.com. It’s the world’s biggest crowd-funding platform, and has raised over £100 million in the UK as at May 2016. World-wide it has raised nearly 3 billion USD in funding, and has successfully launched over 100,000 projects. It sets the standard in crowd-funding sites, but is focussed around creative projects, so if you interest fall outside this, you might need to go elsewhere. They charge a 5% fee and 3-5% payment processing fee.
2.Indiegogo. This is one of kickstarter’s biggest competitors and is available worldwide and they charge 5% of the funds they you raise. They cover most categories of business, including animals, art, community, dance, tech, sports, writing, etc…
3. Gofundme. This crowd-funding platform is available in US, UK and most of Europe. They charge 5% for every donation made plus 2 to 3% payment processing fees. It once again covers more areas than kickstarter, including community, business, charity, competitions etc…
4.Ulele.com. This crowd-funding platform is well-suited to creative campaigns and they have high numbers of projects, relating to Art, Film, Book and Theater campaigns. It’s a global platform with a European practical bias as the only way to send and receive money is in Euros which can only be done by European bank account holders. Other users outside this territory will need to use PayPal. They charge 5% commission plus 3% transaction costs.
5.Patreon. This crowd-funding platform is available globally, charging commission fees of 5% on every donation made. This is pretty much focussed in the creative arena and campaigns tend to centre around comics, novels, drawings, paintings, podcasts, comedy shows, Youtuve video makers etc…