This article shares with you the best crowdfunding sites for small business. We split these into reward crowdfunding and equity crowdfunding as they are very different funding models, which we explain. We also provide you a simple and crisp summary of the pros and cons and fee charges for each site.
If you decide that crowdfunding is not right for your needs, you may want to consider a peer-to-peer loan instead. We recommend Street Shares because they fund early stage businesses, it’s relatively easy to qualify and you can save interest costs by paying your loan back early.
What is Reward Crowdfunding?
Crowdfunding provides you with a great way to raise money from donors. Think friends, family, people loyal to your brand and complete strangers who are all potential donors.
Typically, the best crowdfunding sites for small business connect with donors via social media marketing campaigns. If you do not have the time or resources to create and manage this, it will be more challenging to raise the funds you require. And if you want to reward crowdfund from strangers, you’ll need to consider providing incentives to donors. For example, VIP access, discounts or a free limited-edition version of a new product (or service) you are crowdfunding in return for their donation.
Best Reward Crowdfunding Sites for Small Business
Crowdfunding is a great way for some small business types to raise funds without parting with equity or owing anybody any money. Having researched the market, we have brought together a list of the best options for you to consider. It’s worth reading down the list because some are suited to specific business circumstances.
Launched in 2008, Kickstarter was the first and is still the most popular reward crowdfunding platform for creative projects. To date the platform has raised more that $3.5 billion in pledges from 14 million backers to crowdfund over 139k projects.
If you are looking to crowdfund a film, stage show, comic, video game, book or new tech gadget then Kickstarter is a great place to crowdfund your project.
|Kickstarter charge 5% of total funds raised||If funding isn't successful, there re no fees||You have to raise your target in < 60 days|
|Payment processing costs 3% + $0.20 per pledge||The biggest crowdfunding community for creative projects||Failing to reach your target means writing off a lot of hard work promoting your campaign|
|Pledges under $10 have a discounted micro-pledge fee of 5% + £0.05 per pledge||Everyone has heard of Kickstarter, which will add a boost to your SM campaign||If you're not a creative business, you're unlikely to meet Kickstarter's requirements|
Launched in 2010, GoFundMe is the world’s largest social fundraising platform, with over $5 billion raised so far from a community of over 50 million donors. It currently receives over $140 million in donations every month. That’s more funds then has been raised on any other platform, which says something very good about humanity.
The site allows people to crowdfund events. These events range from funding thank yous to deserving people to the most challenging circumstances like terminal illness. And it’s not just for charitable causes. Small businesses use GoFundMe to raise funds too.
|GoFund me charge 5% of all funds raised||GoFundMe is a well recognised brand around the world||It's difficult to think of any|
|Payment processing costs 3% + 30c per donation||If you are a charity, GoFundMe does not charge any payment processing fees|
|You keep what you raise even if you don't hit your funding goal|
Founded in 2008, Indiegogo is an international success. One of the first sites to offer reward crowdfunding at scale.
You can crowdsource funds for most creative avenues like film, music and comics. You can also crowdfund mobile tech, audio gadgets, travel and outdoor pursuits, and health and fitness. If you’re an innovator, Indiegogo is a great alternative to Kickstarter.
|Indiegogo charge 5% of total funds raised||You get the funds donated whether you reach your target or not||Campaigns are limited to 60 days|
|Payment processing costs 3% + $0.30 per pledge||Lower fees for charitable campaigns||You must provide rewards whether you receive full funding or not|
Founded in 2008, FundRazr is a highly customisable reward crowdfunding site of huge scale with approaching $100 million of projects funded via the platform. You can customise your campaign to reflect your brand and use plugins to make it easy to integrate with social media (like Facebook) to promote your campaign.
The site has been an innovator in cause crowdfunding since its early days and continues to enrich the user-experience. For example, FundRazr was the first crowdfunding platform to offer a collaborative payment model. This allows funds donated to be deposited directly to the cause raising funds. It also provides a service that allows you to attract volunteers for your cause.
|FundRazr charges 5-7% of total funds raised. Contributors are given the option to cover fees||Contributors are given the option to cover your fees||Backers will typically come from your own promotional efforts, but their tools help|
|Payment processing costs 2.9% + $0.30 per donation||Access to your funds right away|
|Freedom to customise and great plugins to help you promote your campaign|
Launched in 2012, Experiment is a great reward crowdfunding site for scientists engaged in research and development. The site focuses on science, medicine, health, mathematics, computer science, ecology and a range of other areas of scientific research.
The backers of an experiment project are rewarded by having a copy of the results of the research project shared with them.
|Experiment charges 8% of total funds raised||Identifies and applies grants to projects that attract them||No funding if you do not fully complete your goals|
|Payment processing costs 2.9% + $0.30 per donation||You retain complete control over your intellectual property||Fees are high compared with other platforms|
|Specialist community for scientists and acedemics|
What is Equity Crowdfunding
If reward crowdfunding is not right for your needs, you could may want to consider equity crowdfunding. Equity crowdfunding platforms bring together a marketplace of potential investors to fund your business in return for an equity stake.
If you are confident that your business is going to be successful, this is probably the most expensive sources of funding. However, if speed to market is a priority, venture backing is a great way to grow fast. And this is why it is popular with service-as-a-software and online marketplace business concepts.
Best Equity Crowdfunding Sites for Small Business
Launched in 2010, RocketHub has rapidly become one of the largest equity crowdfunding platforms for small business. Like other equity crowdfunding sites, RocketHub pre-qualifies small businesses seeking investment in a 72-hour turnaround. RocketHub is partnered with Bankroll Ventures, which helps to connect you to a wide range of early stage investors and a rapidly scaling venture eco-system.
Thousands of entrepreneurs are raising millions of dollars on RocketHub, which has broad investment focus covering musicians, entrepreneurs, scientists, game developers, filmmakers, photographers, theatre producers/directors, writers, fashion designers and philanthropists like Bill Gates.
|RocketHub charge 4% if you achieve your agreed goals||You get access to funds raised during the campaign||It's a relatively expensive way to raise money,|
|And charge 8% if you don't reach your goals||Investors are pulled from a massive global community||It's very expensive if you don't reach your goals|
|There is also a 4% processing fee for each donation|
Launched in 2012, Fundable is both a reward and equity crowdfunding platform with over $400 million in funds currently committed on the platform. If your business wants to explore both of these options that Fundable is an obvious place to start.
Fundable is wholly focused on commercial industries ranging from retail to finance, tech to real estate and energy to food. The platform does not raise funds for social or charitable projects.
|Fundable charge a flat fee of $179 per month to use the platform for fundraising purposes||Supports smaller and larger crowdfunding needs within one platform||Smaller than other platforms but growing fast|
|Payment processing costs 3.5% + $0.30 per transaction for rewards crowdfunding donations||No fees (other than the flat charge) are incurred for equity crowdfunding|
Launched in 2012 as reward crowdfunding site for women, Plum Alley has now morphed into an equity crowdfunding site primarily for female entrepreneurs. Plum Alley is not the largest or best known crowdfunding site, but it’s building a great reputation for selecting the right businesses to get behind. It draws them into a vibrant member community of investors and ensures that great businesses get funded.
Plum Alley tend to focus on women-led retail, education, healthcare, marketplaces, media, tech and wearable tech businesses with high growth potential and solid business ethics.
|Bespoke investments in private companies for an equity stake||If equity funding isn't successful, there are no fees||You have to give up equity in your business to raise funds. An expensive form of borrowing compared to reward crowdfunding|
|A female led investment club that sets high standards in terms of business ethics and values||If you don't fit Plum Alley's investment focus, you'll get a polite no thank you.|
|A high success rate based on rigorous pre-qualification|
With a network of more than 200,000 entrepreneurs and investors, Crowdfunder is an equity crowdfunding platform. To date it’s funded more than 100 early stage venture with an average investment of $1.8 million per project.
Like any great equity crowdfunding platform, it has a vibrant community. In this case, over 15,000 investors and 45,000 organisations/companies.
|Crowdfunder charge $499 per month to have full access to the platform for fundraising purposes.||Excellent value for money compared with other equity crowdfunding sites.||There are no angel investors for smaller funding needs|
|Easy to connect with investors and introduce yourself and your business||Your business will have to be exceptional to attract investment|
Launched in 2010, AngelList started out as an online introduction board for tech startups to connect with angel investors . The vision is still to democratize accessing to investors. And since 2015 the site has been allowing startups to raise seed funding from angel investors free of charge. You could argue that its not strictly speaking a crowdfunding site, but you can find thousands of angel investors to connect with all in one place, which is good enough for us.
|AngelList does not charge any fees||It's free||Customer service and advice from AngelList is very lean because it is free|
|You become part of a community where you have access to thousands of angel investors|
The Juice Press
In this article, we shared with you the best crowdfunding sites for small business. All of the sites we reviewed are viable options depending on your needs and circumstances. If you want to share your crowdfunding experiences, do get in touch with us through the comments section below.
Reward crowdfunding works well for some businesses and not so well for others. If crowdfunding is not right for your business, a good alternative is a peer-to-peer loan. We recommend Street Shares because they fund new businesses, it’s easy to qualify and you can save loan interest costs by paying your loan back early.