Crowdfunding is so diverse…
But we need a clear understanding about each platform before deciding how we fund the UK expansion of our affordable managed print service.
Our last post covered all the investment options you could explore when needing to raise cash to support new product development, expansion & growth. It highlighted that Crowdfunding is a growth investment area and offers some diverse and unique opportunities. Which we need to investigate further.
In our first post. we detailed the amazing business support programme being provided through Edge Hill University. And once we’ve finished our own Sprint Programme workshop with Professor Simon Bolton at Edge Hill University We will have our UK expansion blue print and will choose the investment model that best supports it.
So for us, it’s vitally important that we have a good understanding of every available investment model. Which will enable us to make the best informed choice.
So here’s what we’ve learned about Crowdfunding…
Crowdfunding
Crowdfunding is where you get a lot of people to invest in your idea, rather than finding one person to come up with everything you need. Crowdfunding is basically crowd-sourced money.
Everyone chips in a little bit to achieve the ultimate goal. But while you can ask your friends and family to each part with some cash, you don’t necessarily want to ask 500 people to hand you a £50. As it is uncomfortable, awkward and time consuming.
Instead, you can use a crowdfunding platform to manage all the collections and give you a central location to share your ideas to explain what you’re trying to accomplish. And once you reach your desired goal, you’re expected to begin work on your project.
Keep in mind though these platforms are not in the business of giving away their services. They take a cut of your donations, and some even require setup or promotional fees. The cut and fees depend on the platform and how much your hoping to raise. So do your research before you commit.
Here’s our top crowdfunding sites. Some of them are more geared to developing products, others are about funding artistic endeavors and some others are ideally suited to nonprofits. Some sites will collect all the money as it comes in and others won’t collect it until the goal amount is reached.
Kickstarter
Kickstarter is geared more toward creative projects like a new album or writing a book, as well as products and inventions. It’s not really for buying equipment or helping a nonprofit. And you don’t get to keep your money unless you reach your goal through financial pledges. Categories include Design & Tech, Food & Craft, Film, Publishing, Music, Games, Arts, Comics & Illustration.
Indiegogo
Indiegogo is like Kickstarter, you can use it to start up any project or idea. But as an extra, you can set up nonprofits on the site. Indiegogo also offers Flexible Funding, which means you get to keep the funds you raised, even if you didn’t reach your goal. And it allows you to buy funded products on their marketplace.
Patreon
Patreon is a monthly subscription platform where supporters and donors provide regular monthly contributions, rather than one bulk payment. The goal is to provide ongoing support for a creative venture or artist, such as supporting your favorite band or musician, or even your favorite podcast.
GoFundMe
GoFundMe is mostly used for personal emergencies, but it can be used for any number of short-term personal projects. People have used it to cover emergency bills, like the vets, a trip to the dentist or medical bills.
Crowdrise
Crowdrise is geared more to helping real world issues, rather than funding profit ventures. Projects like solar technology to people in developing nations. But you can also use it to fund birthday parties, weddings, and even college scholarships.
PledgeMusic
Being a musician can be expensive. So anything you can do to cover costs when you launch an album, promote it, or go on tour really helps. This is where PledgeMusic can make a real difference. And like most of the other crowdfunding platforms, you can provide rewards for donors who pledge a certain level. Such as downloadable digital music.
Razoo
Razoo is geared more to helping worthy causes, rather than material goods and profits. So if you’re looking for business funding, this probably won’t work for you. Razoo lets you fund raise for causes like children and family, education, animals and pets, and even faith-based causes.
RocketHub
RocketHub is more for entrepreneurs looking for venture capital. Where you can pitch your project idea, and see if you can generate any interest amongst their funders and donors. Then they’ll provide advice on where you can find additional funding.
Crowdfunder
If you’ve gone through all the crowdfunding platforms but still want to land an angel investor or venture capitalist, Crowdfunder might be your best bet. Just like a regular venture capital program, you can sell equity and debt in your company to raise money.
Give
This is a WordPress plugin to add to your WordPress blog and you use it to collect donations from visitors. And its for nonprofits only. But unlike every other crowdfunding platform, Give does not take any fees based on what you raise. They make their money selling premium add-ons, which you can use if you need additional functionality.
Charitable
Charitable is another WordPress plugin and lets you collect donations on your website via PayPal, and they don’t charge any transaction fees for credit card donations. Charitable and Give are ideal for nonprofits that don’t want to give up transaction fees.
Lending Club
This is a site for investors who want to invest their money, but still do a little good. You can borrow up to £40,000 for a personal loan, and the investors will make between 5.5 percent and 7.7 percent as you repay the loan with interest. It’s easier to get a loan on Lending Club than a normal bank, and they’re more likely to fund unusual projects and ideas.
AngelList
AngelList allows you to apply for a job at more than 60,000 startups with a single application. And if you’re looking for a place to invest, AngelList has those opportunities as well. You can still apply for funding too. Just fill out an application, and you’ll be introduced to potential investors and lenders.
Ulule
Ulule funds mostly creative projects, and they’ve helped more than 16,000 artists and entrepreneurs in 198 countries. Don’t let their international focus frighten you, though. They’re headquartered in Paris, with offices in Barcelona, Rome, Antwerp and Montreal.
Funding Circle
Funding Circle will grant between £25,000 and £500,000 in unsecured small business loans. Interest rates start at 4.99 percent, although can increase sharply depending on the risk factor. You can also invest money on the platform too.
Seed & Spark
Seed&Spark is the crowdfunding platform for movie makers around the world. Whether it’s documentaries, dramatic films, or offbeat comedies, you can get funding for your movie and even watch others’ contributions. You can also watch the movies that are produced on their website or your Apple TV.
Crowdcube
Crowdcube is a great way for entrepreneurs to spread the risk of their new ventures (whilst still getting the grown up funding of investors). Initially funding is raised through your own network of friends, family, customers and strangers, before being released to the Crowdcube network of investors. You can also be an investor by building your own investment portfolio.
GoGetFunding
GoGetFunding will let you raise funds for any cause, whether personal, nonprofit or even a business. Campaigns have raised funds for documentaries, funeral expenses, jockey’s and hearing aids.
Fundable
You post your business or idea on Fundable and investors can pledge money to your project, like KickStarter. But it costs £150 per month to be on Fundable, and they take 3.5%. You can give rewards or give equity in your company. And like KickStarter, the rewards campaigns are all or nothing. If you don’t meet your goal, you don’t get any money.
Kiva
Kiva is a special crowdfunding platform. The money raised here is not for you. Rather, you can become a micro lender to entrepreneurs and artists all over the world. Whether it’s lending £250 to a knitting group in Haiti to buy wool or £2,000 to a wannabe photographer in Mumbai to buy a camera, you can loan a small amount to any borrower you choose. And as the loan is paid back, you can make a little bit of money in return. This is a way to help people who are in poor parts of the world get a bit of money to make a vast difference in their lives.
Seedrs
Seedrs has a greater focus on helping entrepreneurs gain their first seed capital. Angel investors and venture capitalists invest alongside friends, family and tribes of supporters. Their model offers support before, during and after fundraising aiming for the best opportunity for success and that their investors are part of it. With a global community, Seedrs has connected with active investors and entrepreneurs from 48 countries.
Syndicate Room
Syndicate Room is pitched as the UK’s only investor-led equity crowdfunding platform, a different model is offered. Listed are companies already backed by professional ‘business angels,’ who invest their own money and take an active role in evaluating the strength of the deal. Members who are not business angels are offered the same economic terms if they decide to invest alongside the professionals. Syndicate Room’s vision follows a transparent approach allowing its members access to a more sophisticated set of investment opportunities.
CrowdShed
CrowdShed aims to be the primary platform for the “discovery of social & community investment and funding opportunities, democratising social lending.” They enable individuals & organisations to help make positive impact on society and communities, while earning interest on their investments of projects, charities & social enterprises. CrowdShed gives value to social investment, creating an inclusive space for everyone rather than wealthy individuals, foundations and institutions only. By enabling many funders to collectively lend to projects through the CrowdShed website, the vision is to make social investing within the reach of the many and not just the few.
Spacehive
Spacehive supports initiatives within UK public and community spaces. Places that can be freely accessed by the public. Past projects include the rejuvenation of green spaces, sports facilities, playgrounds and town main streets. Spacehive varies from equity funding models. Rather than investing or lending, contributors help fund the capital costs of building projects or landscaped areas in their community, meaning they don’t own the projects, nor do they expect a return on their contribution.
RateSetter
Voted the UK’s best peer-to-peer lending platform by trusted Which consumer magazine. RateSetter carries some very interesting figures on its success rates. This is a marketplace where the rates are set by investors and borrowers, and since launching in 2010, the platform has won over 20 awards. Having lent over £1 billion, without a penny lost to its customers, by cutting out the costs of the traditional high street loan, RateSetter offers better margins for lenders and lower than average rates for borrowers.
Zopa
Zopa is the world’s first and the UK’s largest peer to peer lender, having launched in 2005. It’s business model from day one aimed at bypassing banking institutions by matching lenders with borrowers online, offering the best rates in the market. Zopa shook up the lending market by doing its business entirely online, which was an innovative model at the time. To the advantage of its customers, there are no early repayment fees nor does applying for a Zopa loan affect individual credit rating.
Lendinvest
LendInvest is the UK’s first peer-to-peer lending platform specifically for residential and commercial mortgages. A very unique debt crowdfunding company, LendInvest allows investors to find and invest in new loans. Debuting on the London Stock Exchange in February 2015, its rise in the market is a sign of the evolution of the alternative finance sector.
AngelsDen
AngelsDen aims to raise between £50,000 & £1 million for the companies they select to pitch. If you are looking for a smaller investment amount, they are very clear and recommend that you get a small business loan to get the business to a point where it has more ambitious plans and higher funding requirements. Be aware though, there is a 6.5% success fee and a £1,600 completion fee. And on the flip side. AngelsDen is also an online investment platform that makes it simple to own shares in early-stage companies that could potentially become the next big thing.
What makes them different is that they ensure a lead investor is on board before they open the funding to our wider network of investors. The lead conducts due diligence, invests their own money and often provides mentor-ship and connections to help your business grow.
To summerize…
Regardless of the work you want to do, the goals you want to accomplish, or the lives you want to change and save, there are crowdfunding platforms of all sizes, aims, and areas of focus.
Our advice is to figure out your end goal, and start your research. Find a platform that will suit you and your desires, and then go for it. But don’t split up your efforts between platforms, because that will only confuse people. Focus on that one platform and that one goal, and tell everyone about it, until you raise your funds.
Next for us. Is to complete the Sprint Programme, write our business plan and apply for investment with our chosen platform. To kick-start our affordable managed print service UK expansion.
Part of being an entrepreneur is having the drive and passion to ask for money when you need it, isn’t it?
