Crowdfunding has evolved the whole concept of raising funds before launch. Many startups with an idea, consider crowdfunding as source of seed funding that helps them to set their base before launch.
Even though, crowdfunding has seen a huge trend over this decade, it is not a new idea.
In 1997, when the term crowdfunding was not even coined, a British rock band, Marillion gathered over $60,000 from their fans, for their North America Tour.
After 10 years, crowdfunding became a mainstream and people started realizing the benefits of raising funds directly from the public. Later, in 2009, crowdfunding has helped to raise over $530 Million across the globe and the growth rate remained impressive since then.
Today, the global market volume of crowdfunding is about $16.2 Billion and over 500 Crowdfunding platforms (including social, equity based, donation based, small scale or large scale) are registered globally.
Here’s a list of top 3 major crowdfunding sites, which has funded over thousands of startups and projects succesfully.
The popular crowdfunding site of the decade, Kickstarter, is the most active platform, which has raised over $3.5 Billion since its launch in 2009. Stats reveal that they have funded over 1.4 lac projects successfully.
Kickstarter backs only creative projects like films, gaming, innovation, technology and music etc. Projects related to humanitarian activities, charities or any personal fundraisers are not entertained by the platform, which is a limitation. Another major drawback, which fundraisers face, is the outcome of failure in reaching the goal. Suppose, if any project fails to raise the goal amount, no money will be collected. This is an ‘all or nothing’ strategy, which involves a bit of risk. Also, Kickstarter collects 5% of platform fee from the projects which are successful.
Launched in 2007, Indiegogo remains the World’s first major crowdfunding site, which has raised over $1 Billion since its initialization.
Based on the statistics of 2015, the platform funded over 1,75,000 campaigns, which were backed by around 2.5 Million people across 225 countries across the world.
Two things, which makes Indiegogo a ‘go-for’ platform over Kickstarter, is the acceptance of social campaigns and a variety of other campaigns to raise funds for innovation, charity or humanitarian activities and the option of ‘flexible funding’, which allows the campaigner to withdraw the collected money even if the goal is not reached.
Indiegogo collects 5% of Platform fee from all the campaigns, whether successful or not. Transactions via credit card are liable to pay 3% extra charge.
Also, the new concept of MircroVentures by Indiegogo allows an equity based investment option which is offered in partnership.
Based in San Fransisco, Circle Up has funded over 256 companies and helping them raise over 390 Million in total. The average value raised is around $1 Million and the average investment is $1,00,000.
Circle Up has garnered a good reputation among the top investing platforms ever since its launch in 2011. The investors in the platform are experienced enough to provide strategic guidance and support to the budding entrepreneurs.
In order to raise funds, you need to fulfill basic requirements before applying to the platform. Companies applying, should show their revenues upto $1 Million, while promising startups with their revenue over $5,00,000 can be considered as exceptions.
Platform also provides escrow services at no cost and cuts a small percentage in commission from the raise of the startups.