7 Best Ways to Crowdfund Your Startup

startup team creating a funding campaign

Do you need help funding your startup business? Are you wondering if a crowdfunding platform is a smart way to inject capital into your new business? We list the best crowdfunding options for getting your startup business off the ground.

SeedInvest

SeBest For Attracting VCs and Angels

SeedInvest’s goal is to help initial-stage startups find venture capitalists and angel investors an early opportunity to get in on your business. But getting onto SeedInvest’s platform is not just filling out an application and creating a marketing campaign. SeedInvest vets every project through a screening process and due diligence check.

If you have a sound business model and plan, this may be a great fit for your startup. Keep in mind VCs and angels may want an equity stake for investing in your company rather than a flat reward like you get on other crowdfunding platforms. And SeedInvest takes 7.5% of the placement fee and an additional 5% in equity. For some, it might be a steep price for the eyeballs.

Related Link: Business Startup Costs & Tax Deductions

Indiegogo

Best Success Rate

Indiegogo has a great track record for funding well-developed ideas and startup companies. It funds projects from over 235 countries and integrates well with social platforms to help get the word out about your project.

Indiegogo has an intuitive user design, making the site easy to set up and promote your startup business. One thing to be aware of is that Indiegogo does charge a 5% platform fee and an additional third-party payment processing fee. If you choose to go with this crowdfunding platform, you’ll want to factor these fees into your crowdfunding plan

Kickstarter

Best for Products and Services

Kickstarter is probably the most well-known and longest-running crowdfunding platform. But because it has been around the longest, thousands of projects compete for investors to notice their project.

Kickstarter is focused on projects that provide products or services to their customers. Startups that do well on Kickstarter have something to share or give their investors as a reward for investing in their project. These types of projects fall under categories like:

  • Art
  • Crafts
  • Fashion
  • Film
  • Photography
  • Games
  • Technology

Patreon

Best for Creative Startups

If your startup business is creative, then you may want to look into Patreon. Patreon allows artists, creatives, influencers, podcasters, musicians, and writers to create a subscription plan to accumulate patrons. These patrons pay a monthly fee to the creator who provides valuable content to their subscribers.

Patreon integrates with lots of software tools like Vimeo and MailChimp that enable you to grow your subscribers. If a subscription model works for your business or could add value to your startup, then you should check Patreon out. Keep in mind their fees range from 5-12%.

Does your startup invest in research and development? Learn how the TaxRobot software can save you money by tracking and managing your R&D expenses.

Related Link: 5 Best Startup Funding Sources in 2022

iFundWomen

Best for Women-Led Startups
While not exclusively for women (men crowdfund on this platform too), iFundWomen caters to women entrepreneurs. IFundWomen offers marketing, coaching, and other startup services specifically designed to help women-led startups. These mentoring services help businesses raise 27 times more money than a typical crowdfunding project.

iFundWomen is only available in 23 countries but is a valuable crowdfunding platform for the countries it accommodates. They also reinvest 20% of the funding fees they earn back into campaigns and services of women-owned businesses.

WeFunder

Best Equity Crowdfunder

With a 75% success rate, WeFunder is the best equity crowdfunding platform. WeFunder connects startups with accredited investors. The platform does have more legal requirements than other platforms, but when you need a large infusion of capital for the future of your business, WeFunder can put your business in front of the right VCs and angel investors.

WeFunder is open to most startups and projects, as long as you’re willing to jump through the legal requirements. You’ll also need a solid business plan and provide financial disclosures.

Mightycause

Best for Nonprofit Startups

A low-cost crowdfunding platform, Mightycause caters to nonprofits and individuals who want to raise donations for their causes. The platform allows for flexibility to allow nonprofit startups to use several different donation campaign strategies like giving days, event-related, or peer-to-peer fundraising.

Mightycause offers lots of fantastic integration tools and is compatible with popular customer relationship management (CRM) systems. Unfortunately, to access many of these tools, you’ll need to upgrade to their paid monthly plan. But at $99/month, that’s not too bad.

two people collaborating at tech startup

Benefits of Crowdfunding Your Startup Business

Using a crowdfunding platform has several advantages:

  • Raises capital fast with low upfront fees.
  • Provides a great marketing campaign to boost awareness about your business.
  • Sparks feedback and expert analysis to better your business model.
  • Tests public opinion of your products or services.
  • Allows investors to track your progress.
  • Funds unconventional ideas and product offerings.
  • Creates a loyal customer base for when your products launch.
  • Offers an alternative financing option when traditional funding is hard to secure.

Risks of Crowdfunding Your Business

While crowdfunding creates lots of opportunities, it isn’t without its risks:

  • Requires time, work, and marketing to build interest before launching on the platform that takes your resources away from building your business.
  • Earns nothing if you don’t reach your target-funding goal.
  • Can be more tedious than traditional funding.
  • Damages your reputation if the project doesn’t fund.
  • Without patents or copyrights, others can steal your idea.
  • It gives away too much to the investors if you don’t structure your rewards carefully.

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Crowdfunding Can Be a Great Alternative to Traditional Funding

For startups, crowdfunding can be a successful alternative to traditional funding. Businesses should look for a platform that draws in their target consumers or potential investors. Do you your homework, be strategic about your campaign, and learn best practices before starting your crowdfunding project to increase your chances of reaching a successful funding goal.

For startups, crowdfunding can be a successful alternative to traditional funding. Businesses should look for a platform that draws in their target consumers or potential investors. Do you your homework, be strategic about your campaign, and learn best practices before starting your crowdfunding project to increase your chances of reaching a successful funding goal.

TaxRobot offers a powerful AI-powered tax tool for startup businesses. Maximize your R&D tax benefits with our intuitive software automates calculating which activities and expenses qualify for the tax credit.
Want to learn more about how our automated tax software can save you money on your tax return? Contact us to see a demo.

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