Over the past several years, crowdfunding has exploded in popularity. The rise of crowdfunding as a fund raising mechanism is twofold: in the standard setup, crowdfunding allows makers and startups to test the water, gauging the demand for a product or services; it allows investors or funders to get early access to products, often at a deep discount. For the most part, the rise of crowdfunding has been driven by two major players: Kickstarter and Indiegogo. That said, there are a whole host of alternate platforms, including some with wildly different funding models. Below we will take a look at several different platforms, and explore some of the alternate models.
CircleUp is one of the most popular equity crowdfunding platforms. The company was formed in 2011, well before the JOBS act loosened the requirement restrictions on equity investing and equity crowdfunding. As CircleUp’s model had already been proven, quite well in fact, the platform did not undergo any substantial changes after the JOBS act. So, in a nutshell, CircleUp allows startups and other small businesses to exchange equity for funding, with all of the investors having to meet the requirements of an accredited investor.1
There are several benefits to choosing CircleUp as a funding platform. First and foremost, with the investor pool all being confirmed accredited investors, it is a much better barometer for company performance. Whereas Kickstarter and Indiegogo are driven by rewards – t-shirts and other knick knacks – while CircleUp is driven by returns, or potential returns. Therefore, the CircleUp investors are much more inclined to thoroughly vet each potential company, and perform a fair amount of due diligence. It stands to reason, then, that a company that receives funding through CircleUp is more likely to be a success than one that receives funding through one of the other platforms.
Fundable is a pretty unique platform, combining elements of both equity crowdfunding and rewards-based crowdfunding. We touched on the platform a little bit last week, but it is essentially a hybrid of sorts. Here is how the company describes the platform:
Fundable offers unparalleled flexibility for startups’ specific needs — allowing them to fund their companies through Rewards or Equity campaigns. Rewards campaigns are a great fit for startups raising smaller amounts of capital that have something of value (a compelling reward) that they can offer in exchange for funding. Equity campaigns are best utilized by companies that are looking for larger amounts of capital, and have gained enough traction to incentivize accredited investors with the opportunity to own a piece of the company.2
RocketHub is a bit different from all of the others on this list. Firstly, it is aimed at a different sort of project. Rather than focusing strictly on businesses or physical products, RocketHub focuses on a wide range of areas:
Artists, musicians, entrepreneurs, scientists, game developers, philanthropists, filmmakers, photographers, theater producers/directors, writers, fashion designers, etc. are welcome to post projects to RocketHub.3
There is a real variety of projects on the platform, including a Penn State University led initiative to land a satellite on the moon (above). The platform’s fee structure is pretty straightforward. RocketHub takes 4% from every project that meets its funding goal, and 8% from every project that fails to meet its goal.
Qikfunder is unique for a number of reasons. In terms of the types of projects allowed on the platform, they offer the standard categories: design, technology, film, photography, charity, etc. Where Qikfunder departs from other platforms is in the funding structure. Where the larger platforms like Kickstarter tend to have an all-or-nothing type funding structure, Qikfunder departs from that model with a sliding scale.
The Sliding Scale encourages and rewards entrepreneurs to reach full funding. Projects receiving 50-69% still receive any funding they’ve earned, minus an 8% fee. From 70-79%, the fee decreases to 7%, 80-89% = 6% fee, and 90-99% = 5% fee. Projects that are funded 100% and above are subject to only a 4% fee.4
The platform’s “Fund It Back” program is also quite unique. The option allows projects to donate 1% of their money raised back to a charity of your choice.
Beyond Qikfunder itself, the platform is used to power Fund Some Fun:
Fund Some Fun is a crowdfunding platform aimed at providing children with threatening medical conditions, their parents and relatives, or friends an avenue to fund cool gifts:
At Fund some Fun we are about the little things, the things that may only cost a few hundred to a couple thousand dollars and are way too much to ask family and friends for directly. Because you know if you ask mom and dad they’ll get it for you even if it’s the last few dollars they have. Those things can include anything from an Xbox One to a Nintendo DS, a DSLR camera, easels, art sets, a GoPro or even a fishing rod. We are here to alleviate that burden. Fund Some Fun is for anything that’s fun, anything that can bring a smile to a child’s face.5
There are countless other platforms as well. The point being, while Kickstarter and Indiegogo are far and away the most popular, the structure of the platforms, the structure of the fees, and the rewards are not one size fits all. Not every single project fits neatly into Kickstarter. It is worth exploring the alternate platforms for a structure more in line with your goals.