Crowdfunding sites are getting more popular day by day, and the numbers are increasing rapidly.
Through these sites, you can raise money from a large number of people for a particular project. You need to present your project beautifully and logically, and only then, people will fund you for that.
If you have an amazing idea that you are confident about, you might start looking for funding so that you can start your dream project. But where will you find the perfect platform to present your idea? That’s why I’m telling you about the primary three types of crowdfunding sites with the best of its kind so that you can choose the best one for you.
- Reward based Sites
The first type of crowdfunding site is –reward based. In these sites, you will have to provide a reward for those who provide monetary support to your project. The reward can be a free sample, or special product or gift.
One of the best reward crowdfunding sites for startups is Indiegogo. Currently, Indiegogo is the largest fundraising site globally. Nearly, all types of firms can raise money on Indiegogo, such as – design, technology, travel, film, and eco-friendly businesses.
Although Indiegogo is famous for reward crowdfunding, it also offers the option of equity crowdfunding. Because of the vast popularity of this site, it is not easy to standout and get your desired success.
There are some fees associated. 5% taken from what you raise and 3-5% for credit card processing fees.
- Debt Based
Another common type of crowdfunding site is Debt based sites. Here, you will receive money as a loan from people. This makes you a borrower, and you have to pay it back within a particular period. The system makes it easier to get loans, rather than going through a bank.
One of the best Debt crowdfunding sites for startups is Lending Club.
You can get both personal and business loans from this site.
One can get up to $40,000 as a personal loan, and up to $300k as business loans. Loans are usually paid back within 1-5 years. The process of getting a loan is easy. You need a credit score of at least 650 to qualify for a loan. And some extra requirements are needed for business loans.
It is possible that the interest rates can be high, depending on the credit score you have, and the average APR is 5-30%.
- Equity based
The last type is Equity-based. In these sites, you can raise money through normal crowdfunding procedure, but you have to give away a part of the ownership of your company to those who give you funding. So basically, people are investing in your business to become a part of it.
One of the best Equity crowdfunding sites for startups is AngelList.
This is a well-known and oldest amongst most of the equity crowdfunding sites. Many prominent and successful companies have used this site to reach their investors.
Usually, businesses based in the UK or US can apply for the funding procedure on AngelList. The most amazing thing is that there is no cost associated with the fundraising.
This site is free to use for entrepreneurs, and they provide an environment for you to meet your suitable investors. A huge number of businesses are using this site, so this might be harder for you to standout and get noticed.