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Crowdfunding - what you need to know...
by Startacus Admin
To use its’ Wiki definition, Crowdfunding is ‘the collective effort of individuals who network and pool their resources, usually via the Internet, to support efforts initiated by other people or organizations’.
Lots of words therein to like immediately - ‘collective’, ‘network’ and ‘support for example! Since we are living in a time when the more traditional forms of finance have become increasingly difficult to acquire, it has become an increasingly important alternative way of financing a project or an idea. Although there are a plethora of crowdfunding sites out there, they all generally work along the same lines:
-You create a profile and outline your idea or project, how much funding you would need and what the project timescales are. - On most sites listing an idea is free although if your project is successfully funded, there is normally a fee charged by the site itself - this is usually between 4-5% of the total sum raised - Most platforms work on the “all or nothing” principle whereby if your target is not reached, your project does not get any funding at all - Many of the sites do require you to reward your investors in some way as a thank you. Rewards are obviously project specific but can be anything from a t-shirt through to being credited on an album. - Also, pretty important point - if you start a project, but don’t see it through to completion, you are obliged to pay any investors back - so no half measured jobs then...
If you think crowdfunding could help your idea get off the ground, here are a few of the main players in the market to check out:
Kickstarter At last, the world’s largest platform for funding creative projects has arrived in the UK. Sign up and join the hordes of other artists, designers, illustrators and others who have been helped by the site that is synonymous with crowdfunding. In terms of charges, it applies a 5% fee to any funds raised.
Sponsume This platform supports creative projects like films, plays, music and photography but also supports other enterprising endeavours - new products, social enterprises and startups have all being given a helping hand by Sponsume. The fee? Well, it’s free to add a project and then a 4% fee applies if it gets successfully funded.
Fund it The only Irish platform on our list - Fund it is an all-island crowdfunding site for creative projects in Ireland. In its’ first year, it managed to enable over 140 projects to get funded - an impressive feat by all accounts. If you post a project with them and it gets successfully funded, Fund It will charge a 5% commission on the total amount raised.
Crowdcube Unlike the other platforms listed here, Crowdcube provides the opportunity for startups to pitch for funding and in return for obtaining said funding, those who invest are rewarded with equity in the business. The site does have a requirement that the minimum amount of funding sought has to be at least £10000. Listing a project costs £250 although this is currently being waived. If a project is successfully funded, a 5% fee of the target amount is charged as well as legal fees of £1750.
Please Fund Us This platform again enables creative projects and ideas to be realised. Rewards in the form of experiences, products, acknowledgements and accreditations must be offered in return for any financial pledges. Their charges? Listing a project is free and a flat 5 % fee is charged is the project is successfully funded.
Buzzbnk The key distinguishing feature about this platform is that all projects listed must in some way deliver social or public benefit. However, all sorts of organisations and people can use the site - not simply social enterprises, provided the underlying project’’s goal ties in with the Buzzbnk ethos. Social ventures joining the site do have to pay a £25 fee and there is a 5% fee charged on any projects which do raise funds successfully.
So there you have it... a few of the main players in Crowdfunding today. If you're thinking of using crowdfunding to finance your project or business, these basic tips may just help you succeed.
Crowdfunding your project can help you raise the finance you need. Startacus is helping to make this happen right here. Read all about our own crowdfunding portal!