Three Types Of Crowdfunding Campaigns
Introduction
Crowdfunding is a great way to raise funds for a business venture, charity event or creative project. But, did you know that there are different types of crowdfunding campaigns? In fact, there are three types.
Each crowdfunding campaign has its own benefits and distinct features, and understanding these will help you decide which is best for your needs.
If you are new to crowdfunding, we’ve got you covered. We are going to deep dive into the three types of crowdfunding campaigns so that you can decide which type of campaign is best for your project. Let’s check them out;
Equity Crowdfunding
This is an excellent option for growth-focused organizations that see the potential for return for investors. Essentially, equity crowdfunding allows investors to back projects in return for shares or partial ownership in the business. The capital investors provide is then used to grow the business and make a profit.
Equity crowdfunding is done slightly differently depending on the platform used. For example, some crowdfunding websites will check the credentials of investors before allowing them to invest. So, ensure to check out the best crowdfunding websites to see which one suits your needs.
If you are interested in acquiring funds through equity crowdfunding, we recommended taking a look at these two crowdfunding websites;
Wefunder
If you are looking for funds for your startup, Wefunder is a great website to consider. $566 million in funds has been raised across the site in total, aiding over 2000 founders to work towards their business goals.
If you are thinking about using Wefunder as a founder, you should take into consideration that you will have to disclose your finances to the public. Again, the main difference between Wefunder and other crowdfunding websites, is that when a backer invests in a project on this website, they are hoping to see a return.
SeedInvest
SeedInvest is another option for organizations that are hoping to benefit from equity crowdfunding. Similarly to Wefunder, SeedInvest is great for startups who are seeking capital. The minimum investment amount is higher than most sites, at $1k, which means you can raise significant funds quickly once your campaign gains traction.
Some of the website's most popular success stories include businesses such as Vengo, HelloMD and Kylie.ai.
Donation Crowdfunding
Donation crowdfunding is commonly used to raise funds for charity events, nonprofits and personal or family emergencies. When a backer donates funds to this type of crowdfunding campaign, they do not expect anything in return. They are donating to simply help a cause.
There is a big emphasis on community in this type of crowdfunding campaign, as the aim is to get enough people interested in the social or charitable event to meet a financial goal.
GoFundMe
GoFundMe is one of the most popular donation crowdfunding websites across the globe. This website is used to raise funds for projects people are passionate about, medical expenses, charity purposes, memorials or education.
Reaching your goal is not required when using GoFundMe. If you don’t hit your target, you can still use the funds for your cause. However, if you do reach the campaign goal, you are free to continue raising money for as long as you’d like.
DonorBox
DonorBox is an easy-to-use platform for donation crowdfunding. It has been used by some of the most recognizable charity organizations such as Make-A-Wish. If you are just starting out on your donation crowdfunding journey, DonorBox has lots of helpful resources, such as blogs and webinars to ensure you are getting the most out of your campaign.
Reward Crowdfunding
Reward crowdfunding is mostly used by creatives, such as artists and musicians. The idea is simple: backers who are interested in the work of a creator will invest funds in return for non-financial benefits.
A non-financial benefit can come in many different forms, including discounts on concert tickets, early access to new releases and free gifts. This type of crowdfunding campaign normally works as a tier system. So, the more a backer invests, the bigger the rewards. This is a great option for artists and creatives who can’t afford to offer shares.
Indiegogo
If you have a project that early adopters would be interested in, Indiegogo might be the website for your campaign. Whether it's fitness, travel or technology, Indiegogo offers an array of categories for investors to explore.
Kickstarter
Kickstarter has aided over 200,000 projects to reach their financial goals and has over 7 million repeat backers! This might be the perfect place to start reward crowdfunding if you are passionate about making your idea a reality while offering your fans an authentic reward for simply being invested.
If you're starting to think about launching your crowdfunding campaign and not sure where to start or where to launch, we'd love to connect and speak with you about your upcoming crowdfunding project and/or campaign.