7 Key Tips for Finding the Best Crowdfunding Site for You

by Alex Feldman

June 10, 2019

Crowdfunding is a great way to get funding for a variety of purposes. People will crowdfund medical emergencies, product launches, startup businesses, or to fund scientific research and art projects.

In 2018, there were millions raised on various crowdfunding sites to fund projects. There’s a reason why. It’s far often much easier than doing the traditional dog and pony show or begging friends and family for money.

How do you go about finding the best crowdfunding site? Read on to find out.

1. How Much Money Do You Need

The first thing that you need to determine is how much money you’re going to need to raise for your project. For a business, you’ll want to take into account all of the expenses that you’ll have. Advertising, promoting your project, building your project, payroll.

Not only that, but you also need to know how much you’re willing to give up in return for someone investing in your project. Will you give away a completed product or a beta of your app when it’s ready? For other types of investments, you may have to give up a percentage of your business.

It’s important to define this early on in the process because you can put yourself in a position where you’re giving too much away in your business.

2. What’s Your Purpose

Defining your purpose in crowdfunding is important for a few reasons. The main reason to define your purpose is that some crowdfunding sites are well-suited for certain purposes.

For example, let’s say you needed to raise a significant amount of capital for a start-up. Some crowdfunding sites like Kickstarter may be suited to that type of fundraising. They only seem to be able to raise money for consumer based products like ridiculous coolers or apps.

If you have a real business model with a business plan, your best bet is to seek financing from Angel List or Fundable.

3. Know the Types of Crowdfunding

Have you ever heard of regulation crowdfunding? That’s quite different from other types of crowdfunding. That’s overseen by SEC-regulated crowdfunding sites.

It allows companies to sell securities in exchange for financing. It’s also becoming a popular source of funding a business.

There are other sites that are for funding nonprofit organizations like Crowdrise. Most of these sites are based on donations to an organization or cause.

There are crowdfunding sites that reward funders, which is more like Kickstarter. By knowing steps one and two in advance, you can narrow down the choices to find the best crowdfunding site.

4. Do Your Research

It’s time to research different crowdfunding sites to find the best ones for you. What do you need to look for?

The first thing to look at is processing fees. Some sites tend to charge around 6% for fundraising. Kickstarter, for example, charges 5% in fees if you reach your funding goal. That fee doesn’t include credit card processing fees, too. Those can be an additional 3% to 5%.

You also want to look at how many other projects were successfully funded and how much was raised. It’s a good chance to study them to see what made them successful. In some cases, they had a great story and in some others, they had a great giveaway.

5. Get Creative in Your Financing Options

You may wonder whether or not a crowdfunding site is the right thing for you. It’s OK to ask questions and figure out if there are other options that are better for your project.

One watch company raised $52 million, with about $2 million of that being raised on Kickstarter. The rest was done through a self-run fundraising campaign. That eliminated the massive amount of fees the company would have paid.

Another option is to go through personal loans. Loans can be a great way to finance a project without having to give up a part of your business. You just have to make sure you get a low-interest rate and make the monthly payments.

You can also get loans based on certain life experience or situations. For example, you could qualify for disability loans, or veterans’ loans.

6. Your Promotion Strategy

Your promotion strategy will largely determine the success or failure of your project. The promotion strategy should be mapped out well before you choose the crowdfunding partner.

The plan and the story should be a good fit for the crowdfunding site, not the other way around. Different crowdfunding sites attract a different type of funder. The crowdfunding site that you choose needs to do well in attracting the type of vendor you’re seeking.

7. Contact Crowdfunding Companies Before Deciding

The last step to choosing the crowdfunding site for your project is to contact them. You want to make sure that they’re legitimate crowdfunding sites.

Feel free to have a list of questions that address the fee structure of the crowdfunding site. You can also ask about how payments are made. You’ll want to be clear if there are any limitations to the number of funders or amount of money raised.

Finding the Best Crowdfunding Site

When it comes to financing a project, financial emergency, or business startup funding, crowdfunding is a great way to go about it.

That’s as long as you find the best crowdfunding site. You need to do your research to make sure that you’re using a site that fits your needs and doesn’t charge too much in fees.

Do you want more fantastic crowdfunding tips? Check out our reviews of the top crowdfunding sites.