Crowdfunding sites also known as fundraising sites are websites that enable people to raise money for their projects or businesses from a large number of people who find such projects or businesses interesting. Crowdfunding websites have become very popular with billions of dollars being raised every year. Many big businesses and ideas have been funded through crowdfunding.
Raising money to start a project, business or call it a venture, is a very difficult thing. Especially in Nigeria and some African countries where access to finance is very hard. Getting a loan can sometimes be a nightmare. As there are often a long list of requirements that you may be unable to meet.
Other options such as pitching to investors and Venture Capitals are good but difficult to access. Most often times you may require connections for an investor to even listen to you. Some VCs may not even look at you especially when you do not have a track record.
If you ever find yourself in this position, with a venture to start and no where to go for funding, then you should consider crowdfunding. Crowdfunding is all about soliciting support from a crowd of people. These people will invest in your ideas and help you achieve it.
How does crowdfunding work?
Crowdfunding works in this way: A person who is looking for funding to start a venture submits the project to a crowdfunding website. The amount of money needed to start the project is listed, also listed is when the fundraising will end. Different people see the project and those who find it worthy donate to support it. At the end of the fundraising, the money will be given to the project creator to start the project.
You maybe wondering, why will anyone wants to support a project they see on a website? There are many reasons:
- People fancy the opportunity to become a part of a big idea that may rule the world or a region
- They get to have the opportunity to be among the first to test a product or see a product
- Project creators do offer incentives just as customized t-shirts, caps and so on depending on the amount donated
- Supporters may get to have access to meet with the founders and attend their event
- They have the opportunity if they are donating big to have a stake in the business
- They receive credit that may have a huge impact on their portfolios
- Some people are just nice, they want to help dreams come true!
The list is long!
What is in it for the crowdfunding sites? The crowdfunding sites get to keep a percentage of the money raised. This percentage is usually 5% or lower. With involvement of escrow service, it could rise to 10%. The rest goes to the project creator. Over over US$34 billion was raised from crowdfunding in 2015!
There are different crowdfunding sites with different rules and fees. But structure are usually same. Submit your project, set a fundraising goal and a deadline. You also have to actively campaign for support from your friends, family and through your social media networks.
So whether you are looking for funding to shoot a movie, start a business, run a tech company, make a community impact, whatever creative ideas you have, you can use crowdfunding sites to help you accomplish it.
Top crowdfunding sites to get funding for your ideas
Here are the top crowdfunding sites to get funding for your ideas in Nigeria:
Kickstarter is the most popular crowdfunding site. Over 156,000 projects have been funded on Kickstarter with over $4.1 billion raised.
Whatever creative ideas you have, you can raise fund on Kickstarter. Whether you are a filmmaker, programmer, music artist, entrepreneur, or anything creative, as long as your project is amazing, you can use this platform for your fundraising.
Mostly, Kickstarter supports reward based fundraising. People who support the project are offered incentives such as T-shirts, caps and so on. The more money a supporter pledge, the better the incentive.
It is important to note that Kickstarter runs a all or nothing system. This means if at the end of the fundraising, you do not get the amount needed to start the project, you will not get any of the money, it will be returned to the supporters. But if you meet the amount needed, then you get it.
Kickstarters charges a fee of 5%, that is excluding payment processing.
You can read more about kickstarter: How to get funding from Kickstarter.
Indiegogo is a very popular crowdfunding website similar to Kickstarter but with notable differences. This platform help businesses, creative people, NGOs and others raise fund to support their projects.
One amazing option in Indiegogo is the opportunity to choose a fixed or flexible funding goal. The fixed funding is like Kickstarter’s all or nothing: if you do not raised the amount of money needed to start the project at the end of fundraising, you get nothing. But the flexible funding option allows you to get the fund whether you meet your goal or not.
With Indiegogo InDemand, you can continue raising funds even when your crowdfunding campaign has ended. There is also an option to submit your project for funding to investors in exchange for a stake in it.
Indiegogo charges a fee of 5%, that is exclusive of payment processing.
GoFundMe is a crowdfunding platform that is focused on helping individuals and causes raise funds. Unlike the other crowdfunding platform on the list, GoFunMe is not suitable for business fundraising.
It is most suitable for causes, community projects and individual projects. For example, a Nigerian blogger Omoyele Sowore, who is the owner of Sahara reporters, used the GoFunMe platform to raise funds for his presidential bid in the 2019 election.
If your idea is community centered, philanthropic in nature, or you are in situation that needs support, you can use this platform to raise funds.
GoFundMe does not charge a fee to use the platform but transaction fee of 2.9% + $30 per donation may apply.
Crowdfunder is an equity crowdfunding website that enables entrepreneurs raise fund from a crowd of accredited investors.
They have a large network of over 12, 000 venture capitals and angel investors that you can sell your ideas to in order to get funding.
Crowdfunder have monthly plan starting at $299 per month to create a public profile. You can create a non public profile free.
Patreon is a crowdfunding platform that enable internet creators such as bloggers, music artists, YouTubers and so on raise money from their users.
With Patreon, if you are an internet creator, you can build a strong community of loyal and dedicated supporters who will contribute to fund your work.
Patreon fee starts at 5% excluding processing fees.
Crowdcube is an equity crowdfunding platform. It is really tough to be accepted as only few campaigns are on the site. But once you are accepted, you stand a high chance of getting funding.
They primarily accept companies from United Kingdom, Spain and Ireland. But if you are from Nigeria and other nations, they can still accept. You will need to contact their business development team and tell them where you are based, the structure of your business and how much you are looking to raise.
They charge a fee of 7%.
NaijaFund is a Nigerian based crowdfunding platform that support people to raise fund for a lot of things including business.
All you have to do is create account. You can do it easily with your social network profiles.
Naija fund charges 10% from donations received
Crowdfunding sites are a good way to raise money for your ideas. If you have a good idea and no funds, instead of giving up, you can actually do something about it by using these platforms to raise funds.