Business crowdfunding sites

Crowdfunding and Your Business

Steve-Strauss-in-article-Medium.pngAt the height of the not-so-great recession about four years ago, my publisher approached me with an idea: What if we did a book on all of the different ways a business could find and get funding? The editor I worked with challenged me to come up with as many different funding mechanisms as I could find and the compile them into a book.

To their (and, frankly, my) surprise, I came up with almost 25 different ways to fund a business. Each chapter in Get Your Business Funded looked at a different money source, everything from the traditional – SBA loans, friends & family, savings and so on – to the creative – business plan competitions, microfinance, and factoring.

But of all of the different options I unearthed, by far the most interesting was the newest (at that time): Crowdfunding.

Today, there are two forms of crowdfunding, both providing a valuable option for small businesses. Let’s begin with the original form of crowdfunding that started with sites like Kickstarter and Indiegogo. What is cool about this form of crowdfunding (let’s call it benefit crowdfunding) is that it offers an altogether new way to fund a business.

Traditionally, using outside sources (that is, not the entrepreneur’s money or family), a business could raise the capital it needed in one of two ways:

  1. Debt financing: This is what it sounds like. The entrepreneur goes into debt in exchange for the money. This money must be paid back.
  2. Equity financing: Here, the businessperson exchanges shares of the company, his or her equity, in return for the money. He does not need to repay this money because the financier received a share of the company for their investment.

Pull Quote.pngBut with benefit crowdfunding, the entrepreneur doesn’t need to go into debt nor sell shares of the company for the money. Instead, he or she gives a ‘benefit’ of the business in exchange for the money.

For example: Let’s say that you are starting an ice cream shop. You could let people who invest0 name one of the sundaes. Someone who invests $500 could have a flavor named after them. In this scenario, you still get the money, but you do not go into debt and you continue to own 100 percent of your business.

These days, there are many different crowdfunding websites, catering to all sorts of niche markets. So step one is to find the right site to launch your campaign. Step two is to come up with different levels of benefits. Step three is to make a catchy video that explains the business/project. And finally, step four is to get the word out. Crowdfunding magic happens when you involve your own network and then use them to springboard into a larger group, a.k.a., the crowd.

Crowdfunding money to rebuild destroyed Montana

by mondoBLIND health clinic
Crowdfunding money to rebuild destroyed Montana family health clinic —
Since 1976, Susan Cahill of All Families Healthcare has been in family practice in Montana, offering compassionate family/reproductive health services -- including abortion. It is for this reason that her clinic was all but destroyed by violent thugs, who even trashed her irreplaceable personal mementos. An Indiegogo fundraiser has brought in about $32K so far...

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Jason Best, Co-Founder of Crowdfunding Capital Advisors.
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iFunding Hosts Real Estate Professionals Mixer in VA/DC Area on May 18, 2014  — Virtual-Strategy Magazine
This is an opportunity for those in real estate investing to exchange information, learn about crowdfunding as a method of rapid fundraising for real estate projects, and enjoy complimentary drinks and hors d'oeuvres.

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