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The top 5 crowdfunding sites

What is crowdfunding you ask? It is essentially an alternative form of finance managed via an online platform where you can pitch your business to willing investors. The idea is to attract a ‘crowd’ of investors into your business, each of whom has a small stake in your enterprise. Your ‘crowd’ allows you to benefit from collective business expertise as well as valuable finance.

Crowdfunding  continues to grow in popularity. It’s particularly good for start-ups. If you have an exciting product or service that captures the interest of potential investors, you’re already half to your business dream.

Doing you research is vital. There are loads of crowdfunding sites out there. Each one has its own set of rules.

Here a few things you need to know about crowdfunding:

  • Equity crowdfunding
  • Making a successful pitch
  • Top 5 sites

Equity Crowdfunding

With equity crowdfunding, investors will invest in your business in exchange for a share of the equity in the business. That share value might fluctuate as your business grows. This is really good for small businesses looking to get off the ground. You can gain valuable expert in put into your venture and the more investors you attract, the more their individual risk is spread.

The problem with equity crowdfunding is that you end up giving away an equity stake in your business. Someone else therefore has a certain amount of control in what you do. This kind of funding can also be risky for investors as there is no guarantee that they will see a return on their investment. This might make it difficult to get funding.

Making a successful pitch

There are number of things that you will need to do if you want your crowdfunding pitch to succeed;

  • Research well and choose a site that’s right for your requirements
  • Understand your target audience and write your pitch accordingly
  • Be clear on whether you’re seeking equity or debt finance
  • Explain exactly how the money will be spent
  • Be creative and use images and videos as part of your pitch
  • Have a first-class, winning business plan at the ready
  • Keep the momentum going with regular news updates as part of the investment cycle; even include some investor special offers
  • If equity raising then you need to have raised a third of your target before you pitch in order to be a success

Top 5 crowdfunding sites

In no particular order our top 5 crowdfunding sites are:

Seedrs

Rated 4.5 out of 5 on Trustpilot, Seedrs  is an equity crowdfunding platform which has helped invest £710 million into pitches and funded 893 deals at the time of writing.

Crowdcube

Crowdcube was established in 2011 as an equity-based platform. Crowdcube operates on the “all or nothing” model. When a pitch reaches its investment target, the business receives the funding raised. If it doesn’t, no funds are taken from investors. A commission is charged on successful funding campaigns.

Kickstarter

Since its launch in 2009 Kickstarter  has helped 17 million people back a project. US$4.6 billion has been pledged and 171,902 projects have received funding. The platform helps artists. Musicians, film makers, designers and other creators find the financial resources they need to make their ideas a reality.

Indiegogo

Indiegogo  has been around since 2008. It’s great for investing in the latest in tech, arts and film projects or helping charitable causes and generates opportunities for backers and entrepreneurs alike.

CircleUp

CircleUp has helped raise $260 million dollars for 196 start-ups looking to build a consumer brand. It offers both equity capital and credit financing. It provides a platform to network with experts, retailers, and entrepreneurs.

If you think crowdfunding is an option for you, or you’d simply like to discuss how we could help you to reach your goals in securing the right finance to scale-up your business, speak to one of our advisers.

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