Posted on: 19 August 2014

In order to raise funds through crowdfunding, a business must first find the crowdfunding website (or platform) on which they want to pitch their project. With so many platforms to choose from, this is no easy task.

Factors to consider when you are choosing a platform to help ensure your crowdfunding success are:

  • Type of crowdfunding – not all platforms offer all three types of crowdfunding. For example, Crowdcube only offers equity crowdfunding and Funding Circle focuses on debt crowdfunding.
  • Fees – different platforms have chosen different structures to price their services. These might include arrangement fees, administration fees, legal fees, success fees, transaction fees, commission fees... the list is pretty long so it’s worth costing up a few options.
  • Type of investors – individual, business and institutional investors can all pledge money to a project, but some platforms stick to having one or another type of investor. Registering with an equity crowdfunding platform, for example, enables a business to read the questions posed by existing investors and the answers they have given, providing useful insight into what sorts of projects work on that platform and why.
  • Type of platform – some platforms are purely a landing page that brings businesses and investors together. Others have a more active role.
  • Platform usability – each website offers its own model, layout and pledge process, which attracts certain types of investors. Knowing what’s important to potential investors and which platforms they like will help determine which is most likely to lead to the funding target being reached.
  • Security – will investors feel secure giving money to the website? If friends and family are not comfortable, it’s unlikely the crowd will either.
  • UK v foreign platform – British businesses must use debt and equity crowdfunding platforms that are based in the UK. For reward crowdfunding, any platform worldwide can be invested in by people based in the UK, but really only Indiegogo and Kickstarter are set up for the British market.
  • General v niche site – different platforms focus on different types of project. Indiegogo is a generalist platform, whereas Kickstarter concentrates on creative projects. There are even platforms specifically for mumpreneurs, authors and cancer research projects.

Or some businesses do crowdfunding without using a platform, such as Brewdog. They have raised £7m through three rounds of crowdfunding buying shares in their Aberdeenshire-based brewery.

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