15 ways to crowdfund your startup or project

Published on April 26th, 2011

Written by: JD Lasica

Have you considered asking the community to support your new enterprise?

Target audience: Social enterprises, nonprofits, volunteer groups, sustainable businesses, community organizations.

Guest post by Kerry Given
Green Marketing TV

Finding funding can be one of the biggest challenges for social entrepreneurs. Fortunately, there is a growing number of options for social entrepreneurs and founders looking for capital to start or expand their social enterprise, startup or nonprofit organization and do more good in the world.

One non-traditional funding opportunity that has seen exponential growth in recent years is the phenomenon of “crowdfunding.” Family and friends have been one of the most common sources of venture funding capital for centuries. Crowdfunding takes this age-old source of venture funding and brings it into the digital age.

Thanks to social media and other forms of modern technology, entrepreneurs are able to build networks of friends, colleagues and like-minded individuals more easily and effectively than ever before. Crowdfunding websites allow entrepreneurs or project leaders to leverage these networks to gain funding.

Typically, entrepreneurs post a request for funding on a crowdfunding site with a detailed project description. Depending on the site, funding may be provided as a loan or a donation. Once the funding request is posted, the entrepreneurs use their networks to spread the word about their project to potential donors through word of mouth, email, Facebook, Twitter and other social media platforms.

Crowdfunding is not for everyone. The majority of crowdfunding sites fund entrepreneurs on an all-or-nothing basis. If the project is fully funded when the deadline arrives, the money is given to the entrepreneur. If it is not fully funded, it is returned to the donors to keep or donate to another project. So it’s important to have a compelling project or story and to be a skillful marketer and networker to ensure that word about your project reaches enough potential donors to fully fund the project before the deadline. If you’re confident that your social enterprise has what it takes to become a crowdfunding success story, you may find crowdfunding to be the perfect option for your fundraising efforts.

The following is a list of crowdfunding websites that can help your social enterprise, sustainable business or nonprofit organization get off the ground:

33 Needs: Connecting microinvestors & social enterpreneurs

133needs is a recent crowdfunding startup that connects microinvestors with social entrepreneurs who have big ideas in categories such as sustainable food, health, education and the environment. Investors can earn a percentage of revenue in exchange for their support.

AppBackr: Offset app development costs

2A specialty crowdfunding site that may be useful to some social enterprises, AppBackr allows Apple developers to get funding upfront for iPhone, iPod and iPad apps in the concept stage by selling the app wholesale to backers, who receive a percentage of the profits for the apps they have purchased. Many app buyers also assist developers with marketing and promoting their apps to ensure that their investment is fully recouped. With a growing number of social enterprises tapping into the explosive apps market to raise awareness and sell products or services, AppBackr may be a useful tool to help offset app development costs, and even gain some extra promotional help.

Buzzbnk: Supporting a wide range of fields

3Buzzbnk is a crowdfunding platform especially for social enterprises that allow funders to donate either money or time to support social enterprises working in a wide variety of fields. Though based in the UK, it is open to social ventures operating anywhere in the world. Social enterprises must submit their project proposal to Buzzbnk and the Buzzbnk team will work with the social enterprise to help develop appropriate fundraising targets and benefits or rewards to offer funders.

CauseVox: Fundraising pages for nonprofits

4CauseVox offers nonprofit organizations a fully customizable fundraising page that makes collecting money from supporters easy. Supporters can also create their own personalized fundraising pages. Social media integration makes it easy to embed YouTube videos, Flickr slideshows and more.

ProFounder: Investors share in the profits

5ProFounder caters to entrepreneurs – social or otherwise – who are looking for alternative sources of venture capital. ProFounder provides a secure platform where entrepreneurs can raise money from family members, friends and other connections, who then receive a share of the profits when the business they have invested in succeeds. This revenue sharing system is good for investors and good for entrepreneurs, because it doesn’t commit entrepreneurs to making debt payments (potentially with high interest rates) during periods of bad business, only when the business is successful and profitable.

Kickstarter: Supporting a wealth of creative projects

6One of the best-known crowdfunding websites is Kickstarter, which rose to fame after the open source Facebook alternative Diaspora raised more than $200,000 on the site. Kickstarter funds creative projects such as independent films and music albums, books, software, citizen journalism, theatrical productions and more. Project creators are required to offer rewards to donors, such as bonus musical tracks, autographed books, signed prints, free performance tickets or something similar. Although Kickstarter cannot be used to fund social enterprise start-ups, it can be a great source of funding for social enterprises and nonprofits hoping to use creative projects to raise awareness of their cause, as well as for social-minded creative enterprises such as nonprofit theater companies and independent music producers. Other great crowdfunding sites focusing on creative projects include IndieGoGo, RocketHub, UK-based Crowdfunder and Australian-based Pozible.

ChipIn: Embed a widget, raise $

7ChipIn is a simple widget that can be posted on blogs, websites and many social media profiles. It allows individuals, private groups, non-profits and others to raise money easily online.

Crowdcube: Equity-based investment community

8UK-based Crowdcube bills itself as “the world’s first equity-based crowdfunding community dedicated to business investment.” In exchange for microinvestments of as little as £10, investors can fund worthy enterprises and in exchange gain a share of direct equity in the business. Crowdcube is currently available only to UK-based investors and entrepreneurs who have or can start a UK Limited Company, but hopes to expand to other regions in the future.

Give.fm: Create your own campaign

9Give.fm allows nonprofits and individuals to set up a campaign to raise money for causes ranging from local soccer teams to international efforts to fight poverty, hunger, disease, environmental degradation and more. The site works by allowing donors to set up recurring microdonations of as little as 10 cents per day.

Peerbackers: Raise funds from your peers

10Peerbackers offers entrepreneurs and nonprofits of all types the opportunity to raise funding for their idea from their friends, family and peers. Rather than receive financial returns or equity, backers receive rewards such as free or discounted versions of the products or services offered by the company.

FirstGiving: Raise funds for your favorite cause

11FirstGiving has helped more than 8,000 nonprofit organizations connect with more than 13 million donors and raise more than $1 billion to date, it reports. The site allows nonprofit supporters to create their own fundraising page to raise money for the cause of their choice.

Razoo: Simple, secure tools to raise funds

12Razoo is a crowdfunding platform for nonprofits and charities that allows individuals, organizations, corporations and foundations to set up a fundraising page to raise money for their own cause or their other cause of choice. Razoo also allows team campaigns.

Sponsume: Free fundraising platform

13Sponsume is a crowdfunding startup, launched in 2010, that allows both creative projects and social enterprises to raise funding on the site. Sponsume is currently free to use, but does plan to start charging fees in the future.

Spot.us: Funding citizen journalism

14Spot.us is a one-of-a-kind crowdfunding platform that supports citizen journalists by funding their investigations of specific topics. Spot.us can be a very useful tool for organizations seeking to raise awareness through hard-hitting investigative journalism, community reporting or similar means.

Start Some Good: New kid on the block

15Start Some Good is a new crowdfunding startup that launched in February with the goal of connecting social entrepreneurs with crowdfunded venture capital. Start Some Good allows both for-profit and nonprofit social enterprises to post fundraising campaigns to the site. Team members will help review the campaign’s goals and rewards to ensure they’re a good match for Start Some Good’s philosophy.

Have we left any crowdfunding websites off this list? Please leave a comment below!

Image at top by Matt Wengerd on Flickr. Republished from GreenMarketing.tv.

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JD Lasica works with nonprofits, social change organizations and businesses on social media strategies. See his profile, visit his business blog, contact JD or follow him on Twitter or Google Plus.