What the heck is crowdfunding you may wonder? Crowdfunding is an innovative way to raise funds for your creative project or start-up. Currently, the landscape for investment in small business or start-ups is limited to pledges, donations and barter. The Securities and Exchange Commission did not allow investment in these smaller enterprises until Congress passed a ground-breaking law: The Jobs Act in April 2012. (Read More here.)
Until September 2012, crowdfunding is restricted to non-monetary funding. In other words, you can donate to the cause, enterprise or project, but you will not be paid interest or acquire shares.
There are three main crowdfunding sites in the pledge domain currently. Many more will be popping up as we approach the new law’s effective date. Kickstarter, Indiegogo, and Rockethub are three crowdfunding sources that are vetted and reputable. Each platform takes from 4-5% of the gross pledges; an additional 4% goes to credit card processing. Campaigns have restrictions such as time periods. Rewards are structured for pledge levels. Specific criteria vary on each platform, so check the rules to find which campaign suits your needs best.
Kickstarter began life in April 2009 and according to its website has funded 20,000 projects and attracted $200 million in investment pledges. Kickstarter “is a funding platform for creative projects.” A project, warns the website instruction, has “a beginning and an end.” A campaign is created through video and print on their site with clear expectations for pledge goals and purpose. The company takes 5% of the gross pledge only if the campaign is fulfilled. Amazon, who processes the pledge transactions, takes an additional 3-4%.
“At this very second, thousands of people are checking out projects on Kickstarter. They’re rallying around their friends’ ideas, backing projects from people they’ve long admired, and discovering things that make them laugh and smile. Every project is independently crafted, put to all-or-nothing funding, and supported by friends, fans, and the public in return for rewards.”
At Indiegogo, the “Go Go” factor is a big deal. You are not limited to creative projects at Indie. Venture opportunities are wide open to: “Fund Your Passion.” Whether that is a cause related, creative or entrepreneurial project, you can do it here. Small businesses can raise money for much needed projects. For example: a Harlem café needs kitchen equipment to support its “coffee and culture:” dynamic in Harlem’s “El Barrio” neighborhood. Even a campaign to raise money for a New York musician’s medical bills was fully funded with $48,000 by donors. Indie grabs 4% of the pledges donated.
In Indiegogo’s Own Words:
Everyone should have the opportunity to raise money. Now everyone does. People all over the world use our industry-leading platform to raise millions of dollars for all types of campaigns. No matter what you are raising money for, you can start right now with no fee or application process. At Indiegogo, creating a campaign is simple. Tell people what you are doing, how they can help and what unique perks they’ll get for becoming contributors. You keep 100% ownership of your campaign and you don’t owe us a cent until you raise money. Our customer happiness team is here to make sure you have the support you need any time of day.
RocketHub is similar to both funding platforms. The Rocket’s funding platform is broader than Kickstarter and less broad than Indiegogo. In other words, you can’t raise money for your medical bills, but you can raise money for your cause. The fund is dedicated to supporting works that are commissioned by ordinary people like you and me. The site details how in the past wealthy patrons supported the arts and sciences and innovative endeavors. Rockethub’s platform makes this option available to everyone from everyone. If your campaign is funded: the Hub takes 4% and the credit card company takes another 4% for processing pledges. You have the choice to accept pledges for fully funded or partially funded campaigns.
We provide the credibility and infrastructure necessary to successfully leverage the financial power of your community, and offer the ability to discover and apply for curated opportunities….At RocketHub, a Creative is anyone who would like to launch a crowdfunding campaign or otherwise seeks to have his/her work developed, promoted, distributed or sold. We support entrepreneurs, scientists, actors, artists, composers, dancers, designers, directors, educators, filmmakers, inventors, musicians, painters, philanthropists, poets, politicians, programmers, singers, songwriters, teachers, writers, and more. Let your imagination run wild.
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