Crowdfunding has opened up opportunities for small business projects to get funding. These businesses, often startups or maybe just product ideas, find themselves without any capital often because they are not considered for loans or other conventional ways of fundraising. Crowdfunding has made it possible for them to raise money, especially with the new trend of equity crowdfunding.
Crowdfunding is a process in which a lot of people can pool in small amounts of money in order to raise a large amount of money. This can be done for social causes as well as for profit ventures. In the past decade, profit ventures have found newer ways to raise money online.
There are two principal ways in which a business can raise money online. 1. Through rewards based crowdfunding 2. Through equity crowdfunding.
Rewards based crowdfunding means that campaigners ask for contributions and in return of contributions they send rewards. Often, this is a product. Equity crowdfunding has been popular since the US government passed the JOBS Act in 2012. It works like stocks. You pay money to a venture and in return you own part of the venture. In this article, I will explore platforms that engage in both kinds of crowdfunding. However, do remember that equity crowdfunding is on hold in India, according to SEBI guidelines. There are plenty of crowdfunding sites in India. Here is a list:
- Impact Guru: Incubated at Harvard, this crowdfunding platform has backed hundreds of startups and social enterprises. If you are looking to start a business and want a crowdfunding platform with experience, this is the place for you. The added advantage is that it has a service charge of about 5%, which is low compared to most other platforms. Impact Guru also has a tie up with Global Giving. Their minimum fees is Rs 1999.
- Wishberry: Slightly different from Impact Guru, Wishberry only funds ideas that are creative. Wishberry has a high success rate of 70% as campaigners are assisted throughout the campaign by campaign managers and otherwise. The service fees are slightly higher than Impact Guru’s – 10%. There are options for campaign consultation available.
- Ketto: Operational since 2012, Ketto charges a commission of 9% and works in the field of charity and community services. Ketto has been used by plenty of celebrities to fund their own campaigns. They are operational in only India but they have raised more than 100 crores in donations.
- Milaap: This crowdfunding platform is operational in three countries, following close in the heels of Impact Guru. Small businesses will find Milaap especially useful as the website started out as a micro-entrepreneurial venture. Milaap is a perfect way of blending the e-economy and making it suitable for small businesses. As of April 2018, the platform has raised more than 330 crores for 100,000 causes.
- BitGiving: This Delhi based crowdfunding platform is known for being selective in taking up fundraisers. BitGiving uses angel investors to raise funds. This is the reason for its selectiveness. However, being on BitGiving means that your campaign has a good chance of being backed well. There is a solid cluster of angel investors behind the platform and this is why it is particularly feasible to business crowdfunding. The amount of money raised by BitGiving is undisclosed. They charge service fees of 6-10%.
Fundraising in India has been around for quite some time but business crowdfunding is slowly caching on. The market is expected to grow in the next couple of decades. Therefore, if you are thinking of raising money for your business through crowdfunding, you are thinking right.