While starting a new business is still a long, difficult process, the whole thing has been made much simpler by the rise in crowdfunding sites.
The likes of IndieGoGo and kickstarter have made crowdfunding a common phrase and helped get thousands of fledging businesses the much-needed capital, that can either supplement or replace traditional business loans. But there are a load of such sites that we bet you’ve never heard of and could work better for you than the bigger names:
We’ll be honest, FundAnything doesn’t offer that much revolutionary in terms of the crowdfunding platform. You can get funding for practically anything and the site takes a 5% fee on successful campaigns and 9% on unsuccessful ones. Recent winners have been a planned film by Penn Jillette (of Penn & Teller fame) and Adam Rifkin. What it does offer that’s unique however is the potential backing of Donald Trump, who highlights specific campaigns that he deems worthy.
Small Knot plays on the idea that people like to support projects in their local area. If you see that there’s, say, a local bakery or community centre opening you’re more inclined back it given the impact it could have on your daily life. The fees are low at 3 per cent commission for successful campaigns and no charge for those that don’t reach their goals. To find out what your tax obligations are on crowdfunded money, talk to a dedicated startup accountant in your area.
This crowdfunding isn’t necessarily just for startups but can be applicable to all stages of business. The catch is you need to have a turnover of $1 million dollars and be looking for investors who want an equity stake in the business. For you part, you’ll get access to a network of accredited investors and therefore – at least this is Circle Up’s hope – a better chance of succeeding your investment goals. For the peace of mind of those putting money into a project, if the campaign goal is not reached all money is returned to the investors.
This site works more like traditional investment practices but with a more streamlined, transparent approach. SoMoLend works by getting businesses/users to fill out a loan application and create a profile on the site, then potential investors can view this information and start a conversation if they’re interested. From there both parties can agree on things like terms and interest rates. SoMoLend is also partnered with several banks to offer standard business loans too.