Crowd funding in 2014, the New Ecommerce strategy to gather capital for your project!

The twenty-first century, with break-throughs in technology has created innovative strategies for small and medium-sized businesses to raise capital to fund their projects. Conventional banks and lending institutions are crippled by extensive regulations including Dodd-Frank, which limits the amount of financial risk banks can take for small companies who want to market their product or service. As a result of this vacuum the need is being filled by the emergence of crowd funding. Crowd funding is becoming a lucrative source of capital for small businesses. This article will briefly look at 10 websites who are active players in this new industry. The Internet is filled with discussions about crowd funding. Fox news recently featured a 3D printing company who used crowd funding to bring their new $199 3D printer to market. New ideas create excitement and this draws millions of potential businesses and investors to this market place. Unfortunately we have found over 700 websites who claim to provide crowd funding. Our research has limited this number down to ten sites who are crowd funding sites with a strong track record of providing accurate and complete information to investors.
Let us ask the question… what crowd funding site is best for you?
As a crowdfunding industry reporter, I wanted to provide you an easy guide for which site to visit for your crowdfunding needs.

I’ll begin with a small overview of this industry, a short primer on the different kinds of crowdfunding models so you can find what you’re looking for, and then I’ll get to specific site recommendations.

The base of the Crowdfunding Industry
Collaboration on the web is an area of tremendous growth. Crowdfunding, or collaborative funding via the web, is one of the standouts for growth in this evolving collaborative economy.

The Crowdfunding Industry Report by Massolution provided data showing the general crowdfunding industry has raised $5.7 billion in 2013, across more than 2 million individual campaigns globally. In 2014 the industry is projected to grow to $7.1 billion.

Some of the most interesting developments in crowdfunding, which are expected to grow in the months and years ahead, include: investment crowdfunding, which is simply (becoming a shareholder in a company), localization (funding focused on participants in specific cities and neighborhoods), mobile solutions, and group-based approaches.

The JOBS Act that was passed in April of 2012 paved the way to investment crowdfunding; however, the JOBS Act Rulings by the SEC have yet to be fully implemented to formally start the market. Expect big movement and activity in this area in 2014 and 2015.

Crowdfunding Models
There are 2 main models or types of crowdfunding. The first is what is known as donation-based funding. The birth of crowdfunding has evolved through this model, where funders donate via a collaborative goal based process in return for products, perks or rewards.

The second and more recent model is investment crowdfunding, where businesses seeking capital sell ownership stakes online in the form of equity or debt. In this model, individuals who fund become owners or shareholders and have a potential for financial return, unlike the donation model.


Crowdfunding Sites You Can Choose From
Business owners are using different crowdfunding sites than musicians. Musicians are using different sites from causes and charities. Below is a list of crowdfunding sites that have different models and focuses. This list can help you find the right place for your crowdfunding goals and needs.

1. Kickstarter
Kickstarter is a site where creative projects raise donation-based funding. These projects will range from new creative products, like an art installation, to a cool watch, to pre-selling a music album. It’s not for businesses, causes, charities, or personal financing needs. Kickstarter is one of the earlier platforms, and has experienced strong growth and many break-out large campaigns in the last few years.

2. Indiegogo
While Kickstarter maintains a tighter focus and curates the creative projects approved on its site, Indiegogo approves donation-based fundraising campaigns for most anything — music, hobbyists, personal finance needs, charities and whatever else you could think of (except investment). They have had international growth because of their flexibility, broad approach and their early start in the industry.

3. Crowdfunder
Crowdfunder is the crowdfunding platform for businesses, with a growing social network of investors, tech startups, small businesses, and social enterprises (financially sustainable/profitable businesses with social impact goals).

Crowdfunder offers a blend of donation-based and investment crowdfunding from individuals and angel investors, and was a leading participant in the JOBS Act legislation. The company has localized crowdfunding and investment to help develop entrepreneurial ecosystems and access to capital outside Silicon Valley. Its unique CROWDFUNDING initiative in cities across the US and Mexico connects local investors with local entrepreneurs both online and offline, and does the work to validate top local companies in each city across the US and Mexico.

4. RocketHub
RocketHub powers donation-based funding for a wide variety of creative projects.

What’s unique about RocketHub is their FuelPad and LaunchPad programs that help campaign owners and potential promotion and marketing partners connect and collaborate for the success of a campaign.

5. Crowdrise
Crowdrise is a place for donation-based funding for Causes and Charities. They’ve attracted a community of do-gooders and fund all types of inspiring causes and needs.

A unique Points System on Crowdrise helps track and reveal how much charitable impact members and organizations are making.

6. Somolend
Somolend is a site for lending for small businesses in the US, providing debt-based investment funding to qualified businesses with existing operations and revenue. Somolend has partnered with banks to provide loans, as well as helping small business owners bring their friends and family into the effort.

With their Midwest roots, a strong founder who was a leading participant in the JOBS Act legislation, and their focus and lead in the local small business market, Somolend has begun expanding into multiple cities and markets in the US.

7. appbackr
If you want to create the next new mobile app and are seeking donation-based funding to get things off the ground or growing, then check out appbackr and their niche community for mobile app development.

8. AngelList
If you’re a tech startup with a shiny lead investor already signed on, or looking for Silicon Valley momentum, then there are angels and institutions finding investments through AngelList. For some time AngelList didn’t say that they did crowdfunding, which makes sense as they have catered to the investment establishment in tech startups, but now they’re getting into the game. The accredited investors and institutions on AngelList have been funding a growing number of select tech startup deals.

9. Invested.in
You might want to create your own crowdfunding community to support donation-based fundraising for a specific group or niche in the market. Invested.in is a Venice, CA based company that is a top name “white label” software provider, giving you the tools to get started and grow your own.

10. Quirky
If you’re an inventor, maker, or tinkerer of some kind then Quirky is a place to collaborate and crowdfund for donation-based funding with a community of other like-minded inventors. Their site digs deeper into helping the process of bringing an invention or product to life, allowing community participation in the process.

These 10 crowdfunding sites cover most campaign types or funding goals you may have. Whether you’re looking to fundraise or not, go visit the sites listed in this article that grab your attention and become involved in this collaborative community.
ABCO Technology offers classes for Ecommerce and crowd funding strategies. Please call us at (310) 216-3067 between 9 AM and 6 PM Monday through Friday. You can Email us at: info@abcotechnology.edu for a schedule of classes.
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