There are different types of crowdfunding, and plenty of platforms to choose from for generating donations to a charity or a worthy cause; asking for help to complete new product development; personal fundraising, such as for medical costs or educational fees; accessing loans at lower-than-high-street interest rates; buying and selling shares in privately-owned businesses; and using a crowdfunding platform as a distribution channel to generate pre-paid product orders. The choice of a crowdfunding platform can significantly impact the success of a campaign, particularly for startups seeking business finance. So it’s important to carefully consider the following 15 criteria for choosing which crowdfunding platform to use.
- Type of Crowdfunding: There are different types of crowdfunding, including donation-based, reward-based, equity-based, and lending-based crowdfunding. Choose a platform that aligns with the type of crowdfunding you’re looking to use for your campaign.
- Fees and Costs: Crowdfunding platforms usually charge fees for hosting campaigns on their platform. These fees can vary significantly and may include platform fees, payment processing fees, and other charges. Evaluate the fee structure to understand how much of your funds will be used to cover these costs.
- Target Audience and Niche: Some platforms cater to specific niches or industries. Choose a platform that attracts backers who are interested in your project’s field or sector.
- Geographic Reach: Consider the platform’s global reach and the countries where it operates. Some platforms are more popular in certain regions, so choose one that aligns with your key target audience’s location.
- Platform Reputation and Trustworthiness: Research the platform’s reputation, history, and success stories. Look for reviews from other campaigners to gauge the platform’s reliability and trustworthiness. Platforms that are members of the UK Crowdfunding Association are obliged to follow the UKCFA Code of Conduct.
- User-Friendly Interface: A user-friendly platform with an intuitive interface can make it easier for both campaigners and backers to navigate and participate.
- Campaign Support: Check if the platform provides resources, guides, and customer support to help you create and manage your campaign effectively.
- Visibility and Exposure: Some platforms have a larger user base and better marketing reach, which can increase the visibility of your campaign. Consider the platform’s ability to help your campaign reach a wider audience.
- Fund Disbursement: Understand the platform’s policies regarding how and when funds will be disbursed to you. Some platforms release funds only after the campaign reaches its funding goal, while others may allow earlier partial disbursements.
- Flexible Funding Options: Some platforms offer flexible funding, where campaigns receive the funds even if they don’t meet their target goal. This is known as Keep What You Raise. Others use an All-or-Nothing approach. Choose the one that aligns with your campaign strategy and your available budget to run your crowdfunding. You don’t want to incur costs and then realise you aren’t going to have any money.
- Social Sharing and Integration: Look for platforms that have social sharing features and integrations with social media platforms. This can help your campaign gain traction through online sharing.
- Analytics and Reporting: Consider platforms that provide analytics and reporting tools to help you track the progress of your campaign and understand your backers’ behaviour.
- Legal and Compliance: Different crowdfunding models have legal and regulatory implications. Ensure the platform complies with relevant laws and regulations for your type of campaign.
- Intellectual Property Protection: If your campaign involves a product or innovation, research how the platform handles intellectual property protection to safeguard your idea.
- Community and Engagement: Platforms with active communities and engaged backers can provide valuable feedback and support for your campaign.
Ultimately, choosing a crowdfunding platform should align with your campaign’s goals, target audience, and the type of crowdfunding you’re using. Carefully review your options and choose the platform that best suits your needs. If you want some help, I am an independent crowdfunding advisor with no ties to any particular platform. Send me an email to [email protected]. Or follow me on Twitter where I regularly post news about crowdfunding campaigns.
The main image shows some of the crowdfunding platforms available to use in the UK – apologies to the ones I have left out.