Introduction to crowdsourcing
Over the past decade, crowdfunding and crowdsourcing have become a popular way for businesses and other initiatives to raise money for their projects and growth. This method of financing came in perfectly to the funding gap and gave small companies a chance to raise funds by going directly to their customers. However, raising funds isn’t the only benefit crowdsourcing can give you.
When you’re starting out you’ll need all the help you can get, and some platforms can help you find the community. These like-minded individuals can benefit your project in many ways that don’t require finances. They can help you out with marketing, developing a part of your product, or just getting the word out there. Once you get the ball rolling, you can pay them back – by giving them a free version of your product, paying them money, or something else you both agree on.
Today, more and more early-stage companies are choosing to crowdsource over raising sometimes unattainable venture capital. Other than providing you with funding, crowdsourcing is a great way to validate your idea. If your customers choose to give you money, you can be sure that they think your product is worth investing in and buying it.
The first step in setting up a crowdsourcing initiative is choosing the best crowdsourcing platform for your campaign. If you’re a newbie, it can be hard to know where to start exploring. With that in mind, we curated a list of some of the best crowdsourcing platforms that are worth your attention. Let’s check them out!
When you think about crowdfunding, Kickstarter is probably what comes first to your mind. Kickstarter is the dinosaur among crowdsourcing platforms and has been around for 11 years. In the meantime, the platform has become a synonym for crowdfunding.
Kickstarter rewards donators. If you choose to support a project, you’ll get something in return (a product, unique experience, or access to something others don’t have).
In order to run a successful Kickstarter campaign, you’ll need to have a specific, final deliverable you want to reach. Competition on Kickstarter is rough, so keep in mind that you’ll have to be creative in order to attract enough funding.
Also, if you don’t reach your target, you won’t get the cash you raised so far. If you do hit the target, Kickstarter has a 5% fee, plus payment processing fees.
Next to Kickstarter, GoFundMe is another popular option for crowdsourcing. In comparison to other platforms, it’s mostly focused on personal causes, rather than companies. Common goals you can come across the platform are covering medical bills or paying for college.
If you choose GoFundMe for your campaign, make sure to build a strong personal brand that represents your company. Keep your face at the front of the game.
Same as Kickstarter, if you don’t reach your target, you won’t be able to raise the funds. For those who do, the platform fee is 5% plus the payment processing fees, unless you started your campaign in US dollars. In this case, there’s no fee.
Funding over Patreon is based on a subscription model, meaning that your patrons give regular, but smaller, contributions. The platform usually attracts creative projects, from YouTubers and podcasters to blog writers and artists.
When it comes to fees, Patreon’s base fee is 5% for a basic plan. However, you can choose to purchase a better plan in exchange for 8% or 12% of your income. On the other hand, there are also service fees that are now paid by donors. While this method is saving the creators some money, they are worried that it might scare away some of their patrons.
Crowdsourcer.io is a collaboration and profit-sharing platform. This platform allows contributors to earn a fair share of profits based on their contribution, rather than their financial investment. Once you set up the project, you’ll be able to give others a chance to complete tasks and contribute to your projects. When a task is complete, the contributor gets contribution points that then become the basis for the profit share that each member receives (including the creator of the project).
You can use it to sell your products or receive donations using the Crowdsourcer.io platform. Once you make a sale, the fee that covers all costs, including the payment processing, is 17.5%. On the other hand, you can sell your products via third party retailers such as Amazon or Steam, and then use Crowdsourcer.io to pay other members of the project. The fee for this service is 6.5% including the payment processing. Other than that, the platform is free to use.
Crowdsourcer.io usually attracts startups that choose to crowdfund over raising venture capital or those that are bootstrapping.
In comparison to other platforms we mentioned on our list, Crowdfunder is designed for entrepreneurs who are looking to raise venture capital. The creators publish their deals on the platform and then connect with investors, who can then directly support the projects through the platform.
Crowdfunder charges a monthly subscription to entrepreneurs. The basic plan is free, but if you want additional perks, it will cost you somewhere between $300 and $500 per month. Once you raise the funds, you’ll also pay a 3% platform and payment processing fees.
Last on our list, Indiegogo provides a little bit of everything from other platforms. There are two ways of funding you can choose from: flexible or fixed, and almost every industry is covered on Indiegogo. If you choose a fixed campaign, you’ll have to reach it. If you don’t reach the goal by a certain deadline, your backers will be refunded.
For flexible campaigns, you don’t have to reach your targets to receive money, but if you don’t the fee is higher, same as on RocketHub.
The fee for both fixed and flexible campaigns that reach the goal is 5%, but if you don’t hit the target with a flexible campaign, the fee is 9%, and you’ll have some additional fees for payment processing in both cases.
Now, it’s up to you!
These are some of our top picks for the best crowdsourcing platforms. However, there are many more out there. If you want to start crowdfunding, make sure to set the goals of your project first.
Once you have the base laid out, you can start exploring the best platform that fits your needs the best.
Have you tried crowdfunding before? What’s your favourite platform? Let us know in the comments below!