Each crowdfunding model is appropriate for different types of businesses and needs.

• How much money do you need to raise?
• How big is your investor pool?
• What type of business model does your company have?
• Are you manufacturing a product for sale? Or,
• Are you creating the next big app?

If you are manufacturing an item to be sold usually a rewards-based crowdfunding campaign can be your best bet, i.e. Kickstarter or Indiegogo. Here, the “reward” can be the product itself. Also pre-selling of the product can occur, which makes this a nice way to show proof of concept.

Is your business is already established and you are looking for expansion capital? Then consider debt-based crowdfunding: Investor expectations are a return of their capital—with or without interest, over a pre-determined period of time. Businesses benefit because this form of capital is non-dilutive to their ownership and the secured nature of the investment may provide sufficient additional incentive for investors.

For those businesses that need a significant amount of capital and are willing to give a share of their business to investors, then equity-based crowdfunding will be a strong option. This provide an opportunity to attract a larger pool of investment, with a lessened financial risk for investors who will generally be limited to invest between $2,000–5,000.

Donation-based crowdfunding campaigns are best for nonprofit organizations. Here a clear need/cause or goal can be achieved. Strictly donation-based does not work well for entrepreneurs, as most investing in a for-profit business do not want to just donate money without a return.

If you’re manufacturing a product and are willing to give a portion of a future sale to an investor, then learn more about royalty-based crowdfunding for your organization. Here, the investor takes a chance on how much you will sell.

Take some time to define your business, goals and capital needs—the right capital raising platform is there for you.  Schedule a consultation today!