Did you know that technology-based projects have averaged more than $1 million in funds through crowdfunding? If you have a tech business and need to raise funds, turning to crowdfunding looks like a promising solution.
With all of the platforms out there, however, how can you choose the right one for your business. Read on for tips on how to choose the best crowdfunding platform.
1. Best Crowdfunding Platform for Your Campaign Goals
Before you can make a decision on the crowdfunding platform, you need to have a clear idea of what your goals are. Have a business strategy or plan in place so that you can narrow options down based on whether they can make those goals a reality or not. Look at what kind of projects have been successful on the platform to see if it can offer crowdfunding for tech startups.
Having a clear plan will also help you attract more interest. People tend to support projects that have specific and achievable goals.
2. Platform’s Structure
There are different structures for crowdfunding. These include the donation model, the equity model, and the rewards model.
With the donation model, contributors do not receive anything in return for their donation, so it is best suited for charity or non-profits. The equity or lending model gives lenders a portion of future gains or shares of a company. With the rewards model, contributors receive different rewards for the various levels of contribution.
For most businesses, either the equity or rewards model can work well so look for a platform that uses those.
3. Fees and Missed Targets
Crowdfunding is free but sometimes there are small fees for signing up to the platform. These fees can range anywhere from 5 to 15 percent. Many times, these fees come directly from the donations but some platforms do have hidden service fees you want to watch for.
There may be other fees, too, from third parties like PayPal or credit card companies.
Before you set a goal, you need to make sure it is a feasible one. If you miss your target, you will not be charged but all of the money will be returned to the contributors, which is one of the benefits of crowdfunding. All crowdfunding platforms will have a page dedicated to terms and conditions related to missed targets.
4. Payment Methods
Most crowdfunding platforms support different payment methods which can verify funds. The most common options are credit cards, authorization holds, and a capture. The majority of crowdfunding platforms prefer authorization holds to ensure a contributor can actually make the donation.
Credit cards are a bit trickier since it is more difficult to verify that the payment really went through. The other option is to capture the money when the donation is made and then refunding it if the project is not successful.
Raise the Funds Your Company Needs
Crowdfunding can be an excellent option for tech startups and many other companies. With all of the different platforms for crowdfunding, you can always find the one that best suits your business’ needs.
Learn more about choosing the best crowdfunding platform and growing your startup by reading out Business page!
