If you’re thinking about growing your ecommerce company, it’s time to consider launching a crowdfunding campaign. Today, crowdfunding is a popular alternative to a traditional bank loan or “family and friends” financing. Basically, you use an online service to launch a fundraising campaign aimed at generating small individual investments. If all goes well, crowdfunding can deliver excellent results. If not, you can always try another method.
There are a number of decisions to make when planning a crowdfunding campaign, including the amount you want to raise and how you will put those funds to work in your store. Timing is also a consideration, since the likelihood of a successful campaign can vary from month to month, according to “Kickstarter Stats 101”, a recent analysis by Genius Games. In general, September, October and November are good months to launch a campaign, although January and February are even better, according to the study.
But the most important decision is which crowdfunding site will be best for you. Some sites cater to non-profits or charitable causes, while others focus on raising funds for businesses. Geographic considerations can affect your results, since an Australian crowdfunding site may not generate much traffic for a New York or South Dakota retailer. Fees and charges can also vary, and you should be sure to read the site’s terms and conditions before launching a campaign.
Here is a closer look at some of the most popular U.S. crowdfunding sites:
- Celery Launch lets crowdfunders host a campaign on their own website. This means that sellers can customize the look and feel of their campaign, develop independent branding, and keep more of the funds. Major brands like Disney/Sphero’s BB-8 droid, Pebble’s Steel smartwatch and August Smart Lock have all launched through Celery, opting for more brand control than traditional crowdfunding platforms provide. The fully loaded e-commerce platform enables both pre-orders and crowdfunding and has been around since 2012.
- GoFundMe is primarily a charitable fundraising site best suited to online businesses with a particular cause. Recent business campaigns include raising funds for a vegan restaurant, and security cameras for an animal rescue shelter. Based in California, GoFundMe says it has raised more than $1 billion from 16 million donors since 2010.
- Kickstarter can be a great platform for technology, design, music, games, publishing and other creative online companies. Recent campaigns include a “smart biking” system and ear-free headphones. Kickstarter takes an “all or nothing” approach to funding creative projects, so if a goal isn’t met, the money is returned to contributors. Since 2009, the Brooklyn-based company says it has raised $1.9 billion from 9.5 million contributors, and 44 percent of its campaigns reach their goals.
- Indiegogo takes a broader approach to crowdfunding, supporting new products and social causes. Recent businesses campaigns include funding for drones, travel jackets, and tracking devices. The San Francisco company, founded in 2008, says it has connected inventors, musicians, filmmakers and other “game-changers” with millions of contributors worldwide.
- Etsy is an online marketplace, rather than a true crowdfunding site. However, online merchants can use the 10-year-old platform to help finance new products by minimizing inventory and carrying costs. Instead, businesses can post a retail offer, waiting for orders to come in, and then manufacture just enough products to fulfill those orders. Based in Brooklyn, Etsy is a solid choice for hand-made, vintage or other one-of-a-kind products.
There are dozens, if not hundreds of other crowdfunding sites to consider, so take time to check them out. One good source is Alexa, which tracks website traffic and can provide detailed analytics about the visitors to each site. So, take a creative approach to growing your business and consider a crowdfunding strategy!