Crowdfunding

May 12, 2020

6 Financing Options For Up & Coming Entrepreneurs (Plus 4 Expert Funding Tips To Get You Started)

Starting any business can be challenging, but the quick growth and turnaround times commonly associated with entrepreneurial ventures come with their own particular set of challenges. You’re entering a fast-paced and cutthroat segment of the economy with both high risks and high rewards. To start your journey as an up and coming entrepreneur, you’ll need to take stock of your financing options.

If your business plan prominently features explosive growth, a liquidity-rich exit strategy, or even an initial public offering (IPO) within five years or so, this article is for you. For other prospective business owners who are looking to build something on a smaller scale, we have you covered with some broader resources for entrepreneurs.

Why Financing Can Be Hard For Entrepreneurs To Find (& Why That Shouldn’t Stop You Anyway)

Entrepreneurs face a few serious obstacles to getting financing, but if it were easy more people would be entrepreneurs, wouldn’t they?

The biggest issue is, of course, risk. You take an enormous one by starting a new, unproven business. Well over 50% of startups fail. Those aren’t great odds for the more conservative lenders out there, so right from the start, you’re going to be dealing with a smaller pool of lenders than is available to established businesses.

Related to that is the fact that bank consolidation has resulted in fewer traditional lenders, which means fewer opportunities for funding. The loss of community banks, in particular, has had a negative impact on lending. Online lenders have partially stepped into the void, but many are focused on very short-term lending.

In particular, the high growth startup model (though much romanticized in the media) is rarer than you might think. Fewer than 1% of businesses successfully raise venture capital.

Finally, social barriers ranging from prejudiced lending practices to geographic concentration of resources can greatly affect your chances of getting financing.

That said, “difficult” doesn’t mean “impossible.” With some creativity, diligence, and relationship-building, you’ll have a good shot at overcoming the odds.

6 Types Of Financing For Entrepreneurs

Now that we’ve gotten the cautionary tales out of the way, it’s time to look at some types of financing entrepreneurs can tap.

1) Venture Capital

If any funding source has become more closely associated with entrepreneurship in the public than venture capital, it would be news to me. There’s a certain mystique to being successfully being funded by groups that believe your business idea could take off.

Venture capital firms pool money from sources ranging from wealthy individuals to banks to pension funds. Each firm tends to specialize in a particular industry or type of company. Once they’ve raised an agreed-upon amount, they’ll shop around for businesses in which to invest.

A venture capital fund frequently disburses its funding over the course of several “rounds,” the first of which is called the seed round. As the name implies, this funding is meant to get your business off the ground. Successive rounds, called series, may become available as your business grows. Series A funding, for example, may be used to scale up a business that is already offering a product and has a customer base. Series B funding is similarly focused on growth.Â Finally, Series C funding focuses on helping mature companies expand into new products, or even acquire other companies. Different venture capital firms tend to specialize in specific phases.

Pros

Specialized Financing:Â Venture capital firms develop some expertise in the industries they’re investing in, which can be handy if you need advice.
Well-Connected: The venture capital circuit is pretty small and interconnected. Once you get your foot in the door, you can often use their connections to your advantage.
Eager To Work With Startups: Where many lenders are reluctant to work with businesses who have little more than an idea and a plan, venture capital firms may take a risk on big ideas.
No Debt:Â While you are giving up equity in your company, you don’t have to worry about “paying off a loan.”

Cons

Geographic Concentration:Â The majority of venture capital supported startups are in California, Massachusetts, New York, and Texas. Some states have no active venture capitalist firms. Even within the states that do, they’re frequently concentrated within a few cities (San Francisco, New York City, Boston, for example). That doesn’t mean you can’t get venture capital funding elsewhere (Cincinnati, Salt Lake City, and Atlanta all have some VC activity, for example), but there’ll be fewer firms in the mix.
Loss of Control: Accepting venture capital funding means giving up equity in your business. In some cases, it may even mean giving up some decision-making power to the firm.
It’s Just Hard To Get: As mentioned earlier, fewer than 1% of startups successfully raise venture capital. For all the hype VC gets, it’s actually a really small part of the business funding picture.

2) Angel Investors

Though sometimes used interchangeably with venture capitalists in casual conversation, angel investors aren’t quite the same thing. Whereas venture capital usually involves a firm aggregating funds from a number of different sources, an angel investor is an individual–typically wealthy–who is looking for a risky venture with a potentially high rate of return. Like a venture capital firm, an angel investor is usually looking for equity in your company in exchange for funds.

While word-of-mouth is still a common way to get hooked up with an angel investor, over the past decade or so there have been attempts to form networks of investors through hubs like AngelList and ACE-Net. Some angel investors even pool their resources and function like a venture capital firm.

Pros

No Debt:Â You’re giving up equity in your business instead of taking a loan.
Eager To Work With Startups: Whereas banks may be wary, angel investors are looking for the type of investment opportunity a startup can provide.
You Just Need To Convince One Person: While this is not always an advantage, you can hone your pitch to the investor rather than having to worry about a committee evaluation.

Cons

Loss Of Control: Again, you’re giving up equity which can also mean loss of decision-making power. With angel investors, there can also be an added risk of lack of expertise, which brings us to …
Potential Lack Of Expertise:Â Unlike venture capital firms, an angel investor may not be intimately familiar with your industry or product.

3) Debt Financing

For brevity’s sake, we’re combining bank loans, microloans, online loans, and personal loans. While there are advantages and disadvantages to each of these, in the end, we’re still talking about taking on and servicing debt in exchange for a lump sum of cash. While it’s difficult to get a loan before you’ve established a steady source of income, it’s not impossible, particularly where programs like microloans are concerned. These programs provide relatively small amounts of money with reasonable interest rates and long term lengths that can give you enough time to get your business up and running.

Pros

Retain Control: You’re not giving up any equity to a third party.
Flexible Exit Strategy: You’re on your own timetable for selling or making an IPO.
Building Credit: If you manage to service your debt regularly, it’ll make getting funding in the future easier.

Cons

Interest:Â Your debt earns it and you have to pay it off. This can be a drag on your growth down the road.
Risk Of Default:Â Starting a business is risky, and there’s a very real chance you won’t be able to pay your debt. If that happens, you’ll want to know how much personal liability you have, as well as the effect it’ll have on your credit.
Borrowing Amounts May Be Low:Â You’re probably looking at five-figure amounts or less when it comes to loans that are available to startups.

4) Bootstrapping

Another financing strategy is to not seek outside financing at all. That means working with your own savings and resources and taking a lean, minimalist approach to your business operations. When you do hit a growth phase, it’ll be funded by your business’s own revenue.

Pros

Retain Control:Â You don’t owe anyone anything, so you have complete control over business decisions.
Your Business Strategy Matters:Â You’ll only grow if your model works.
No Obligations:Â You have no debt or third-party timetable to adhere to.

Cons

Lack Of Funds: There’s a reason the old cliche “you’ve got to spend money to make money” persists. You may run into roadblocks that could be removed by money you don’t have.
Slow Growth:Â You won’t be able to scale quickly, which may put you at a disadvantage if you have competitors.
Time Investment:Â You’ll probably have to take on tasks you’d otherwise be able to delegate if you had employees.

5) Crowdfunding

Among the newer ways to get a startup off the ground is to crowdfund it. Crowdfunding is typically associated with pre-purchasing products, but some newer services are offering so-called “equity crowdfunding.” As the name implies, you’ll be giving up some equity in your company in exchange for funding from a pool of investors.

Pros

No Debt:Â Crowdfunding doesn’t come with any debt obligations.
High Funding Amounts Possible:Â Crowdfunding can be hit or miss, but when it works, the hauls can get pretty big.
You Don’t Have To “Know The Right People”:Â If you’re not socially connected to wealthy investor networks, crowdfunding can be a way to still raise large amounts of equity financing.

Cons

Loss Of Control:Â You’re giving up equity, which means you may also be giving up decision-making power.
Crowdfunding Campaign:Â Crowdfunding requires a sustained effort to get eyeballs on your business.
Platform Fees:Â Crowdfunding platforms have to make money too, so expect to be some kind of fee or to have them take a cut of the funds you raise.
It’s Still New:Â Some investors are still wary of equity crowdfunding.

6) Grants & Subsidies

Most parts of the country have programs in place designed to encourage entrepreneurship. These can take the form of tax incentives, subsidies, grants, or some kind of infrastructural support. You should familiarize yourself with the ones that apply to your type of business and take advantage of them when you can.

Pros

Free Money:Â While grants and subsidies may come with obligations, they aren’t debt or even loss of equity.
Builds Local Connections:Â Becoming a pillar of your community, so to speak, can open up additional opportunities down the road.

Cons

Can Be Time-Consuming: Grants, in particular, have involved, competitive application processes that may require a lot of your attention.
Obligations:Â Accepting this kind of help may come with strings attached. You may be expected to stay within a certain city or county for a certain number of years or hire X-number of employees.

Entrepreneur Financing Tips From The Experts

What better source of advice is there than people who have successfully undertaken the same journey you’re about to attempt?

Make Sure You Really Want Angel Investment

Entrepreneur Tim Berry, founder of Palo Alto Software and bplans.com, cautions founders to make sure they actually need and want angel investment prior to seeking it out. If you don’t need it, you’re better off without it.

Believe In Your Vision

In an episode of The Jordan Harbinger Show, angel investor Jason Calacanis says he can tell when an entrepreneur believes in their own vision and when they’re bluffing, a skill he compares to playing poker.

Getting A VC Firm’s Attention Is Part Of The Interview

Marc Andreessen, co-founder of VC firm Andreessen Horowitz, says that a founder’s ability to network their way into a meeting with a venture capital firm is a good barometer for their ability to forge other important business relationships, such as those with customers, suppliers, and even the media.

Understand The Motivations Of Your Potential Investors

Scott Kupor, author ofÂ Secret of Sand Hill Road, advises founders to consider what an investor is hoping to get out of their relationship with the startup. The right investor will be the one whose objectives align with your own.

Get Started On Your Entrepreneur Financing Journey

You had your vision in place. Now you have a sense of how you might finance it. If the odds seem daunting, remember that the rewards are also great.

None of these options sound appealing? Check out some additional ways to finance your startup. And if you’re looking to finance smaller, short-term expenses for your business, you’ll want to take a look at our top business credit card options for startups.

The post 6 Financing Options For Up & Coming Entrepreneurs (Plus 4 Expert Funding Tips To Get You Started) appeared first on Merchant Maverick.

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May 5, 2020

8 Alternative Funding Sources If Venture Capital Isn’t The Right Fit For Your Startup Or Small Business

Venture capital is often touted as the be-all-end-all when it comes to financing a startup. To be fair, you have to admit that wealthy investors showing up to rain treasure upon you because you have a great idea has a lot of appeal. That being said, venture capital isn’t the only way to finance your new business and, in many cases, may not even be the best way to go.

So where do you turn when venture capital isn’t a good match for your business plan? Below, we’ll look at some alternative funding sources if venture capital isn’t the right fit for your startup or small business. But first, let’s talk about venture capital a bit to make sure we’re on the same page.

How Venture Capital Works

There are a lot of myths surrounding venture capital, but the concept is fairly simple and not especially glamorous in practice. Venture capital firms aggregate funds from a number of sources ranging from bored wealthy folks to pension funds. Once they’ve raised an agreed-upon amount, they’ll shop around for businesses in which to invest. What each of these funding sources has in common is the desire to recoup their money, plus a tidy profit, when the business they invested in either A) goes public or B) is sold to another company. A venture capital fund frequently disburses its funding over the course of several “rounds,” the first of which is called the seed round.

Investing in unproven businesses, many of which will fail, is risky. Typically, venture capitalists will hedge their bets by spreading their money out through a number of businesses to increase their chances of scoring a hit. This model works mainly because the payoff from a successful company making an initial public offering (IPO) can generate returns orders of magnitude above what was invested. On average, a venture capital firm is looking for somewhere around a 20% return per year.

How much the firm receives is based on a valuation of the company done both before and after the cash infusion. The difference in valuation is used to determine the percentage of stock the venture capitalists will own in the company. It may also determine the amount of influence the investors have in a company’s decision-making processes prior to the company’s IPO/sale.

When You Should Look For Alternatives To Venture Capital

If you looked at the previous section and thought that arrangement sounds bad, then venture capital probably isn’t for you. For example, if you’re not a serial entrepreneur and would prefer to own and run your business indefinitely, this probably isn’t the funding source for you. Venture capitalists expect you to have an exit strategy.

It’s also quite possible that your type of business won’t fit in well with the venture capitalist model. For better or worse, “venture capital” has become almost synonymous with Silicon Valley. If you’re not a tech company creating some kind of software, you may have some difficulty convincing a fund to work with you. They’ll also be looking for a quick return, so if your business plan doesn’t match that rate of return, you’ll be a poor match.

Keep in mind, too, that most venture capital funds specialize in a particular type of business, so even if your profile is venture capital friendly, you may have to look around to find one that can work with your company at its current stage.

Finally, there’s a geographic component to venture capital investment culture. If you’re not in, or close to, hot spots like New York City, San Francisco, Los Angeles, Atlanta, or Austin, you’ll have to work much harder to wiggle your way into a venture capitalist’s view.

8 Venture Capital Alternatives

If all new businesses needed to rely on venture capital to get off the ground, we wouldn’t have very many businesses. The good news is there are numerous ways to finance your company’s early operations that don’t involve venture capital. Let’s take a look at some of your options.

1) Grants

When you’re talking about raising money, even a zero-interest loan just can’t compete with free money. Grants typically offer small-to-moderate-sized lump sums to companies that fit their criteria, and the best part is you don’t ever have to pay that money back!

So why isn’t every startup running exclusively off grants? Well, as you can imagine when you’re handing out money, there’s going to be a lot of people in line to get some. Grants are highly competitive. Applying for them can be quite involved and time-consuming, and there’s no guarantee that your hard work will pay off. Still, if you target the right grants at the right time, you can score a nice chunk of cash with no debt obligations.

2) Crowdfunding

You’ve probably heard of Kickstarter, but the crowdfunding industry is quite a bit larger and more specialized than you might think. In contrast to venture capital, traditional crowdfunding tends to work best when you’re trying to raise money for a tangible, deliverable product–funders are essentially pre-purchasing your product (with some additional funders simply donating smaller amounts of money in the interest of seeing your project succeed).

A newer form of crowdfunding, equity-based crowdfunding, allows investors to purchase equity in your company. These services can be convenient if you’re not plugged into the investor circuit but are still looking for that kind of relationship. Just be aware that this is still a fairly new realm of investing, with many investors still wary.

Keep in mind, any kind of crowdfunding will require a marketing blitz to get your name and product out there, which will likely have its own costs in both time and money.

3) SBA Loans

The Small Business Administration’s loan guarantee programs are designed to give small businesses access to quality rates and terms. In the case of startups, the two most popular programs, 7(a) and 504, may not be the best fit as they usually require you to have been in business for two or more years.

The SBA microloan program, on the other hand, is more geared toward startups. These loans can net you between $500 and $50,000. Interest rates range from around 6% to 18%, with most borrowers falling somewhere between 8% and 13%. You’ll have a while to pay it off too, with term lengths of up to 6 years. The rate you get will depend upon your credit score and any collateral you’re able to put up.

If you need more than that, you’ll also want to check out SBA Community Advantage Loans, which the agency offers through community-based lenders. These loans range from $50K to $250K, with terms lengths of up to 10 years. Interest rates are lower, usually falling between 7% – 9%.

4) Online Business Loans

Wait, why would you be here reading this if you could just go out and get a business loan? Fair point. It can be very challenging for startups to qualify for business loans since most business lenders are going to want to see a profitable business history before they open up their purses.

That said, it’s not impossible. Many online lenders are willing to work with businesses with histories as short as three months. Some of the more creative ones may not care at all. Just be prepared to pay interest rates in proportion to the risk your business represents. Additionally, you can often find better terms if you can put up something valuable as collateral.

5) CDFI Loans

Community Development Financial Institutions (CDFIs) come in a number of different forms, ranging from banks, to credit unions, to–believe it or not–venture capitalists. What they have in common is certification by the federal CDFI Fund, which designates them as being committed to facilitating economic growth within low-income or historically disadvantaged areas.

CDFIs usually carry higher interest rates than comparable bank products, but lower than those of a typical alternative lender. Best of all, many are startup-friendly.

6) Personal Loans

Your business may not have much history, but that doesn’t mean you don’t. Many personal loans are versatile enough that they can be used for business expenses. And since you’re probably not looking at borrowing vast amounts of money, they may be sufficient to meet your financing needs.

Of course, because they are personal loans, you’ll lose whatever protections you would have had with business loans, which typically differentiate between you and your business. Make sure you can still pay them off even if your business fails.

7) Vendor Financing

Don’t feel bad if you haven’t heard of vendor financing until now. Vendor financing is an arrangement where a vendor essentially lends a seller the money to buy the vendor’s products. This can be useful if you’re launching a retail business of some kind or even badly need what they’re selling for your own uses.

So what do the vendors get out of the arrangement? Believe it or not, it can be better to move product with risk than not move product at all. Additionally, the vendor will usually expect to earn interest on the loan or an equity stake in your company in return. No matter the arrangement, you’ll probably need to be on good terms with the vendor to be a candidate.

8) Friends & Family

Depending on your social context, this may or may not be a practical option for you. Still, you may be surprised by how willing your friends and family may be to pitch in and help you succeed and probably at far lower (if any) interest rates than even the most benign lender.

Just use your judgment and don’t burn bridges.

Your Best VC Alternative Offers Funding That Works With Your Terms

Don’t worry about fitting the platonic ideal of an entrepreneur. The best venture capital alternative for your startup will depend greatly on your circumstances and business plan. Work with the resources and connections you have to find the funding you need to carry out your vision.

Look for more startup-related information?

Get The Equipment You Need For Your Startup Business With A Loan Or Lease
The Best Business Credit Cards For Startups & Entrepreneurs

The post 8 Alternative Funding Sources If Venture Capital Isn’t The Right Fit For Your Startup Or Small Business appeared first on Merchant Maverick.

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April 10, 2020

Raising Money For Your Small Business Through Kickstarter? Find Success With These 11 Tips

Since its 2009 launch, Kickstarter has helped more than 180,000 campaigns collectively raise over $4.8 billion in business funding. Kickstarter has been key in assisting businesses to raise money and gain media traction, but if you want to use Kickstarter for business purposes, it helps to have a plan.

It may seem obvious, but it needs to be said: Running a successful Kickstarter campaign is no walk in the park. According to Kickstarter’s campaign stats, 37.63% of Kickstarter campaigns ultimately reach their funding goal. That means that over 62% of businesses on Kickstarter get no money whatsoever from running a crowdfunding campaign. Under Kickstarter’s all-or-nothing funding policy, if your campaign doesn’t hit its funding goal within the time frame you specify (campaigns have a maximum length of 60 days), you won’t receive any money at all — all the funds pledged to you are returned to your backers.

We tell you this not to dissuade you but to prepare you for the realities of crowdfunding on Kickstarter. If the current pandemic and resulting economic climate have you struggling to find traditional sources of funding and you’re looking to Kickstarter as a possible solution, we have some crowdfunding tips for you to keep in mind.

1) Be The Point Person Of Your Campaign

Look, I get it. You may not be a natural PR flack or salesperson, and you probably didn’t get into business to be the next Billy Mays. However, the reality is that people — your potential backers — are attracted to the idea of passion projects. They tend to identify with business leaders who convey enthusiasm and vision, and from there, it’s a short path to becoming a supporter. Just look at the fanatical social media following Elon Musk has been able to attract, despite his many missteps.

Don’t be afraid to put yourself out there as the public face of your campaign. It’s challenging to make people feel invested in a business project, but if you personify that business project — if you detail your life story and your motivation for doing what you do — people become more likely to share your enthusiasm. Kickstarter knows this. That’s why the company refers to those who launch crowdfunding campaigns as “creators” and not “campaigners.”

Of course, you’ll still want to be concise and not overwhelm people with biographical details. Just remember: People are more likely to become enthusiastic about what you’re doing if they get a sense of your enthusiasm. So while you may be an introvert, do your best approximation of an extrovert while touting your business!

2) Research Past Kickstarter Campaigns Similar To Yours

Imagine that you’re trying to get a business loan from your bank. Now imagine that you could look at every loan application any business had ever submitted to your bank as well as whether each application was granted or rejected. This would be pretty valuable for you in terms of helping you tailor your loan application for success, wouldn’t it?

Thankfully, this is essentially what you can do on Kickstarter before launching your campaign. Kickstarter campaigns never get removed from the website, regardless of whether they succeed or fail. With over 480,000 campaigns launched on Kickstarter to date, you have ample opportunity to study the ghosts of campaigns past. All this raw data is just sitting there waiting for you to examine and draw lessons from. Pay particular attention to old campaigns for business projects similar to yours. Look for patterns. Compare and contrast the campaigns that succeeded vs. those that never really got off the ground.

3) Come Up With A Good Business Plan For Your Kickstarter Campaign

Achieving your business goals requires a good business plan. Why would achieving your Kickstarter goals be any different?

You’ll want to research what elements are needed in a business plan for Kickstarter. To that end, Kickstarter has posted a creator handbook that contains helpful information for creators about telling your story, promoting your campaign, fulfilling your commitments to your backers (complete with a list of services that can help your fulfillment process), and more. Read through this handbook but also seek out feedback from successful campaigners — look for interviews and podcasts featuring them, and if you can secure a private chat, you should do so.

4) Record A Professional Video & Post It

Kickstarter once posted an article about making promotional videos in which the company stated that featuring a promotional video in your crowdfunding project increases your likelihood of success from 30% to 50%. The article was posted several years ago, so the stats may be out of date, but it touches on an undeniable truth: The better your presentation is, the more likely it is that your Kickstarter campaign will reach its funding goal.

Your instinct may not be to invest precious time and resources into the production of a slick video. You might prefer investing those resources in your actual business project. Just remember that thousands of other Kickstarter creators have great business ideas too. Effective promotion helps determine which of these ideas get heard (and funded) and which don’t. A professionally-produced video can help you cut through the noise and draw attention to your campaign, so don’t be shy — put out the best video you possibly can.

You should also take care to ensure that your campaign design choices, including your logo, are top-notch as well. It may go against your instincts, but a professional sales pitch helps differentiate you from all the other worthy funding-hungry businesses on Kickstarter.

5) Recruit Backers From Your Network Prior To Launch

People who support crowdfunding campaigns generally don’t like to be the first to support a campaign. When people happen upon your campaign and see “$0 pledged,” it can be a deterrent to getting their backing, whereas if they see that your campaign already has some support, they may decide to join the bandwagon. That’s why you should mine your existing networks for backing before you officially kick off your Kickstarter campaign.

According to Kickstarter’s ever-helpful stats page, while just 37.63% of Kickstarter campaigns succeed, 78% of projects that raise more than 20% of their goal are ultimately successful, thus illustrating this bandwagon effect.

Don’t be afraid to go to your family and friends to line up commitments of support before your campaign goes live, then have them contribute once you launch your project. Try building an email list of potential backers from your personal and professional networks as well. Of course, if you have a significant social media following, do some prelaunch promotion of your campaign on your social media channels. Then, once your campaign goes live, notify everyone immediately.

Securing immediate funding is key to attracting subsequent funding from those who aren’t already familiar with you and your business. Success breeds success, so line up those early commitments!

6) Use The Data In The Project Dashboard To Your Advantage

Kickstarter’sÂ Project Dashboard gives you access to a lot of helpful data, such as the domain source your backers (not just internet traffic in general, but your actual backers) are coming from, the number of pledges from that source, the amount pledged, and the percentage of your total amount raised from each domain. In terms of helping you focus your marketing efforts on the right places, this information is golden.

The Dashboard also gives you information on the popularity of your reward tiers, assuming you offer different levels of rewards to backers at varying levels of financial support. This should help you refine your reward tiers to better reflect what the data shows people want. Kickstarter’s Project Dashboard data is your friend!

7) Stay In Touch With Your Backers

The act of backing your project is an act of faith on the part of your backers. These folks are putting their trust in you to deliver on your promises. They generally realize that there’s no guarantee that you’ll be able to fulfill your commitments. That’s why it’s so important to show your backers the respect they deserve by keeping them updated on your progress. Be as open as possible — honesty is the best policy.

Try to monitor what’s being said about your campaign on social media. If people have concerns, respond to them and try to address their issues. Give people reassurance about taking the leap of faith necessary to place their trust in your campaign.

8) Don’t Be Afraid To Run An Ad Campaign

Yes, this is another point that touches on the marketing aspect of running a Kickstarter campaign. That’s how important the marketing side of crowdfunding is.

In the early days of Kickstarter, you may well have gotten away with not focusing on advertising. But as some observers have noted — not without a hint of bitterness — the backlinks directed towards successful Kickstarter campaigns often reveal a lot of traffic coming from Facebook or Google AdWords.

Don’t be squeamish about running an ad campaign. It’s simply what modern crowdfunding often requires. If you can afford it, you may want to hire a PR agency and/or an advertising agency to handle the promotional side of your campaign so that you can keep more of your focus on your business project.

9) Make Sure Your Funding Goal Is Realistic

Most entrepreneurs possess a healthy amount of self-confidence. If they didn’t believe in their ability to reach big goals, they would likely have found another line of work. However, if this is you, there are benefits to keeping your Kickstarter funding goal relatively modest.

It’s good to know just how much money you’ll need to accomplish your goals and cover your expenses, being mindful of Kickstarter’s 5% platform fee and the fees charged for payment processing. Don’t ask for more than is necessary. You’ll have better luck meeting a modest fundraising goal than a more ambitious one. As I said earlier, success breeds success, so a successful campaign can set the stage for more crowdfunding success in the future.

Additionally, with a modest funding goal, you’re more likely to have a campaign that blows well past what you set out to raise, which, in and of itself, can impress interested parties, perhaps including the media.

10) Don’t Go Overboard With The Reward Levels

Studies have consistently shown that when you offer people too many choices, they tend to feel overwhelmed, thus leading them to decide that making a choice isn’t worth the trouble.

Decide on rewards that are clearly presented and that appeal to your target audience. Offer entry-level rewards for small pledges to give the broadest possible array of potential backers the ability to feel like they’re a part of your project. Get them invested in your success. However, don’t offer an overabundance of rewards. In particular, don’t offer a plethora of similar rewards or variations on the same reward. It will prove to be counterproductive.

11) Don’t Try To Do Everything Yourself

When Kickstarter launched in 2009, it may have been possible to run every aspect of a successful campaign yourself. However, in 2020, you’re going to be competing with companies backed by angel investors and other deep-pocketed agencies. Hell, in some cases, their agencies have agencies.

Don’t spread yourself too thin — enlist help when you need it. Whether you have an agency to handle the marketing, business partners to help with your project, or your friend’s kid to take care of the social media outreach, Kickstarter campaigns are best approached as group projects.Â Remember, your project isn’t competing with a bunch of ragtag DIY folks. Your competitors are taking advantage of assistance any way they can get it. Don’t hesitate to do the same.

Report Back: How Did You Find Success Using Kickstarter For Your Business?

Crowdfunding has been a godsend to hundreds of thousands of businesses. Just remember that the playing field is not level and that you’ll be competing with projects backed by big crowdfunding agencies. That’s why it’s so vital that you use every tool at your disposal to meet your funding goal.

Have you been a part of a Kickstarter crowdfunding campaign? Does your experience with what works comport with our advice? Are there other things people should keep in mind to set themselves up for crowdfunding success? If so, please drop us a comment — we’d love to hear from you!

The post Raising Money For Your Small Business Through Kickstarter? Find Success With These 11 Tips appeared first on Merchant Maverick.

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April 19, 2018

Loans For Freelance Businesses: Your 13 Best Options

Freelancer. The very word evokes freedom (and lances). If you’re a self-employed freelancer, I’m sure I don’t have to lecture you about the perks and drawbacks of running a freelance business. You probably enjoy the independence — the feeling of freedom that comes from choosing your own work assignments and making your own financial choices without a boss looking over your shoulder.

However, you’re probably less than thrilled with the difficulty of getting a small business loan. It’s not easy for any business to qualify for a loan from a big bank these days, but it’s all the moreÂ difficult for a freelance business. Most banks see sole proprietors as a lending risk, as you are personally liable for all losses and debts your freelance business incurs. Plus, your entire business is dependent on your good health and ability to work.

For these and other reasons, many freelancers would benefit from exploring alternate means of financing. Thankfully, many different types of financing are available from online lenders. When compared with the big banks, online lenders tend to be somewhat more relaxed in their eligibility requirements. But while you may face fewer hurdles regarding your credit score, annual revenue, and time in business, online lenders usually charge higher interest rates than bank loans. That’s the trade-off you accept in exchange for the convenience and less stringent eligibility barriers of online lenders.

Let’s explore the main categories of financing available to freelance businesses and the top reputable lenders that offer loans within each category. Note that many online lenders offer more than one type of loan, so if I list a lender under a particular loan category, that doesn’t mean they don’t offer other loan products!

Personal Loans

Freelancers will find it difficult to get a business loan, whether from a bank or an online lender. In fact, this goes for mostÂ young businesses, freelance or not. Lenders of business loans closely examine your business’s revenue, net income, debt-to-asset ratio, business credit, and collateral, and onlyÂ the most profitable and well-established businesses tend to qualify.

Personal loans are different. With a personal loan, the lender assesses your credit-worthiness, not that of your freelance business, though you will have to disclose the fact that the loan will go towards supporting your freelance business. However, whether or not you qualify for a personal loan will mainly depend on your personal creditÂ score, credit history,Â source of income, and debt-to-income ratio. Borrowing amounts are also less than with business loans. Typically, the maximum borrowing amount for personal loans is $35K to $50K.

I’m going to walk you through some of the top online vendors of personal loans. But first, here are some links to articles we’ve done on using personal loans for business expenses.

The Merchant’s Guide To Personal Loans For Business
Top Personal Loans For Business Compared

Upstart


Borrower requirements: â¢ Must have a personal credit score of 620 or higher. â¢ No time in business or revenue requirements.
Visit the Upstart website Read our Upstart review

Upstart is a great personal lender for the freelancer whose credit might not be stellar. In contrast to the personal lenders who scrutinize your credit score/history and finances to the exclusion of all else, Upstart takes a broader view of your earning potential by considering factors such as your employment history and education. You’ll likely still need decent credit to qualify — your credit score must be 620 or higher — but it’s good to see a lender whose conception of credit-worthiness isn’t quite so exclusionary.

You can borrow a maximum of $50K (in most states) from Upstart — more than with many competitors. As far as Upstart’s terms and fees go, the APR ranges from 7.73% to 29.99%, term lengths are for three or five years, and there’s an origination fee of up to 8%.

Overall, Upstart is a top-rated personal lender with a relatively progressive lending ethos. Check out our full Upstart review and Upstart’s website using the links above.

Lending Club


Borrower requirements: â¢ Must have a personal credit score of 600 or higher. â¢ No time in business or revenue requirements.
Visit the Lending Club website Read our Lending Club review

Founded in 2006, Lending Club was one of the first non-bank online lenders to come upon the scene. They remain one of the most popular online lenders out there, as their rates are competitive and their loans are relatively easy to qualify for. What’s not to like?

For personal loans, Lending Club’s maximum borrowing amount is $40K. The APR ranges fromÂ 5.98% to 35.89%, term lengths are for three or five years, and there is an origination fee of 1-6%.

Lending Club has lent money to countless people in its decade-plus in business. To learn more about Lending Club, links to the company’s website and our Lending Club review are posted above.

Prosper


Borrower requirements: â¢ Must have a personal credit score of 640 or above. â¢ No time in business or revenue requirements.
Visit the Prosper website Read our Prosper review

Another pioneer in the online lending industry is Prosper, founded in 2005. As with the previous lenders listed, Prosper offers personal loans you can put towards your freelance business.

Prosper offers fixed-term loans with lengths of three or five years. The company’s APRs range fromÂ 5.99% to 35.99%, which includes a closing fee ofÂ 0.5% to 4.95%, and the maximum borrowing amount is $35K. You will need a credit score of at least 640, however.

Check out our Prosper review at the link above if you’re intrigued. Afterward, visit Prosper’s website and see what kind of rates you can get compared to the other personal lenders I’ve mentioned.

SoFi


Borrower requirements: â¢ Must have a personal credit score of 660 or above. â¢ No time in business or revenue requirements.
Visit the SoFi website Read our SoFi review

SoFi describes itself as “a new kind of finance company.” Short for “social finance,” SoFi offers free career coaching and financial advising to all members. SoFi’s loans are quite flexible in comparison to the other personal lenders listed here.

SoFi’s maximum borrowing amount of $100K is remarkably high for a personal loan vendor, and term lengths run from three, five, or even seven years. With fixed APRs fromÂ 5.49% to 13.49% and no origination fees, SoFi’s flexible personal loans are quite competitively priced indeed. On the other hand, SoFi’s borrower requirements are a bit more stringent than those of the other personal lenders listed here, plus the loans are slower in coming — after you’re approved, it can take up to 30 days for you to get your funds.

Visit the above links to read our SoFi review and check out their website to see what they can offer you. Remember, with lenders, as with life, it pays to comparison shop!

Lines Of Credit

Many online lenders include lines of credit as part of their product offerings. If you own a credit card, you’ll understand the concept of a line of credit loan. You’ll get access to a certain amount of funds, and you can draw upon these funds at any time while paying interest only on what you actually borrow.

Lines of credit actually tend to be less expensive than credit cards. Moreover, the repayment terms usually differ.

I’m going to list some lenders offering business lines of credit, but first, here’s further information about this common loan type.

The Merchant’s Guide To Line Of Credit Loans

StreetShares


Borrower requirements: â¢ Must be in business at least 12 months with a revenue of $25,000 per year (sometimes StreetShares will make exceptions for high-earning businesses at least 6 months old). â¢ Must have a personal credit score of 620 or above.
Visit the StreetShares website Read our StreetShares review

StreetShares is an online lender offering lines of credit along with traditional installment loans and contract financing. While StreetShares was founded by veterans and takes pride in catering to the particular needs of veteran-owned business, any business owner can use StreetShares to take out a loan — including freelancers!

Take note of the requirements listed above, as there are revenue/time-in-business requirements to be met. As for the lines of credit themselves,Â the maximum amount you can borrow is $100K, but the amount of the line of credit you can actually get will depend on your revenue. The more you earn, the more you can borrow. All things considered, StreetShares’s borrower requirements for a business line of credit are not terribly onerous.

The draw term length for a StreetShares line of credit is 3 to 36 months, the APR range is 7% â 39.99%, and there is a draw fee of 2.95% each time you draw from your line.

BlueVine


Line of credit borrower requirements: â¢ Must be in business at least 6 months with a revenue of $10,000 per month. â¢ Must have a personal credit score of 600 or above. â¢ Lines of credit are not available in all states. See full review for details.
Visit the BlueVine website Read our BlueVine review

Founded in 2013, BlueVine is an online lender that offers both business lines of credit and invoice factoring (more on that later). Let’s examine theirÂ lines of credit.

While the amount you can borrow will depend on your revenue, BlueVine’s maximum borrowing amount is $200K. Term lengths are for 6 or 12 months. APRs range fromÂ 15% to 78%, and there is a draw fee of 1.5%.

Along with the borrower requirements listed above, note that BlueVine lines of credit are not available in all 50 states.

Invoice Factoring

Invoice factoring is a way for B2B businesses to maintain a consistent cash flow by selling their invoices, at a discount, to factoring companies in exchange for cash upfront. It’s a way to even out your cash flow when you have clients who take their sweet time paying their invoices.

Invoice factoring has some complexities to it, so if you’re thinking it makes sense for your freelance business, I highly recommend reading ourÂ explainer article on the subject.

A Basic Introduction To Invoice Factoring

Fundbox


Invoice financing borrower requirements: â¢ No specific time in business, revenue, or credit score requirements.
Visit the Fundbox website Read our Fundbox review

Founded in 2013, FundBox offers an invoice financing product called FundBox Credit. Invoice financing is very similar to invoice factoring — the difference to the borrower is that you must make payments on your loan on a weekly basis, not whenever your customer pays their invoice.

Fundbox Credit will hold great appeal to many freelancers due to its relaxed eligibility requirements — you don’t have to meet any time in business, revenue, or credit score threshold! However, you are required to have been usingÂ compatible accounting or invoicing software for at least three months, or a compatible bank account for at least six. See our Fundbox review for details.

Fundbox Credit lines are offered up to $100K, the term lengths are 12 or 24 weeks, and there is an advance fee ofÂ 0.4% to 0.7% per week when you make your weekly payments.

Riviera Finance


Invoice factoring borrower requirements: â¢ No specific time in business, revenue, or credit score requirements. â¢ Best forÂ B2B and B2G businesses.
Visit the Riviera Finance website Read our Riviera Finance review

Founded all the way back in 1969, Riviera Finance is no newcomer when it comes to invoice factoring.Â Riviera Finance offers non-recourse factoring, which means you won’t have to repurchase an invoice if a customer goes bankrupt.

While Riviera Finance is a real-world meatspace lender with 20 offices throughout the U.S. and Canada, you can nonetheless apply online to use their services.

Riviera Finance offers contracts that run anywhere from month-to-month to 12 months long, and the credit faculty size runs from $5K a month to a whopping $2 million per month! Check out the links above to learn more about Riviera Finance.

P2P Loans

P2P (peer-to-peer) lending is a lending model employed by many online lenders. Instead of borrowing from a central banking entity, your loan application is instead approved by a banking platform to go live for online bidding, where everyday investors who like the cut of your business’s jib can invest in your business.

Small-time investors can be risk-averse, so freelance businesses with bad credit may have difficulty securing the needed financing. Nonetheless, you’re still more likely to be approved for a P2P loan than a bank loan.

Many online lenders of personal loans and other kinds of loans are P2P lenders. In fact, of the lenders I’ve mentioned thus far, Upstart, Lending Club, Prosper, and StreetShares are all P2P lenders!

Microloans

Microloans are small loans — under $35K but typically in the range of $5K to $10K — offered at low interest rates. Microlenders typically focus on marginalized groups that face difficulties getting a loan elsewhere. As such, they are a solid option for women and minority freelancers seeking smaller loans, though any freelancer can take advantage of the generous terms offered by microlenders.

Kiva U.S.


Borrower requirements: â¢ No specific time in business, revenue, or credit score requirements.
Visit the Kiva U.S. website Read our Kiva U.S. review

Kiva U.S. is a remarkable microlender in that not only are there no revenue, credit score, or time-in-business requirements to meet in order to qualify, but Kiva U.S. loans carry no interest or fees whatsoever! Pretty cool, eh?

With Kiva U.S., the only requirement to get a loan is that you run a business and that you put your funding towards your business. You can take out a Kiva U.S. loan for as much as $10K or as little as $25. Yes, that’s 25 dollars. Your APR will be a big fat 0%. Term lengths are for 6 to 36 months.

Does this sound too good to be true? Well, keep in mind that Kiva’s application process is significantly longer than that of other online lenders. The process can take up to two months. For more information, check out our Kiva U.S. review and Kiva U.S.’s website at the links above.

Accion


Borrower requirements: â¢ Requirements vary based on location — see full review for details.
Visit the Accion website Read our Accion review

Accion is a nonprofit microlender that also happens to be one of our highest-rated lenders,Â period. Their reputation, customer service, and financial education programs are all top-notch. While Accion’s loans aren’t “free” like those of Kiva U.S., Accion is an excellent funding option for the freelance business owner.

Borrower requirements vary by location, so you’ll need to visit Accion’s site at the link above to see just what is required of you to get an Accion loan. Credit score requirements vary from 550 to 575, and you must demonstrate that you have sufficient cash flow to repay the loan.

While Accion’s loan offerings vary by U.S. state, you can borrow as little as $300 to as much as $1 million (and yes, it would be a stretch to call that a microloan!). APRs generally range fromÂ 7% to 34%, and you may need to put up specific collateral in some situations. Check out our full Accion review above for more details, then head to Accion’s website to see what specific offerings are available in your area.

Crowdfunding is an excellent way for freelancers in the creative industries to get funded by those who enjoy their work. Note that while P2P lending is sometimes referred to as debt crowdfunding, the kind of crowdfunding I’m talking about is rewards crowdfunding in which backers support you financially and get exclusive access to your work in return. It’s not technically lending, as you don’t have to pay back your backers!

Of course, running a crowdfunding campaign will require much more of your time and energy than a loan application, so know what you’re getting into. Below is a basic primer on running a crowdfunding campaign. (Note that I mention debt and equity crowdfunding in that article — I’m not focusing on those here.)

Crowdfunding For Startups: 8 Tips You Should Know Before Launching

Kickstarter


Campaign requirements: â¢ Must offer rewards to your backers.
Visit the Kickstarter website Read our Kickstarter review

Founded in 2009, Kickstarter has become synonymous with crowdfunding. With over $3.6 billion in funding sent to creators and entrepreneurs, Kickstarter is the largest commercially-focusedÂ crowdfunding site in existence. If your freelance business is devoted to making creative works, Kickstarter is a great way to raise money for a big project.

Kickstarter requires all crowdfunding campaigns to create something that can be shared with others. There’s no limit to the amount of money you can raise on the platform. Your funding campaign can last for up to 60 days (though Kickstarter recommends 30-day campaigns), and Kickstarter will take 5% of what you raise as a platform fee. An additional 3% +Â $0.20Â per pledge goes to the payment processor.

One thing to keep in mind with Kickstarter is that in order to collect the funds at the end of your campaign period, you must reach or surpass your funding goal. Fail to reach your funding goal, and you get nothing — no soup for you.

Check out our Kickstarter review at the link above if you’re interested, then cruise on over to Kickstarter’s website.

Indiegogo


Campaign requirements: â¢ Offering rewards to your backers is strongly recommended.
Visit the Indiegogo website Read our Indiegogo review

Indiegogo is a crowdfunding platform that caters to a similar audience as Kickstarter — creative and tech projects and the backers who love them. Initially founded as a funding engine for independent films, Indiegogo soon expanded their mission, offering crowdfunding for a wide variety of commercial purposes. However, Indiegogo differs from Kickstarter in a few key ways.

While Kickstarter pre-screens campaigns for suitability before letting them campaign, Indiegogo serves all comers — just sign up and get started (though this doesn’t mean there are no rules to abide by). Another difference is that you’re not actually required to offer rewards to your backers. However, as you can imagine, you’re probably not going to raise much money if you offer people nothing, so I don’t recommend doing that!

Another difference with Kickstarter is that when you run an Indiegogo campaign, you can choose to employ the keep-what-you-raise crowdfunding model in which you keep whatever you raise at the conclusion of your campaign regardless of whether you’ve met your funding goal. Indiegogo is more flexible in its terms than Kickstarter.

Fees are largely the same as those of Kickstarter — there’s a 5% platform fee and aÂ 3-5% per pledge payment processing fee. Check out the links above if you’re interested in Indiegogo’s crowdfunding model.

Patreon


Campaign requirements: â¢ Must offer rewards to your backers. â¢ Funding is ongoing on a per-month or per-creation basis.
Visit the Patreon website Read our Patreon review

Patreon differs fundamentally from Kickstarter and Indiegogo. Instead of campaigning for a fixed period of time for a single project, Patreon lets you crowdfund on an ongoing basis. You can just keep creating on your own time schedule. Your patrons (assuming you attract some!) sign up to support you either on a monthly or per-creation basis. It’s a great way for freelancers to monetize their creative output indefinitely, not just for one specific project.

Patreon is generally more relaxed in the sort of campaigns it allows than Kickstarter or Indiegogo — you can probably get away with producing “edgier” content than with the other two. As for fees, Patreon takes 5% off the top, with payment processing fees coming to approximately 5% as well.

Final Thoughts

Life’s not easy for the freelancer. With all the other challenges you face, securing the funding you need can seem like an insurmountable hurdle. Thankfully, there are many viable funding options out there for the freelance business owner determined to make it work.

Be sure to explore multiple options in your funding quest so you can weigh each option on its relative merits. Now go forth and let your freelance flag fly!

The post Loans For Freelance Businesses: Your 13 Best Options appeared first on Merchant Maverick.

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April 10, 2018

How To Use GoFundMe To Fund A Business In 8 Steps

With over $5 billion raised on the platform since its inception in 2010, GoFundMe has a reputation for helping to cover the costs of personal emergencies in a world where most of us are just one missed paycheck away from ruin. But while the company has become synonymous with charitable crowdfunding, you might not realize that GoFundMe can be used to fund a business as well. Want proof? Here are the categories you can choose from when creating your GoFundMe campaign:

Now, don’t get me wrong: If your entrepreneurial venture is a high-tech startup with exponential growth potential, or if you’re creating the next tabletop gaming sensation, you’re going to be better off going with a more commercially-oriented crowdfunding platform like Kickstarter (see our review) or Indiegogo (see our review), or perhaps one of the new equity crowdfunding sites that have popped up in recent years.

However, for the right kind of startup business — preferably one with a local/community focus and with a compelling story to tell about overcoming adversity — GoFundMe is an attractive fundraising option. One big reason? GoFundMe charges no platform fee to individual campaigns launched from the US, UK, and Canada. The typical crowdfunding site takes 5% of what you raise.

I’ll give three real-world examples of people using GoFundMe to fund a business and finding success.

Two Detroit students raised $3,000 to fund their socially-conscious waffle cookie company
Owners of a San Francisco restaurant raised $50K to get out of debt
A veteran raised $2,000 to start his own motorcycle repair shop

Read on for the eight steps you should follow to get money from GoFundMe to start your own business.

1) Make Sure Your Business Is Right For GoFundMe

Before you go about using GoFundMe to start a business, consider whether your startup is a good fit for GoFundMe. Many of the startups currently using crowdfunding to great effect are in industries that thrive on platforms like the aforementioned Kickstarter: makers of apps, gadgets,Â and games who typically don’t have an offline presence in the form of a restaurant or shop. Likewise, Patreon (see our review) has become a leading crowdfunderÂ for podcasters, musicians, graphic artists, and other creatives whose work is easily disseminated online.

Crowdfunding with GoFundMe is a different matter, however. Donors tend to contribute to GoFundMe campaigns not to get in on the latest tech trend or trendy tabletop game, but to make a positive difference in the life of people in need or to benefit their community as a whole. Look at the sort of businesses that have had successful GoFundMe campaigns and you’ll note that they typically feature some combination of a) a business that has a positive impact on public life in a communityÂ and b) an entrepreneur/business owner with either a sympathetic and compelling personal story to tell or a mission related to charity or social justice.

If neither a) nor b) applies to you and your business, you’d be better off seeking funding from one of the other crowdfunding outfits I’ve mentioned. If at least one of the two does apply to your efforts, you stand a decent shot at making GoFundMe work for your business.

2) Develop A Business Plan & A Realistic Funding Goal

Have a business plan ready before you start publicly campaigning for money. In particular, make sure you set a funding goal that you expect to actually be able to meet. Define exactly what it is that you plan to do with the money you expect to raise so that in the event you reach your funding goal, you know what to do next.

Of course, all the best-laid plans on Earth won’t help you if you don’t actually raise any money. One way to increase your chances of crowdfunding success is to offer cool rewards to people who donate to your campaign.

3) Offer Multiple Reward Tiers

Remember when I said that GoFundMe donors are motivated mainly by the desire to do good? This may be the case, but you’re still competing for the limited attention of donors with all the other campaigns listed on the site. This is when rewards come into play.

With GoFundMe, as with Kickstarter and many other crowdfunders, you can offer multiple levels of rewards to those who contribute to your campaign. This means that you can offer increasingly higher-value rewards to people who donate larger amounts of money. My advice would be to take advantage of this crowdfunding feature and offer multiple reward tiers to your would-be donors. Give people a reason to feel invested in your success!

While branded trinkets and t-shirts might draw some people in, rewards that give people a taste of your product or service are even better. Offer discounts, coupons and/or gift cards for whatever you have to offer. Get people in the habit of frequenting your business and they’ll be more likely to give you their business on an ongoing basis.

4) Refine Your Campaign Pitch

When creating your GoFundMe campaign page, you’ll obviously want to make it as appealing as possible.

Post A Fun Campaign Video:Â Keep it to around two minutes so you don’t lose viewers’ fickle attention, but don’t be afraid to show a personal touch, as people prefer authenticity and humor to slick sales pitches. You should at least allude to the personal challenges you’ve faced in growing your business. After all, this is GoFundMe, where tugging at the ol’ heartstrings is expected.
Make Your GoFundMe Campaign Page As Attractive As Possible:Â Use high-resolution images to promote your campaign. Preferably images that feature both you and your place of business. Remember: the personal touch is key.
Write A Descriptive Title:Â Try to summarize what your campaign is all about with one phrase. Don’t just write “Business Needs Help” — that doesn’t tell anyone anything or capture their interest. A good, catchy title can help distinguish your campaign from the thousands of others like it!

5) Seek Support From Friends & Family Before Launch

Not to diminish the importance of marketing your campaign to the public at large, but your most important source of support is likely to be your personal network: friends, family, co-workers, acquaintances, etc. Not only are they likely to contribute a significant proportion of what you raise, but it’s essential to secure their support before your campaign goes public. That way, when you launch your campaign, strangers who come across it won’t see “$0” as the amount raised. Success breeds success, and it’s easier to attract public support when you’ve already secured a decent chunk of funding.

You can have family members donate anonymously if you don’t want people knowing how much of your support comes from relatives!

6) Market Your Campaign Via Social Media & Email

To build buzz around your GoFundMe campaign, you’ll need to market it on your social media channels. Use Facebook, Twitter, Instagram and the like to spread the word about your story and your campaign. If you can, try to collect the email addresses of those interested in your campaign in order to build a mailing list in which you can give updates on your business’s progress and whatever other behind-the-scenes material you like. You can use services like MailChimp (see our review) to keep your followers updated with attractive template-based emails in which you can detail your progress.

Try to develop some press contacts as well. This way, when you’re ready to launch, you can alert them ahead of time.

7) Keep Everybody Updated After Your Campaign Launches

There’s a reason it’s called a campaign — you have to work hard to keep the contributions flowing! The uncomfortable truth is that most crowdfunding campaigns, whether they be for business or personal causes, don’t reach their funding goals. If you want to beat the odds, a compelling story and a nifty video won’t be enough. You’ll need to work on your campaign continuously as if it were your job.

Once your campaign is in full swing, keep everyone informed with frequent updates. Don’t just post updates to your GoFundMe page — make sure to send out updates through all your social media channels as well. Go ahead and get personal with your updates. Don’t just rattle off a list of statistics. Document your continuing personal involvement in your campaign for business funding. Be sure to respond to anyone with questions about what you’re doing, both on your GoFundMe page and on social media.

8) Stay Engaged With Your Backers Post-Campaign

Let’s say you overcome your challenges and meet your funding goal. Fantastic! Now, what are you going to do with the contacts you’ve made, the followers you’ve attracted, and the mailing list you’ve started? If you want your business to thrive, you won’t just let them drift away.

Consider an email drip campaign to keep your contacts appraised of your latest doings and to offer special promotions. Stay active on the social media channels you used to such great effect during your campaign. Maintain the relationships you developed with your first customers, as these people will be your most important evangelists, spreading the good word about your business and the friendly, personable owner who treated them so nicely.

In this lonely, atomized world we unconscionably created, people long to experience community. Provide them with one, and they will reward you.

Final Thoughts

Crowdfunding is hard. As I mentioned at the start of this article, most crowdfunding campaigns fail. There’s a reason why crowdfunding hasn’t solved the problems of startup undercapitalization or bankruptcy-inducing medical expenses. However, if you prepare beforehand, build a community of supporters, and approach the task like a job, you’ll greatly increase your chances of success when using GoFundMe to start a business.

Check out the links below to learn more about GoFundMe.

Read our full GoFundMe review

Visit the GoFundMe website

The post How To Use GoFundMe To Fund A Business In 8 Steps appeared first on Merchant Maverick.

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March 28, 2018

10 Great Real Estate Crowdfunding Platforms For Businesses

When crowdfunding rose on its initial wave of popularity, it was strictly a means of raising money for personal causes and makers of board games and household gadgets and whatnot. That all changed with the passage of the JOBS Act of 2012. The JOBS Act was sold as a response to the lack of capital available to startups in the wake of the Great Recession. It legalized the crowdfunding of securities so that campaigners could raise money from investors in a public campaign.

From there, it was natural that real estate developers would turn to crowdfunding as a new way of attracting investment. Six years after the passage of the JOBS Act, crowdfunding real estate has become quite the growth industry, with countless real estate crowdfunding sites popping up, offering equity and/or debt crowdfunding deals to accredited investors, and, in many cases, non-accredited investors as well.

With the crowdfunding industry projected to be worth in excess of $300 billion by the year 2025, there’s never been a better time for those in the real estate business to consider crowdfunding as a means of reaching investors who would otherwise be inaccessible. Here are 10 of the most popular and well-regarded real estate crowdfunding platforms out there.

1) PeerStreet

Self-described as a “marketplace lending platform for real estate debt,” PeerStreet was founded in 2013 by real estate attorney Brew Johnson and former Google executive Brett Crosby as a means of giving accredited investors access to real estate investment opportunities. PeerStreet has originated over $500 million in real estate loans as of October 2017. Most remarkably, PeerStreet claims to have not lost a single dollar in investor principal throughout its entire existence.

Let’s get the skinny on PeerStreet’s real estate crowdfunding marketplace.

Best For…

Real estate companies seeking to connect to investors online.

How Does PeerStreet Work?

PeerStreet states the following regarding their loans:

PeerStreet loans are generally secured by first liens on real estate. PeerStreet partners with top-tier originators across the country and carefully vets their loans before making them available to our investors. Most of our loans are short in duration (6-24 months) with LTVs typically below 75%.

PeerStreet applies a servicing fee of betweenÂ 0.25%-1.00% on each loan offered. Their loans offer, on average, 6-12% annualized returns.

PeerStreet Rules

PeerStreet runs extensive due diligence on both the loans advertised on its site and on its loan origination partners. Before a loan can be featured on PeerStreet, the company does the following:

Performs independent underwriting of all loans using both manual processes and big data analytics
Reviews an independent valuation (BPO/Appraisal)
Ensures each loan complies with PeerStreetâs underwriting guidelines
Reviews legal documentation

For loan origination partners, PeerStreet performs the following checks:

Reviews track records
Reviews financials
Reviews licensing and adherence to state usury laws
Runs background checks
Reviews legal and underwriting processes

PeerStreet’s campaigns have an investment minimum of just $1,000 — lower than the typical $10K investment minimum.

How To Start A PeerStreet Campaign

Contact PeerStreet with details of your loan campaign proposal and wait to hear what they think.

Takeaway

PeerStreet’s reputation among investors is second-to-none, so attracting investors to your real estate crowdfunding project may be easier than with other platforms. Their policy of complete transparency to investors (PeerStreet investors can review the performance of every loan ever featured on the site) and strict vetting for loans and loan originators makes PeerStreet a standout company among real estate crowdfunding platforms.

Visit the PeerStreet website

2) RealtyShares

With over $700 million in real estate investments facilitated since its founding in 2013, RealtyShares is at the tip of the real estate crowdfunding spear. Both equity and debt crowdfunding are available, and every deal on the site is strictly vetted before being allowed to campaign. Read on to learn more about this heavyweight real estate crowdfunding contender.

Best For…

Connecting real estate businesses and projects — both commercial and residential — to accredited investors.

How Does RealtyShares Work?

RealtyShares names three different types of real estate investments that can be listed on its site.

(1) Â Cash-flowing/Value-Add equity investments in commercial and residential properties such as apartments, retail, office and pools of single family homes;

(2) Â Equity investments in Fix & Flips located in high demand/low supply markets;

(3) Â Loans secured by residential and commercial real estate.

On the loan side, RealtyShares lists fixed-rate bridge loans, floating-rate bridge loans, small balance permanent loans, and triple-net loans. On the equity side, RealtyShares lists common and preferred equity offerings. Rates and fees for RealtyShares’s various debt and equity products are given on the website at the links provided.

RealtyShares Rules

RealtyShares does its due diligence for investors by running background and credit checks on all funding campaign sponsors. As for the cost of running a campaign, RealtyShares says the following:

Real Estate Companies that raise capital through our investment platform will be required to reimburse RealtyShares for its out of pocket expenses related to establishing and managing the fund that invests in your project. Â These costs typically include legal, accounting and compliance costs.

The exact amount of the reimbursement will depend on the specific investment opportunity. Please contact usÂ hereÂ for more details.

Only accredited investors can invest in a RealtyShares campaign. The minimum investment amount is $5,000.

How To Start A RealtyShares Campaign

Create an account on RealtyShares’s site and submit an application. The company will get back to you within 24-48 hours to let you know if you’ve been accepted. It will then request additional information. You’d better know what you’re doing, as RealtyShares states “Currently, only a small percentage of prospective investments are listed on the site.”

Takeaway

RealtyShares has a reputation for being one of the top platforms for crowdfunding real estate deals. Having financedÂ over 1,000 projects in 39 states thus far, the company has a proven track recordÂ and is a solid choice indeed for the real estate business looking to source investment.

Visit the RealtyShares website

3) RealtyMogul

Launched in 2013 and headquartered in Los Angeles, RealtyMogul offers both equity and debt financing for real estate projects. Over $338 million has been invested thus far through RealtyMogul, financing over 350 commercial and residential properties valued at over $1.5 billion.

Let’s see what makes RealtyMogul tick.

Best For…

Raising equity for commercial projects and conducting debt crowdfunding for both commercial and residential real estate.

How Does RealtyMogul Work?

RealtyMogul’s FAQ details how their campaigns work, but here are some pertinent details. Real estate companies can raise from between $1 million and $5 million from accredited investors in an equity campaign for commercial real estate. Terms, rates, and fees for RealtyMogul equity raises can be found here.

RealtyMogul also offers debt campaigns for both commercial and residential real estate. Most of these loans are sold to institutional investors. RealtyMogul offers hard money loans, bridge loans, and permanent loans. Information regarding terms and fees can be found here.

RealtyMogul Rules

RealtyMogul runsÂ background, criminal and credit checks on all who apply to campaign.

How To Start A RealtyMogul Campaign

You begin the application process on the website, providing information about your firm, the property in question, and other details. A company representative will then contact you, take you through the due diligence process, and work with you in setting up your campaign.

Takeaway

Through RealtyMogul, the Hard Rock Hotel Palm Springs raised more than $1.5 million in equity financing in what was the first equity crowdfunding campaign ever conducted by a hotel. A pioneer in the industry, RealtyMogul’s track record inspires confidence.

Visit the RealtyMogul website

4) MinnowCFunding

Founded in 2017, MinnowCFunding is a recent entry to the real estate crowdfunding race. Headquartered in Los Angeles, MinnowCFunding is a “funding portal” as defined by the law. This means it can offer Regulation Crowdfunding, or equity crowdfunding with non-accredited investors. MinnowCFunding does not offer debt crowdfunding.

MinnowCFunding consists of “a team of real estate veterans and advisors with over 50 years of collective experience underwriting and managing residential and commercial real estate.” Let’s learn more, shall we?

Best For…

Real estate companies looking to conduct equity crowdfunding campaigns that are open to all investors, not just accredited investors.

How Does MinnowCFunding Work?

Through MinnowCFunding, equity campaigns can be launched for the following real estate types:

Residential rental real estate
Commercial real estate
Industrial real estate
Retail real estate
Mixed-use real estate

Due to legal limits on Regulation Crowdfunding, a maximum of $1.07 million can be raised per year by any single entity.

Be warned that MinnowCFunding takes 7% of what you raise as a platform fee.

MinnowCFunding Rules

Companies looking to campaign for equity must undergo strict vetting: “Our experienced real estate and financial experts review the credentials and plans of the investment target.”

The minimum investment amount for a MinnowCFunding campaign is just $1,000.

How To Start A MinnowCFunding Campaign

Contact MinnowCFunding with your crowdfunding proposal and see what their agents tell you. The company doesn’t yet have a lot of information posted regarding the application process.

Takeaway

MinnowCFunding is the new kid on the block when it comes to real estate crowdfunding, yet they’ve generated a fair amount of buzz in the short time they’ve been around. Those in the real estate industry interested in Regulation Crowdfunding should give them a look.

Visit the MinnowCFunding website

5) AlphaFlow

Judging by the name, you might assume AlphaFlow was some kind of non-FDA-approved prostate supplement. However, you would be libellously wrong. Shame on you.

Founded in 2015, AlphaFlow, in their own words, “purchases first lien mortgage notes from top-tier originators around the nation, providing non-conventional liquidity to residential real estate lenders..” Let’s look at AlphaFlow in greater detail.

Best For…

Connecting real estate companies to investors via loan originators. The loan originator offers the investor a balanced portfolio of diversified real estate investments — the investor doesn’t actually choose the individual projects to invest in.

How Does AlphaFlow Work?

AlphaFlow works with companies like PeerStreet to find residential debt crowdfunding campaigns. They take what they believe to be the best campaigns, make sure they are spread out across the US, and build portfolios to offer investors so the investor doesn’t have to do the heavy lifting.

AlphaFlow describes their loan products as follows:

Asset-backed (first-lien) mortgage note
Loan amounts between $75K-$2MM
6-12 month duration
7% + interest rate
Personal guarantee

Â AlphaFlow Rules

The company states the following regarding loan originators wishing to use the platform:

AlphaFlow conducts extensive due diligence on each originator partner. Lender onboarding entails strict review of the firmâs management staff, historical loan performance, underwriting guidelines, quality control metrics, and onsite review by AlphaFlow of their lending operations.

How To Start An AlphaFlow Campaign

Individual real estate companies don’t apply to raise funds on AlphaFlow. Rather, lending platforms apply to AlphaFlow, and if the platform is onboarded, it serves as a source of residential debt deals from which AlphaFlow draws to build its portfolios for investors.

Takeaway

AlphaFlow makes investing in real estate easy by offering portfolios comprised of diversified, pre-vetted residential loans.

Visit the AlphaFlow website

6) Fundrise

Launched in 2012, Fundrise’s brand of real estate crowdfunding is somewhat akin to that of AlphaFlow. Fundrise’s investors see their investments spread out over the company’s portfolio, which includes both commercial and residential real estate. The investor doesn’t choose which projects to invest in.

Investors invest in Fundrise’s portfolio through the vehicles of the eREIT (an electronic Real Estate Investment Trust — it resembles a mutual fund for real estate projects) and the eFund (similar to the eREIT).

Best For…

People who want to invest in real estate but don’t want to choose the individual investments.

How Does Fundrise Work?

Fundrise sources real estate investment from around the US, then offers anybody and everybody (not just accredited investors) the chance to invest in Fundrise’s portfolio.

Fundrise doesn’t publicly release the duration, interest rates, etc. of their loan products. On the investor side, FundriseÂ allows investments of as little as $500 and takes aÂ 0.85% annual asset management fee.

Fundrise Rules

There are no limits as to who can invest with Fundrise. As for real estate companies looking to raise funds with Fundrise, the company is not publicly seeking new projects right now, so no rules for companies looking for investment are given.

How To Start A Fundrise Campaign

You can’t apply for funding through Fundrise’s website, so you’ll have to contact the company via other channels if you have an irresistible deal to propose.

Takeaway

Fundrise is known for its supreme ease of use for the investor. It’s a great way for the average person to invest in something that is independent fromÂ the stock market.

Visit the Fundrise website

7) Patch Of Land

Born in 2013, Patch Of Land is a hard-money debt crowdfunding site for real estate investments — mostly residential, but some commercial. The company was founded by Jason Fritton (who lobbied for the passage of the JOBS Act that made real estate crowdfunding possible in the first place), and his brother Brian.

On Patch Of Land’s About page, the company posts the following mission statement:

Patch of Land aims to solve the problem of slow, inefficient, fragmented and obscure private real estate lending by using the latest technology, data and process efficiency to more accurately assign risk profiles and project viability, while greatly reducing time and cost of loan underwriting for borrowers with real estate projects that are overlooked or rejected by banks and traditional lenders.

Best For…

Real estate companies and the investors who love them.

How Does Patch Of Land Work?

For real estate projects, Patch Of Land offers three different types of loan program:

Fix & Flip Loan Program
Rental Loan Program
Commercial Loan Program

Details of each loan program are given at the link. One thing each has in common is that you can campaign for a maximum of $3 million USD.

Patch Of Land details the performance of its loans here. Some of the highlights: Patch Of Land has funded 986 loans to the tune of over $442 million with a realized rate of return of 10.88%. (Numbers current as of 3/25/18)

Patch Of Land Rules

Regarding the due diligence process, Patch Of Land states:

We will conduct due diligence process and review all the required documentation, including an appraisal. Typically we can close your loan in as little as seven days. Our process is transparent; we do not charge âjunk feesâ or hidden fees of any kind.

How To Start A Patch Of Land Campaign

Patch Of Land details the application process for borrowers here. Perhaps the highlight of the process is the fact that filling out the application, according to the company, takes only five minutes.

If you’d rather speak to a person about your prospective funding campaign, call a Patch Of Land agent at 1-888-959-1465 with details of your project.

Takeaway

Check out Patch Of Land’s track record and see if they might be the real estate funding solution you’re looking for.

Visit the Patch Of Land website

8) GroundFloor

GroundFloor provides debt crowdfunding for residential real estate developers. Founded in 2013 in Atlanta, GroundFloor offersÂ fix-and-flip hard money loans for both accredited and non-accredited investors to, well, invest in.

You can invest as little as $10 in a GroundFloor crowdfunded real estate loan. Yes, $10, no typo. Though, I’m not entirely sure what the point of that would be.

Currently, GroundFloor can only be used in a limited number of US states. I’ll tell you which ones in a bit.

Best For…

Financing fix-and-flip real estate projects.

How Does GroundFloor Work?

GroundFloor describes their loans thusly to borrowers:

Rates starting at 5.4%
Fix-and-flip hard money loans from $75,000 to $2,000,000 for residential properties (Please note: cannot be owner-occupied)
Closing as fast as 15 days
Monthly payments or balloon payment at maturity date
All points can be rolled into the loan
No personal guarantee required
Lend up to 70% ARV (after repair value)
Borrow up to 90% LTC (loan to cost)
Fast and simple application with minimal documentation (no tax returns, no bank statements)

GroundFloor also touts 8-12%Â annualized returns on average on their loans with 6-12 month terms.

GroundFloor Rules

Of course, GroundFloor doesn’t let projects crowdfund loans without doing some vetting:

The product is based on venture loans to real estate entrepreneurs, originated and serviced by Groundfloor. Prior to offering, every loan is pre-funded by Groundfloor after a thorough vetting of the borrower’s experience, credit worthiness, and business plan, plus an assessment of the property value on an as-is and as-improved basis.

As of this moment, you can only raise funds through GroundFloor in the following states: Massachusetts, Maryland, DC, Virginia, Georgia, Illinois, Texas, Washington, and California. However, GroundFloor recently announced that due to theirÂ offering having just been qualified by the U.S. Securities & Exchange Commission under Tier II of Regulation A, they will be operating in all 50 states in short order. Just not quite yet.

Note that in a recent press release, the companyÂ said: “Groundfloor has not historicallyÂ charged any investor fees, but may elect to begin doing so in the near future.”

How To Start A GroundFloor Campaign

If you reside in one of the aforementioned states, apply online and see what GroundFloor says. Alternately, call the company atÂ 678-701-1194 and strike up a chat.

Takeaway

GroundFloor may only be getting started, but they seem to be making some moves to gain a foothold in the industry.

Visit the GroundFloor website

9) EQUITYMULTIPLE

With an all-caps name that makes me feel like I’m yelling at you just by typing it, EQUITYMULTIPLE offers commercial real estate crowdfunding in the form of syndicated debt, equity, and preferred equity raises.

EQUITYMULTIPLE is a young company, having been founded in 2015. However, extolling their familiarity with the field, EQUITYMULTIPLE states:

Experience matters. While other platforms are backed by venture capital companies, we’re backed by a real estate company – Mission Capital, a recognized national leader in commercial real estate debt & equity finance.

Best For…

Commercial real estate developers looking for crowdfunded investment, investors looking for real estate deals, and people who like shouting.

Only accredited investors can invest through EQUITYMULTIPLE.

How Does EQUITYMULTIPLE Work?

Here are the details of EQUITYMULTIPLE’s syndicated debt offerings:

Target Rate to Investors: 7-12%
Typical LTV: 50-75%
Typical Term: 6-24 months

The details for the company’s preferred equity offerings:

Target Current Preferred Return: 6-12%
Target Total Preferred Return: 50-75%
Typical Term: 1-3 years

Lastly, the company’s regular equity offerings:

Target Annual Cash Return: 6-12%
Target Internal Rate of Return to Investors: 14%+
Typical Term: 1-3 years

EQUITYMULTIPLE Rules

Regarding due diligence, EQUITYMULTIPLE describes the platform’s vetting process:

We will provide a comprehensive diligence request list. Once these items are received, our team will determine if the deal meets the requirements of EQUITYMULTIPLE’s investor network. During this time, the Sponsor and EQUITYMULTIPLE will begin discussions surrounding the terms of the anticipated Offering.

How To Start An EQUITYMULTIPLE Campaign

EQUITYMULTIPLE’s deal submission and funding process is detailed here. One key point: once you submit your deal, EQUITYMULTIPLE “will get back to you within two business days with follow-up questions or preliminary approval.”

Takeaway

EQUITYMULTIPLE is a real estate crowdfunding platform just finding its sea legs. Keep an eye on these folks.

Visit the EQUITYMULTIPLE website

10) Small Change

Launched in 2014 and headquartered in Pittsburgh, Small Change may not have the longest track record, but the equity real estate crowdfunding platform distinguishes itself by associating its brand with social responsibility:

We created Small Change to allow everyday people to invest in real estate projects that change cities and neighborhoods for the better, and we created our proprietary Change Index to track that change.

The Change Index is a way for Small Change to assess real estate developments in terms of their access to public transportation, the walkability of the area, access to parks and fresh food, and other factors.

Best For…

Developers of residential, commercial, and mixed-use properties that score sufficiently highly on the company’s Change Index. Non-accredited investors can invest in some projects, while others are strictly for accredited investors.

How Does Small Change Work?

Small Change advertises average returns of betweenÂ 8-10%. The minimum investment amount on a Small Change project is just $500.

Small Change doesn’t provide much in the way of details as to how their investments perform. Hopefully, this will change in the future.

Small Change Rules

The company’s Change Index is a fairly comprehensive scoring system for how beneficial a real estate development is to the wider community. Projects must hit a certain target score on each metric before being allowed to use the platform. I recommend reading the details of the Index carefully if you’re thinking about using Small Change for your real estate venture.

How To Start A Small Change Campaign

You’ll have to create an account and get in touch with the company to ask about getting your project on the platform. Small Change doesn’t provide any granular detail as to how to do this.

Takeaway

It’s good that at least one real estate crowdfunderÂ seems aware of the fact that not all real estate developments benefit the community and that such developments should be viewed through the prism of social responsibility. For that, I tip my cap to Small Change and the Change Index.

Visit the Small Change website

Final Thoughts

Real estate crowdfunding can hardly be said to be a mature industry at this point. After all, it’s only about six years old. As such, the industry is in flux, and my list of leading real estate crowdfunders would undoubtedly be different if I were to write this article in another few years.

That’s not to say real estate crowdfunding can’t work for you right now — indeed, evidence indicates quite the contrary. Check out the companies I’ve listed above if you want to get a good picture of where the industry stands today.

The post 10 Great Real Estate Crowdfunding Platforms For Businesses appeared first on Merchant Maverick.

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March 22, 2018

Real Estate Crowdfunding: Is It Right For Your Business?

With the increasing prominence crowdfunding has attained over the course of the last decade, I’m sure you’re broadly familiar with the concept of crowdfunding. You’ve probably heard of people using GoFundMe (see our review) to try to cover medical expenses and other personal emergencies. You’ve probably also heard of crowdfunding a la Kickstarter (see our review) in which backers contribute to the funding of a board game or gadget or male romper in exchange for rewards in the form of the board game/gadget/romper in question and/or related goodies.

However, if you’re involved in a real estate venture, it’s now possible to solicit investment in real estate via crowdfunding as well. As I’ll explain, this is a relatively recent phenomenon, but by allowing owners of real estate to launch publicÂ crowdfunding campaigns, funding can be drawn from a much broader pool of investors than was previously possible.

Let’s talk about exactly what real estate crowdfunding is and how it can benefit your real estate business.

Real Estate Crowdfunding & The Jobs Act

Prior to 2012, it was illegal to offer investment in the form of a public campaign in the US, as public solicitation of securities was forbidden by SEC rules. Therefore, real estate crowdfunding was out of the question.

However, the idea of what crowdfunding could be changed significantly when the JOBS Act of 2012 was signed into law. The passage of the Act was framed as a response to the lack of capital available to startups in the wake of the Great Recession, as it legalized the crowdfunding of securities. Subsequently, a great number of real estate crowdfunding sites have popped up.

What Is Real Estate Crowdfunding?

Let’s be precise when we discuss real estate crowdfunding. The term encompasses two different forms of crowdfunding: equity-based and debt-based.

Equity-Based Real Estate Crowdfunding

When you open up your real estate venture to equity investment, investors become co-owners of the property in question and stand to profit in proportion to their ownership stake in the property. These profits come in the form of rental income and/or property appreciation.

Debt-Based Real Estate Crowdfunding

With debt-based real estate crowdfunding, you offer investors the chance to lend to you. In return, the investor is paid back the principal plus interest. Mortgages and hard money loans are examples of debt investments in a real estate context.

(For more general information on the differences between different forms of crowdfunding, our article “Types of Crowdfunding For Business: Debt, Equity, Or Rewards” is a good place to start.)

What Do These Differences Mean For Your Campaign?

The substantive difference between these two forms of real estate crowdfunding is that debt investment is safer than equity investment for the investor, but also less potentially lucrative. If something goes wrong and the property in question is foreclosed on, debtholders get paid before equity holders do, so there’s a smaller potential downside for the debt investor. Equity investors bear much more risk.

On the other hand, if the real estate venture does particularly well, equity investors get a share of the windfall profits whereas debt investors do not — they simply get interest on the loan. Equity investment is more high-risk-high-reward than debt investment when it comes to real estate. Keep in mind the type of investments your particular real estate project is likeliest to attract when setting the terms and structure of your real estate crowdfunding campaign.

In order to do this, however, you’ll need to understand what the capital stack is.

What Is The Capital Stack?

The capital stack is key to understanding commercial real estate financing (not so much residential real estate). The capital stack is comprised of the different layers of financing arrangements that go towards funding real estate projects. It delineates where investors stand in the pecking order relative to one other.

This is how investors are prioritized, with the highest-priorityÂ investors on the bottom:

Common Equity (lowest priority)
Preferred Equity
Mezzanine Debt
Senior Debt (highest priority)

Essentially, the risk increases the higher you are on the stack, but so do the returns. Here’s more information on the capital stack.

What Businesses Stand To Gain From Real Estate Crowdfunding?

Let’s discuss the two primary types of businesses that stand to benefit from this new market sector. The first should be fairly obvious.

Real Estate Developers

I can hear you right now: “No kidding, genius.” Of course real estate crowdfunding would appeal to real estate developers. The thing is, it’s the newer developers who stand to gain the most benefit from real estate crowdfunding. That’s because the more established firms have extensive pre-existing relationships with investors and other sources of equity. Crowdfunding isn’t necessarily going to be a priority for them.

Those who have entered the real estate business more recently, however, have every reason to explore crowdfunding. Launch a crowdfunding campaign through one of the many real estate crowdfunding sites out there, and you’ll gain access to investors that you just didn’t have previously — and these investors are the very investors who simply didn’t have easy access to real estate investment opportunities before crowdfunding and the JOBS Act came along.

Many real estate crowdfunders add value by pooling investors into an LLC or other entity specifically set up for the purpose. That way, investors don’t have to be dealt with individually.

Who else can take advantage of real estate crowdfunding to fund their business, you ask?

Real Estate Crowdfunding Platform Owners

This answer shouldn’t come as a shocker either. Think about it, though: real estate crowdfunding is a very new industry, having only just been legalized by the JOBS Act. There may never be a better time to get in on the ground floor of the industry than right now.

Of course, before you launch your real estate crowdfunding business, you’ll need to determine a) what types of financial products can be offered to investors on your site, b) what category of real estate to specialize in (commercial, residential, etc), c) how to build your web platform, and d) how best to market your platform to attract the attention of investors. But if you do your due diligence and manage to answer these big questions, you’ll be entering a field poised to expand by leaps and bounds over the next decade.

It’s estimated that the crowdfunding industry as a whole will be worth more than $300 billion by the year 2025. There are bound to be hiccups along the way, but if you’re thinking that the industry might be for you, this is the time to give it the ol’ college try.

Final Thoughts

1995 was a great time in which to launch an internet search engine. 1970 was a good time to get in on the polyester industry. Some industries present particular opportunities to attuned entrepreneurs at certain defined points in history. Are we in one of those periods now with respect to real estate crowdfunding? Obviously, nobody can say for sure, but all signs point to “Yes.”

Crowdfunding involving investments is legally complex, and federal prosecutors have unlimited resources. Therefore, be sure to get legal guidance from professionals before making the leap into real estate crowdfunding. But if you have the means and the inclination, this is the time to make your move. Don’t be left holding a bag full of woulda-coulda-shouldasÂ while less-talented entrepreneurs rake in those real estate crowdfunding dollars that could have been yours!

The post Real Estate Crowdfunding: Is It Right For Your Business? appeared first on Merchant Maverick.

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March 19, 2018

8 Facts You Should Know Before Crowdfunding A Video Game On Fig

For as long as I can remember, people have bemoaned the ever-accelerating consolidation of the video game industry. For much of the past two decades, small-to-mid-size game developers have been going bust as industry behemoths like EA grow ever more dominant. For those who have followed the industry, it’s an ever-present trend and one that is not likely to abate anytime soon.

However, the second decade of the twenty-first century has given rise to a phenomenon that could be seen as a countervailing force to this trend; a social media-powered boat, gamely pushing upstream against The Market’s unloved current. Crowdfunding pools the resources of those who want a piece of the next big thing, delivering grassroots funding to projects that would otherwise struggle to get funding.

Anyone with a cursory familiarity with crowdfunding could tell you what Kickstarter (see our review) and GoFundMe (see our review) are, but lesser-known specialty crowdfundersÂ continue to pop up, catering to the particulars of individual industries.

Enter Fig. Launched in 2015 in San Francisco, Fig is a platform on which independent game developers and mid-size game studios can get video games crowdfunded. However, Fig is more than just a “Kickstarter for Video Games.”

It’s a unique crowdfunding systemÂ and one that presents unique challenges to those looking to use crowdfunding to finance their gaming dreams. Let’s go through what you need to know before using Fig’s crowdfunding platform for gameÂ developers.

1) Fig Provides Both Rewards Crowdfunding & Equity Crowdfunding For Video Games

With Fig, you can set up a crowdfunding campaign for your incipient game project that gives the would-be backer two options: back a traditional rewards crowdfunding campaign in exchange for a copy of the game, branded swag, expansion packs, etc., or back an equity crowdfunding campaignÂ in which the backer becomes anÂ investor who buys Fig Game Shares and thereby stands to profit from future sales of the game.

Actually, I lied. The backer also has a third option: back both!

You probably have a decent handle on what rewards crowdfunding is, but with Fig’s equity crowdfunding, investors fund your game’s development by buying Fig Game Shares (more on how Fig Game Shares work later). At the end of the process, the profits from sales of your game are divided between your company, Fig, and the equity investors who bought Fig Game Shares in your game

2) You Can Run Both A Rewards And An Equity Campaign Or Just A Rewards Campaign

I said in the introduction that Fig wasn’t just “Kickstarter for video games.” However, if you’re not trying to raise six or seven digits’ worth or capital, you can, in fact, treat Fig as if it were Kickstarter and just run a rewards crowdfunding campaign. Describe/show off your cool game, offer various rewards for different tiers of support, and hope to raise your goal within your funding period.

However, most Fig campaigners opt to run both a rewards campaign and an equity campaign concurrently. This way, you can attract support from the more casual backer who may want to see your game produced and ultimately receive a copy, as well as the investor who sees profit potential in your game idea and wants to support it in exchangeÂ for a cut of future sales.

Check out the campaign page for Pig Eat Ball if you want to see what Fig’s unique brand of rewards/equity hybrid crowdfunding looks like in action.

3) Fig Is Selective

Some crowdfunding platforms allow anybody who signs up and creates a profile to launch a crowdfunding campaign on their platform. Not Fig. According to the company, when a developer applies to use the platform:

We evaluate the game and the developer to determine whether, in our opinion, they have the potential to generate significant income based on criteria such as experience and talent of the developer, the developerâs record for delivering games on time and within budget, our estimates of potential sales of the game and the extent of the gameâs existing social community and fanbase.

Also note that Fig only hosts one or two new funding campaigns per month. When considering whether to send your pitch to Fig, determine whether you can afford to, in effect, wait in line for your chance to be featured on the site.

4) Funding Is All-Or-Nothing For Both Rewards And Equity Campaigns

Just about every crowdfunding platform requires you to set some kind of funding goal before launching your campaign. Some crowdfunders let you keep whatever money you end up raising regardless of whether or not you’ve reached your funding goal before your funding period ends.

Not so with Fig. Launch a Fig crowdfunding campaign, and you’ll have to meet or exceed your funding goal before you can collect. Fail to reach your funding goal, and you’ll get nothing at all. This goes for both rewards and equity campaigns. You’ll want to have done your due diligence before launching your campaign with Fig, as an 80% funded project will see you get 0% of the cash.

5) Investors Aren’t Actually Buying Shares Of Your Company

Launch an equity crowdfunding campaign with Fig and you won’t have to worry about investors owning a portion of your intellectual property. That’s because with Fig’s unique equity crowdfunding system, the investor invests in stock created by FigÂ to pay dividends based on the sales receipts from the game post-release. Fig describes the system like so:

Developers maintain 100% creative control and IP ownership over their game. The community invests in Fig Game Shares, which pay out based on Figâs own revenue share gained through a licensing agreement with the developer, and Fig takes on the accounting and legal risk associated with the investments as itâs our stock.Â Developers are not involved in selling investments, nor are investors investing in studios or IP.

Here’s where you can learn more about Fig Game Shares. Essentially, they allow you to retain full ownership of your company and its products while offering investors the chance to profit from your future game sales commensurate with the proportion of Fig Game Shares they purchased.

6) Fig’s Rewards Crowdfunding Campaigns Carry No Platform Fees

If you’re using Fig as if it were Kickstarter and just want to run a rewards campaign, there’s one way in which Fig is actually superior to Kickstarter. Let me explain.

Kickstarter, like most non-charitable crowdfunding sites, charges a 5% platform fee from what you raise. Factor in payment processing fees, which can come to about 3-5% of what you raise, and you could be paying 8-10% of what you raise in fees.

Fig, however, does things differently. Launch a rewards campaign with Fig and you won’t pay any platform fees. You will only have to pay credit card processing fees. These will come out to about 2.5% of what you raise. If you’re an independent game publisher looking to use rewards crowdfunding to get your project started, this factor alone gives Fig a leg up on the competition.

For Fig’s equity crowdfunding campaigns, the company states the following:

If and only if the campaign succeeds, a portion of Figâs out-of-pocket legal and accounting transaction costs will be deducted from the investment proceeds (up to 5%).

7) Fig Can Publish Your Game As Well

Fig states the following regarding its publishing services:

Fig stands as a non-exclusive co-publisher of your game, so you can maintain control over the publishing of your game while receiving Figâs support in distribution and marketing. Fig is open to exclusively publishing your game if that is your desire. Some developers have requested we exclusively publish their games.

Fig’s publishing services can be opted into — you are not required to use them to publish your game.

8) You Can Run A Private Funding Campaign Before You Go Public

Is your video game idea still in its embryonic stage? Is it unworthy of being seen by the general public at this point? You might want to consider running a private funding campaign before you run a public one.

Fig’s Backstage Pass Program lets you do exactly this. Through this program, Fig’s most hyper-attuned backers can evaluate your campaign away from the prying eyes of the public and give you valuable feedback, all while you start the fundraising process, getting a head-start on your public crowdfunding campaign.

Disclaimer

Here’s a disclaimer I’ve started attaching to everything I write related to equity crowdfunding:

Bear in mind that equity crowdfunding is a still-evolving field, with the full impact of the JOBS Act still being assessed. Equity crowdfunding is a more complex proposition than, say, rewards-based crowdfunding, as investing is much more substantially regulated. Consult an attorney if you have any legal questions regarding the process, SEC regulations, taxes, etc.

Final Thoughts

No form of popular entertainment inspires as much passionate devotion (among other things) as does the video game. For those looking to get in on the ground floor of the industry, crowdfunding is a way you can fund your passion projects while a) retaining control of your work, and b) not going into debt.

Fig’s particular brand of video game crowdfunding gives independent developers and game studios alike the ability to fund their work by monetizing the all-consuming devotion of video game fans. Just make sure you know the essentials before you embark on your crowdfunding journey.

The post 8 Facts You Should Know Before Crowdfunding A Video Game On Fig appeared first on Merchant Maverick.

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March 15, 2018

GoFundMe Alternatives: 10 Sites Like GoFundMe For Business Funding

In terms of raw numbers, GoFundMe (see our review) stands atop the crowdfunding industry. With over $5 billion in crowdfunded dollars raised from over 50 million donors since its founding in 2010, no crowdfunding platform has been able to match GoFundMe in terms of transferring money to those who need it. What’s more, since late 2017, GoFundMe has started eliminating their 5% platform fee for individual crowdfunding campaigns (the 0% platform fee now applies to campaigns started in the US, UK, and Canada).

However, there are plenty of reasons why an entrepreneur looking to crowdfund a startup or a small business might look for an alternative to GoFundMe. While people can and do use GoFundMe to fundraise for businesses, the vast majority of campaigns on the site are personal campaigns for charitable causes, often to cover medical expenses. Facilitating commerce isn’t the focus of GoFundMe’s brand.

Let’s go through some of the GoFundMe alternatives you can use to fund your business.

Kickstarter

Kickstarter (see our review) needs no introduction, but I’ll write one anyway out of habit. Between Kickstarter’s 2009 birth and today, the company has become synonymous with crowdfunding. Kickstarter has raised over $3.5 billion in funding pledged to its campaigns (more than any crowdfunding site besides GoFundMe), boasts more thanÂ 140,000 successfully funded projects withÂ over 14 million total backers.Â You might say the folks at Kickstarter have hit the big time.

Kickstarter embodies the concept of rewards crowdfunding: crowdfunding in which backers support campaigns and receive rewards in return, typically in the form of the product being produced.

Best For…

Kickstarter helps artists, musicians, filmmakers, designers, and other creators find the resources and support they need to make their ideas a reality.

Thus reads Kickstarter’s About page. It sums up Kickstarter’s target audience: those in the business of creating things to share with others. For instance, Kickstarter almost single-handedly spawned the current “golden age” of tabletop games. Game makers found Kickstarter to be the ideal platform from which to launch their passion projects. Tech startups have hit paydirt on the platform as well.

How Does Kickstarter Work?

Kickstarter’s product on offer is its rewards crowdfunding platform. The details of the platform are as follows:

Campaigns can be open forÂ 30 to 60 days
Campaigns are all-or-nothing — you either meet your funding goal by the time your campaign ends, or you get no funds whatsoever
A 5% platform fee is taken from what you raise
AÂ 3% +Â $0.20Â payment processing fee is taken from each pledge made to you

Kickstarter Rules

Kickstarter has five rules for projects:

Projects must create something to share with others
Projects must be honest and clearly presented
Projects canât fundraise for charity
Projects canât offer equity
Projects canât involveÂ prohibited items

Pay special attention to the first rule. In order to host a Kickstarter crowdfunding campaign, you must offer rewards to your potential backers. It’s not optional. Furthermore, these rewards must be of your making and must relate to your project. They can’t just be whatever you have sitting around the house.

How To Start A Kickstarter Campaign

Go to the website, choose a category, enter the basic details of your project into the form, and confirm your identity. When you submit yourÂ project for review, you might pass the automated check and be able to start immediately, or your project might be flagged for additional screening, which can take up to three days. Kickstarter estimates that about 80% of submitted projects are accepted.

Takeaway

Hobbyists, tech geeks, and superfans continue to demonstrate their willingness to spend money on crowdfunding projects in order to get in on The Next Big Thing, and Kickstarter is the best-known place to do just that. Their track record of crowdfunding success is second to none. It’s very competitive, though, so you best have done your due diligence prior to launch. If you have, who knows? Your project could take off on social media and become the next great cultural phenomenon; the next viral dream that captures the imagination of a generation; the next RompHim.

I only pray you experience such spiritual validation in your lifetime. Kickstarter: Catch the fever!

Read our full Kickstarter review

Visit the Kickstarter website

Indiegogo

Indiegogo (see our review) was launched at the Sundance Film Festival in 2008. It was originally conceived as a crowdfunding platform for independent films. Soon thereafter, Indiegogo expanded its mission, and is now a leader in the crowdfunding industry. Indiegogo’s rewards crowdfunding platform is more flexible and less exclusive than that of Kickstarter, as Indiegogo doesn’t prescreen projects prior to launch. Many startups have found success on Indiegogo after being rejected by Kickstarter.

Indiegogo also hosts equity crowdfunding campaigns through a joint venture with MicroVentures (see our review). Equity crowdfunding means your backers are purchasing shares in your company — they aren’t just backing you to get a t-shirt or a board game. Because equity crowdfunding involves investing, it is much more heavily regulated than rewards crowdfunding. Unlike Indiegogo’s rewards crowdfunding campaigns, the requirements to launch an Indiegogo equity crowdfunding campaign are fairly stringent. The bulk of Indiegogo’s business is on the rewards crowdfunding side.

Best For…

Indiegogo appeals to a lot of the same entrepreneurs and creators as Kickstarter. Tech, games, and the arts (particularly movies, no surprise) are well represented in Indiegogo’s campaign listings. But because Indiegogo doesn’t curate its campaigns the way Kickstarter does, a broader array of businesses can fundraise successfully with Indiegogo.

How Does Indiegogo Work?

Indiegogo’s rewards crowdfunding platform carries the following conditions:

Campaigns can last up to 60 days
You can choose a keep-what-you-raise campaign (you keep what you raise whether you meet your funding goal or not) OR an all-or-nothing campaign
5% platform fee
3% + $0.30 payment processing fee (per pledge)

Indiegogo Rules

Indiegogo doesn’t restrict entry to its platform — you can start a campaign for just about any non-charitable purpose. Unless you’re later found to be operating a fraud or otherwise violating the terms of service, you’re good to go. And unlike Kickstarter, Indiegogo doesn’t mandate that you offer rewards. They do highly recommend it, however. Campaigns that don’t offer rewards have a tendency to fail.

How To Start An Indiegogo Campaign

Just go to Indiegogo’s website, click “Start A Campaign,” detail your campaign, and launch it!

Takeaway

Indiegogo’s welcoming approach and flexible campaigns make it an excellent crowdfunding choice for businesses and artists of all stripes.

Read our full Indiegogo review:

Visit the Indiegogo website

Patreon

Patreon (see our review) may be a rewards crowdfunding site, but compared to the likes of Kickstarter and Indiegogo, Patreon is a beast of a different nature. Launch an Indiegogo campaign, and it’s a one-time deal. Once your campaign ends after 30 or 60 days, you get what you get, and that’s that. But with Patreon, your campaign is continuous. It doesn’t end unless you end it. Patrons sign up to support you on a recurring basis (eitherÂ per-month orÂ per-creation), somewhat akin a subscription service. In return, you provide your patrons exclusive content. Founder and musician Jack Conte discussed his motivations in a 2013 article:

âIâm releasing new things on a monthly basis. I have friends releasing material weekly,â Conte said. âTheyâd have to almost invent an excuse to raise money after going on Kickstarter once. Weâre saying, âNo, no. Donât make up a new endeavor. Keep doing what you do best and let people pay you each time you do that.â

Best For…

Those in the business of creation will find Patreon an ideal crowdfunding platform. Game designers, journalists, musicians, comic book artists, and YouTubers are all to be found, though podcasters have had particular success on the platform. From Chapo Trap House to Sam Harris to everything in between, Patreon has been a boon to podcasters.

One thing Patreon has allowed in the past that most crowdfunding sites haven’t is a certain degree of adult content, though that has been changing as of late.

How Does Patreon Work?

These are the terms of using Patreon:

Funding duration is unlimited
Can charge patrons per month OR per creation
5% platform fee
~5% payment processing fee

Patreon Rules

As long as you don’t violate the terms of service (which are more relaxed than those of many competitors), you should be fine.

How To Start A Patreon Campaign

Takeaway

If creation is your business and GoFundMe doesn’t quite fit what you do, Patreon and its innovative brand of continuous rewards crowdfunding provide a means of monetizing your work.

Read our full Patreon review

Visit the Patreon website

FundRazr

FundRazr (see our review) refers to itself as “Canada’s leading crowdfunding platform.” Though that places it well behind the likes of Kickstarter in regards to total money raised, FundRazr distinguishes itself by having an exceptionally good reputation for a crowdfunding site among both donors and campaigners. I had a hard time finding comments from user upset with the product. This is most definitely not the case with most of the competition!

FundRazr hosts a wide variety of personal and charitable crowdfunding campaigns, though they host business campaigns as well (and not just in Canada).

Best For…

Pretty much any business with something to offer backers can make use of FundRazr.

How Does FundRazr Work?

This is what a FundRazr crowdfunding campaign entails:

No mandatory time limit for campaigns
Keep-what-you-raise OR all-or-nothing funding — your choice
5% platform fee
2.9% + $0.30 payment processing fee (per pledge)

FundRazr Rules

FundRazr doesn’t prescreen campaigns, nor does it have any particular bent as to what sort of businesses it favors. And while business campaigns should offer rewards, it isn’t mandatory.

How To Start A FundRazr Campaign

Create an account, fill in the details, and you’re on your way.

Takeaway

FundRazr isn’t the most high-profile crowdfunding service in the business, but its exceptional reputation for treating people well makes it worth considering for the startup in need of funding.

Read our full FundRazr review

Visit the FundRazr website

Fundable

The name resembles FundRazr, but this is a very different platform. Ohio-basedÂ Fundable (see our review) is a crowdfunding platform exclusively for businesses. Fundable hosts both rewards and equity-based funding campaigns. Rather than charge a platform fee to users, Fundable charges a monthly fee of $179 to all campaigners. It’s a system that favors serious startups and early-stage companies over small-time artists and creators.

Fundable has sent $411 million in crowdfunded dollars to businesses thus far. Not too shabby at all.

Best For…

Fundable hosts crowdfunding campaigns for a wide variety of businesses, though tech, food service, and healthcare companies are particularly well-represented.

How Does Fundable Work?

Fundable lets you launch both rewards and equity crowdfunding campaigns, though not both simultaneously. Some businesses start with a rewards campaign and, once successful, use the campaign’s success to demonstrate the product’s viability in the market to investors, thus laying the ground for an equity campaign.

Here’s how Fundable campaigns work:

No mandatory time limit for campaigns
All-or-nothing funding
$179 monthly fee
3.5% + $0.30 payment processing fee (rewards campaigns only)

Given the monthly fee and all-or-nothing funding, if your campaign is unsuccessful, you won’t just have raised nothing — you’ll have spent money in order to raise nothing. Try not to fail!

Fundable Rules

Though just about any business can apply to use Fundable, the company prescreens every campaign profile submitted before allowing it onto the platform. A poorly-resourced startup may have better luck using a site with no barrier to entry, like Indiegogo, to crowdfund.

How To Start A Fundable Campaign

Fill out the online application, submit it, and wait for an answer from the company.

Takeaway

Fundable’s terms and fees make it tough for the little guy, but a startup with high growth potential stands to benefit from the absence of the 5% platform fee many crowdfunding sites impose. After all, if you raise $50K, well, 5% of $50K is a lot more than Fundable’s $179 monthly fee!

Read our full Fundable review:

Visit the Fundable website

Wefunder

Wefunder (see our review) has been an innovator in the equity crowdfunding space. A purely business-oriented crowdfunding platform. Wefunder hosts equity campaigns in which non-accredited investors can invest (this is known as Regulation Crowdfunding). The term “accredited investor” basically just means “rich person,” so by allowing non-accredited investors (i.e. everyone) to invest, you’re casting a wider net in your hunt for investors, so to speak.

Equity crowdfunding with non-accredited investors has only been legal since May 2016, but so far, Wefunder holds 50% of the market share in Regulation Crowdfunding. It’s a new field, but Wefunder has it figured out more than anybody.

Best For…

Wefunder hosts funding campaigns for many different business types (particularly craft breweries), but as equity crowdfunding is harder to pull off for unless your project already has some resources behind it, Wefunder is best for startups whose high-profit potential is apparent to investors. In fact, Wefunder states that of the 174 companies that have hit their funding goal on Wefunder’s site,Â âmost are alumni of Y Combinator.â The cream of the crop, in other words.

How Does Wefunder Work?

Wefunder offers equity crowdfunding under the following terms:

1-year funding limit
All-or-nothing funding
$195 one-time fee
7% platform fee
No payment processing fees (all funds are transferred offline)

The 7% platform fee seems a bit high, but consider that with most crowdfunding sites, an additional 3-5% goes to the payment processor, making that apparent 5% platform fee more like 8-10%. Wefunder doesn’t handle online payments, so there are no processing fees to be paid.

Wefunder Rules

Wefunder allows just about any applying company onto its site. The company doesn’t do the heavy vetting that other equity crowdfunders engage in.Â Wefunder recommends having at least one experienced investor endorse your campaign and set the terms of your raise, but that’s not a requirement.

How To Start A Wefunder Campaign

Just apply online on the website.

Takeaway

Wefunder is one of the few crowdfunding companies with a track record of success in Regulation Crowdfunding. Startups with high growth potential have reason to take a closer look.

Read our full Wefunder review

Visit the Wefunder website

Crowdfunder

The forgettably-namedÂ Crowdfunder (see our review) is unapologetic about being an equity crowdfunding platform for “high-impact ventures” only. Crowdfunder’s equity campaigns are open to accredited investors only, meaning that you’ll be drawing from a smaller, richer, and likely more selective pool of investors than with Wefunder. (Note that the British rewards crowdfunding site named Crowdfunder is an entirely different company)

$160 million in investment commitments have been made via Crowdfunder.

Best For…

Crowdfunder has specific ideas about the identity of its target audience:

Crowdfunder is designed for early-stage startups and more mature businesses raising seed stage, Series-A & Series-B funding. Our offering does not cater to inception stage companies at this time.

Tech, software, and investment companies comprise many of the businesses using Crowdfunder

How Does Crowdfunder Work?

Here are the details of Crowdfunder’s platform:

No mandatory time limit for campaigns
Keep-what-you-raise funding
$449-$749/month subscription fee (depends on your subscription package)
No platform fees or payment processing fees (funds are transferred offline)

Crowdfunder’s monthly subscription fees are high. No getting around it.

Crowdfunder Rules

You can set up a profile for free, but in order to actually start your equity campaign, Crowdfunder will have to approve your plans.

How To Start A Crowdfunder Campaign

Takeaway

If your startup company has boundless potential in the eyes of investors, Crowdfunder is a very intriguing prospect. Though the monthly fees are high, they’ll be worth it in the end if you raise a significant sum, as Crowdfunder campaigns don’t carry a percentage platform fee.

Read our full Crowdfunder review

Visit the Crowdfunder website

Ulule

Headquartered in Paris,Â Ulule (see our review) is one of Europe’s largest rewards crowdfunding platforms. It’s not widely known in the US, but if you’re in North America and your project appeals to the European market, it’s definitely a crowdfunding site to consider.

Ulule distinguishes itself with what it claims is the highest rate of successful campaigns for any crowdfunder: 65%. The company attributes this to its focusÂ on personalized coaching, which it provides to all campaigners. Indeed, Kickstarter’s success rate is approximately half that of Ulule!

Best For…

Any sort of business can campaign on Ulule, though art-related startups seem to do particularly well.

How Does Ulele Work?

Ulule’s crowdfunding campaigns are structured like so:

Campaigns can last up to 90 days (45 is recommended)
All-or-nothing funding
Platform fees: 6.67% of all funds received via creditÂ card, 4.17% of funds received via check or PayPal
~3% payment processing fee

Ulule’s fee structure could stand to be less complex.

Ulele Rules

Launching a Ulule crowdfunding project requires passing two validation stages. Ulule really wants to make sure your plan is solid before letting you loose on the platform. If you are ultimately accepted, you’ll be assigned a “success manager” to help you with every stage of your campaign. Compared to most of the competition, particularly in the rewards crowdfunding space, Ulule is quite hands-on in its approach to campaigners.

How To Start A Ulele Campaign

Write Ulule an essay explaining why you think you’re worthy of their platform and send it to them in the mail.

I kid, I kid. Just apply online.

Takeaway

Ulule does things differently than most of the crowdfunding sites on this side of the pond. More consultation, more guidance. Does this approach jibe with your needs? If your company produces things that have Continental appeal, give Ulule a closer look.

Read our full Ulule review

Visit the Ulule website

Republic

Republic (see our review) is, like Wefunder, a Regulation Crowdfunding platform — an equity crowdfunding outfit open to any and all investors.

Founded by AngelList alumni and considered to be an AngelList spinoff, Republic stands out for its public commitment to social justice. The company’sÂ About page details their intention to help level the playing field when it comes to capital by prioritizing women, minorities, and others who the investing world has historically overlooked.

Best For…

Republic may have egalitarian aspirations, but equity crowdfunding is nonetheless best suited to companies with uniquely high-profit potential.

How Does Republic Work?

Republic’s equity crowdfunding campaigns are structured as follows:

1-year funding limit
All-or-nothing funding
7% platform fee
3.5% payment processing fee for payments made via credit card

Republic Rules

Companies applying to Republic undergo a thorough evaluation before being allowed to raise funds. The following factors will be taken into consideration:

Experience of founders and management team
Products, services, and market
Revenue and growth
Customer base and demographics
Fundraising needs
Offering terms
Business plan
Financial health
Recordkeeping procedures

How To Start A Republic Campaign

Just apply online through the website.

Takeaway

Being an AngelList spinoff, Republic is already making waves in the equity crowdfunding world. Does its idealistic outlook match reality? The years to come should give us our answer. In the meantime, if you run an exceptional startup and you come from a historically-underserved community, Republic wants your attention.

Read our full Republic review

Visit the Republic website

Kiva US

And now for something completely different.

Kiva US (see our review) doesn’t offer rewards crowdfunding or equity crowdfunding. What the heck do they do, then? They offer debt crowdfunding, otherwise known as crowdfunded loans. Kiva US is a nonprofit entity, and the crowdfunded loans it offers carry 0% interest. Not bad, eh? It may be the only platform in which lenders stand to make no profit whatsoever. Kiva’s mission is to open up the lending world to businesses that would otherwise struggle for funding. If you need $10K or less for your business and are willing to wait a bit for your money, Kiva’s crowdfunded loans just might be for you.

Best For…

Absolutely any sort of business can apply for a Kiva US crowdfunded loan.

How Does Kiva US Work?

Here are the details of Kiva’s crowdfunded loans:

Borrowing amount:Â $25 â $10K
Term length:Â 6 â 36 months
0% interest
Time to funding: 1-3 months

Kiva US Rules

The only requirement to receive a Kiva US loan is that you put the money towards business expenses.

How To Apply For A Kiva US Loan

Yes, you apply online, but that’s only the first step to getting a Kiva loan. The entire process is as follows:

Fill out an application online
EnterÂ the approval stage
EnterÂ a 15 day private funding period
Enter a 30 day public funding period
Get funds within 5 â 7 days

The process takes a while — certainly longer than with other lenders — but then again, crowdfunding with rewards/equity is hardly an instantaneous process either.

Takeaway

If you own a business, you need less than ten grand, and you want a loan you won’t have to pay interest on, Kiva US is your only funding option. Assuming you can wait a while before seeing any funds, there’s no reason whatsoever not to give it a shot.

Read our full Kiva US review

Visit the Kiva US website

Final Thoughts

If you find yourself looking for a crowdfunding site with more business-specific features than GoFundMe, the ten companies I’ve mentioned are all solid possibilities, depending on the nature of your business, its potential, and whether you want to offer rewards, equity, or debt payments with interest to your potential backers. Consider what makes sense for your business, then make the jump while you can! Your ideas won’t stay ripe indefinitely. Don’t wait too long!

The post GoFundMe Alternatives: 10 Sites Like GoFundMe For Business Funding appeared first on Merchant Maverick.

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March 13, 2018

The 7 Best Equity Crowdfunding Sites For Businesses And Entrepreneurs

So, what is equity crowdfunding, anyway?

Let’s start with the term “crowdfunding.” If you’re only loosely familiar with the concept, you might think of GoFundMe’s brand of medical and charitable crowdfunding. You may also think of rewards-based crowdfunding platforms like Kickstarter and Patreon in which entrepreneurs and artists solicit funds from backers in exchange for a physical product or exclusive creative content.

What if I told you that there existed an entirely different form of crowdfunding — one in which entrepreneurs and startups receive funding from backers in exchange, not for gifts or products, but for an equity stake in the company?Â A crowdfunding campaign in which the backers are investors?

Equity-basedÂ crowdfunding got its start later than rewards crowdfunding because crowdfunding involving investments was, until relatively recently, illegal in the US. Enter theÂ Jumpstart Our Business Startups Act, better known as the JOBS Act. Passed by Congress and signed into law by President Obama in 2012, the JOBS Act amended federal securities regulations to legalize equity crowdfunding. The reasoning was that allowing startups to publicly solicitÂ investment via crowdfunding would help spur the economy in generalÂ and startup formation in particular.

The various portions of the Act, however, did not immediately come into force. For instance, the provision that allowed the offering of equity investment to non-accredited investors (more on what this means later) wasn’t actually enacted until 2016. Suffice to say, equity crowdfunding is new. In fact, the reality of equity crowdfunding hasn’t yet lived up toÂ the loftier predictions of those who pushed its creation. Nonetheless, the fact remains that billions of dollars have been raised by startups and companies via equity crowdfunding. For the right kind of business, equity crowdfunding represents a prime opportunity.

If your company is still just getting off the ground, however, you might find that rewards crowdfunding is a better fit for your enterprise, considering that investors tend to be less starry-eyed than the typical crowdfunding project backer. In this case, you might want to read our reviews of Kickstarter, Indiegogo, and Patreon. Bear in mind that in many cases, a successful rewards crowdfunding campaign can set you up for an equity crowdfunding campaign by showing proof of demand to potential investors.

Let’s take a look at the leading equity crowdfunding sites and what they have to offer growingÂ businesses.

But First, A Warning

Let’s pump the brakes for a moment and go over the disclaimer I’ve started putting on my equity crowdfunding reviews:

Bear in mind that equity crowdfunding is a still-evolving field, with the full impact of the JOBS Act still being assessed. Equity crowdfunding is a more complex proposition than, say, rewards-based crowdfunding, as investing is much more substantially regulated. Consult an attorney if you have any legal questions regarding the process, SEC regulations, etc.

In short: Equity crowdfunding is legallyÂ complex. Be careful and don’t get into trouble!

Crowdfunder

Crowdfunder (see our review) was launched in Los Angeles in 2012 with a mission to, in the company’s own words, “empower thousands of entrepreneurs to grow high-impact ventures.” The company provides the following figures regarding equity funding services:

$160,000,000 in investment commitments on the platform
12,000 individual & institutional investors
36,000 companies
Funded 100+ deals with an average deal size of $1.8M

Let’s take a closer look at the equity crowdfunding platform with the hopelessly generic name. (The company shares its name with an unrelated British rewards crowdfunding site.)

Best For…

Crowdfunder is very explicit regarding its target audience:

Crowdfunder is designed for early-stage startups and more mature businesses raising seed stage, Series-A & Series-B funding. Our offering does not cater to inception stage companies at this time.

The platform accepts businesses that fall into a variety of categories including Tech Startups, Social Enterprises, Small Businesses, and Film & Entertainment.

A look through the companies currently campaigning on Crowdfunder reveals more tech companies than anything else, with financial/investment companies a close second.

Products Offered

Crowdfunder allows companies to raise money via Title II equity crowdfunding. For those who aren’t familiar with what I mean, here’s a brief explainer.

Title II equity crowdfunding essentially means your crowdfunding campaign can solicit investment from accredited investors only. An “accredited investor” is defined someone who either has a net worth of $1,000,000 minus the value of their principal residence OR who made more than $200,000 a year for the past three years. The term simply refers to someone with a certain level of wealth/income — it does not denote any particular investment skill.

Title III equity crowdfunding, or Regulation Crowdfunding,Â means you can solicit investment from anybody — both from accredited investors and those who are not. Title III crowdfunding was legalized more recently than Title II crowdfunding and is currently less widely used. On its website, Crowdfunder explains why it does not currently allow Title III crowdfunding.

With Crowdfunder, all funds are transferred offline, so Crowdfunder doesn’t take a percentage cut of what you raise. And while it won’t cost you anything to create a (non-public) profile on the platform, you’ll need a monthly subscription in order to launch your equity campaign.

Crowdfunder’s Starter package, for $299/month,Â lets you take your profile public and start raising money.
The Premium plan, at $499/month,Â gives you the above while letting you browse and contact the accredited investors on Crowdfunder’s platform. You also get advanced data/metrics and up to one hour per month of phone support.

I’ll note that in addition to equity-based crowdfunding, Crowdfunder lets you raise money via debt, convertible note, or revenue share offerings. Furthermore, Crowdfunder’s funding campaigns are keep-what-you-raise — you don’t have to hit a specific funding goal to collect funds.

Requirements

Anyone can set up a profile on Crowdfunder’s website, but in order to launch your campaign, you’ll have to prepare and submit three documents:Â the Term Sheet, the Executive Summary, and the Investor Pitch Deck. These documents are complex, particularly the Term Sheet. Crowdfunder recommends that you work with an attorneyÂ when creating your financial offering.

Of course, you’ll also need to buy a monthly subscription before raising funds.

How To Apply

Anyone can set up a profile on Crowdfunder and submit the documents required for taking your campaign public. However, upon reviewing your documents, it’s up to Crowdfunder’s sole discretion to determine whether your business is “high-impact” enough for their platform.

Takeaway

Startups with boundless growth potential, particularly tech and investment startups, stand to potentially raise significant sums through Crowdfunder’s equity crowdfunding platform. While the monthly fees are high, they’ll be worth it if your campaign is successful, as Crowdfunder doesn’t charge a platform fee.

Read our full Crowdfunder review

Visit the Crowdfunder website

EquityNet

Like Crowdfunder, EquityNet (see our review) is an equity crowdfunding site that doesn’t process transactions itself, but rather facilitates offline transactions between campaigners and investors. Founded in Fayetteville, Arkansas in the pre-crowdfunding days of 2005 as a private investment company, EquityNet started offering equity crowdfunding after the enactment of Title II of the JOBS Act.

Best For…

EquityNet markets itself to a broader range of entrepreneurs and businesses than does Crowdfunder. EquityNet states in its FAQ that they are not just a platform for high-tech and high-growth businesses:

EquityNet is designed with flexibility to accommodateÂ all ranges of private businesses, whether it’s an $100M/yr in revenue international biotech company, a pre-revenue one person software start-up, or a modest one-location coffee shop.

Products Offered

EquityNet offers entrepreneurs and businesses the ability to use its equity crowdfunding platform. EquityNet’s equity campaigns operate under Title II rules, so you’ll be raising funds from accredited investors only. You’ll also get to keep everything you raise regardless of whether you hit your funding goal.

Since all funds are transferred offline, EquityNet doesn’t take a cut of what you raise. Instead, EquityNet operates on a subscription basis. You can actually sign up with EquityNet and publish your business profile for free, but if you want to, say, share your business plan with investors (investors typically like to see a business plan before investing in something!), you’ll need one of EquityNet’s three subscription plans.

The Full Access package goes for a one-time fee of $900Â and gives you full access to the accredited investors on the site. You’ll also get full access to fundraising documents and EquityNet’s patented business planning tools.
The Premium Consulting package goes for $2,500 and gives you all of the above, plus access to one-on-one consultations with an EquityNet team member regarding every aspect of your business plan, funding strategy, pitch, marketing, and more.
The EquityNet + plan costs a whopping $25,000 and gives you the ultimate hands-on equity crowdfunding package in which the company tailors everything to your exact needs.

Also note that since all transactions between entrepreneurs and investors occur offline, you can theoretically enter into a debt funding arrangement with an investor or even seek a grant. It’s up to you.

Requirements

Anyone can freely set up a business profile page on EquityNet. However, EquityNet reserves the right to remove profiles for any reason.

Of course, you’ll need a paid subscription if you want to run an equity funding campaign with any likelihood of success.

How To Apply

Just sign up with EquityNet and set up your profile. EquityNet does not pre-screen businesses before allowing them onto the site.

Takeaway

The folks at EquityNet make a point to try to attract a broad range of businesses to their platform. It’s not just for Silicon Valley tech startups and investment funds. And while the premium services cost a pretty penny, they come with one-time charges, not monthly charges. EquityNet is one of the less elitist equity crowdfunding sites out there, and to that, I’ll tip my cap.

Read our full EquityNet review

Visit the EquityNet website

Fundable

Founded in 2012 and based in Ohio, Fundable (see our review) is an unusual crowdfunding site in it hosts host both rewards and equity crowdfunding campaigns (though not both simultaneously). Think of it as both a Kickstarter-type platform and an equity crowdfunder. Given the subject of this article, however, I’ll be focusing on the equity side.

Best For…

You can raise funds for just about any type of business endeavor on Fundable. When it comes to choosing a rewards campaign or an equity funding campaign, Fundable states that rewards campaignsÂ “are effective for smaller dollar raises (typically below $50,000)” and goes on to describe the target audience for its equity campaigns:

Equity raises are best for companies looking for larger sums of operating capital to move their business forward. Also, some businesses do not have a developed product or service that they can market through a Rewards raise, so offering equity is their best bet for raising funding.

Products Offered

Fundable is another crowdfunding platform that doesn’t take a percentage of what you raise, but rather charges a flat monthly fee to launch a campaign. Fundable offers two subscription packages:

The Standard package costs $179/month and gives you data analytics, email support, a guide for marketing your crowdfunding campaign, and marketing outreach templates.
The Premium package is available for a one-time payment of $2499. With this package, Fundable puts you in contact with the accredited investors the company believes will be the most receptive to your pitch. Fundable will also provide a list of relevant media contacts so you can better conduct media outreach for your campaign.

As with the previous two companies discussed, all funds transferred in a Fundable equity campaign are transferred offline. You are therefore free to seek a debt-based funding arrangement (or any other type of funding arrangement).

Requirements

Once you set up your Company Profile in which you detail your company, your proposed campaign, and your funding goals, you’ll have to wait for Fundable to approve your project before you can continue. If you’re approved, you then choose which type of crowdfunding campaign you’d like to run and a subscription package.

How To Apply

Go to Fundable’s website and get started!

Takeaway

Fundable is a flexible crowdfunding platform in terms of what sort of campaign you can launch through the site, and they provide invaluable assistance with media outreach, marketing, and investor contacts at the highest subscription level. Fundable does pre-screen businesses before allowing them to begin fundraising, however, so make sure you have everything in order before you begin the process.

Read our full Fundable review

Visit the Fundable website

AngelList

Founded in 2010 in San Francisco, AngelList is one of the leading equity crowdfunding platforms. It’s the only crowdfunding site that doubles as a job board for job-seekers trying to find a position with a startup. AngelList distinguishes itself by being the rare crowdfunding platform that lets entrepreneurs/startups raise money free of charge. All fees are paid by investors. Pretty cool, huh?

Best For…

Anybody can sign up with AngelList and attempt to raise money from the accredited investors on the site. However, AngelList doesn’t quite provide the guidance for those looking to crowdfund that many other crowdfunding platforms give you. Their website is much more spartan than the competition, with relatively little information for startups as to how you launch your campaign. Be prepared to do some research.

Products Offered

AngelList doesn’t offer any subscription packages with special features. You just sign up with AngelList on the website, and once you’ve completed your profile, you can launch your Title II crowdfunding campaign and get in touch with accredited investors.

Companies using AngelList raise money through investment syndicates. It’s an investment arrangement that differs from that of the other crowdfunding sites I’ve detailed today. Essentially, accredited investors give money to “angel” investors who then invest the pooled money into companies on the platform.

Keep in mind that though you won’t have to pay a monthly charge or a cut of what you raise to AngelList, that doesn’t mean there are no costs associated with running an equity campaign. The process of arranging an equity deal with investor syndicates on AngelList will cost you money due to paperwork, legalities, etc.

Requirements

There are no particular requirements for a company looking to establish a profile on AngelList. Of course, in order to actually raise any money, your plan of action must be formidable enough for AngelList’s syndicates to take an interest in you, so this platform isn’t for just anybody.

How To Apply

Create a startup profile on AngelList’s website and start kissing angel investor butt! (Or use any other technique you find effective)

Takeaway

AngelList is a more freewheeling platform than some of the others discussed here, and the complexities involved in working out deals with investor syndicates may seem daunting to the first-time entrepreneur. However, AngelList has an excellent public reputation and is highly rated by those who have used the platform to conduct equity raises, many of whom have used multiple equityÂ crowdfunding sites.

Visit the AngelList website

WeFunder

WeFunder (see our review) differs fundamentally from the other services I’ve mentioned. Every site I’ve mentioned thus far deals in Title II crowdfunding (accredited investors only) and not Title III (anyone can invest). Wefunder, founded in 2012 and based in Cambridge, MA, is the most successful crowdfunding platform to use Title III equity crowdfunding, or Regulation Crowdfunding. In fact, with over $50 million raised thus far, Wefunder comprises 50% of the market share in the Regulation Crowdfunding industry.

Best For…

Of the 174 companies that have been successfully funded through Wefunder, the company states that “Most are alumni of Y Combinator.” That should tell you something about the sort of company to whom Wefunder is best suited. The rare startup with exponential growth potential stands a decent chance of finding funding through the platform. Other businesses may have a tougher time of it. I’ll note that tech and food companies seem to comprise the majority of funded startups on Wefunder.

OnlyÂ USÂ corporations and LLCs can use Wefunder for crowdfunding.

Products Offered

Wefunder offers the use of its equity crowdfunding platform through which you can raise anywhere fromÂ $20,000 to $1,070,000. You’ll have to pay a $195 fee before you can start crowdfunding, and if you’re successful in reaching your funding goal (Wefunder is an all-or-nothing crowdfunding site), Wefunder will take 7% of what you raised as a platform fee. Take that into account when setting your funding goal.

Requirements

There are no particular requirements for joining Wefunder. The company prescreens applicants for fraud and to make sure your startup complies with the rules, but that’s about it.

How To Apply

Go to Wefunder’s website, sign up and fill out your business profile, and wait to hear back from the company.

Takeaway

Wefunder is the industry leader in Regulation Crowdfunding and can take the right kind of high-growth startup to funding success. Regulation Crowdfunding hasn’t yet been the boon some hoped it would be, but Wefunder is one of the few companies thus far to truly make it work.

Read our full Wefunder review

Visit the Wefunder website

SeedInvest

SeedInvest (see our review) was founded in 2012 just as the JOBS Act was being signed into law. In fact, foundersÂ Ryan Feit and James Han were part of the movement to get the Act passed in the first place. Like Wefunder, they offer Regulation Crowdfunding, opening up investing to the masses.

Best For…

By their own estimation, SeedInvest has approved only 1% of the companies who have applied to use their platform. SeedInvest is an exclusive platform and they don’t care who knows it. Tech companies seem to dominate the list of offerings on SeedInvest’s site.

I’ll note that while many crowdfunding sites refuse to have anything to do with cannabis-related companies, SeedInvest appears not to be one of them. “Green” startups, take note!

Products Offered

Wefunder offers up the use of its equity crowdfunding platform to the lucky few who survive the vetting process. Per the FAQ, this is what SeedInvest offers to those who get through:

Simplify and speed up your fundraising process
Access a network of accredited investors from around the world
Host virtual fundraising sessions from your desk
Streamline investor pitches, execution of legal documents, and processing of investments

Unfortunately, SeedInvest’s fees are complex andÂ depend on your specific offering type:

7.5% placement fee; charged on the total amount raised on SeedInvest in the round, paid only upon the successful completion of your offering.
5% warrant coverage or equity; based on the total amount raised on SeedInvest in the round.
Up to $0 â $10,000Â in due diligence, escrow, marketing and legal expense reimbursements.

Though the fees are considerable, one advantage of SeedInvest is that you can raise up to $30 million on the platform.

Requirements

SeedInvest doesn’t lay out specific criteria for making it onto its site, but remember that only 1% of applicants survive SeedInvest’s extreme vetting process. You’d better have done your homework!

How To Apply

Go to SeedInvest’s website, sign up for an account, fill out your project information, and wait to see if you’ll be accepted into the 1%.

Takeaway

To state the obvious, SeedInvest isn’t for everybody. Only the startups with the highest growth potential need apply. If this is you, SeedInvest may be worth investigating.

Read our full SeedInvest review

Visit the SeedInvest website

MicroVentures

Founded in 2009 and based in Austin, MicroVentures (see our review) is another example of a Regulation Crowdfunding platform. You should know what that is by now if you’ve been paying attention!

MicroVentures states thatÂ â(t)he sweet spot for our platform is companies or startups that need $150,000 to $1,000,000 in capital.â Thus far in their lifetime, MicroVentures has facilitated the raising of over $100 million for high-growth startups. Let’s take a closer look at them.

Best For…

According to MicroVentures, the following industries are its main areas of investment:

Internet technology
Media and entertainment
Software
Green technology
Mobile
Social
Gaming

MicroVentures goes on to describe the sort of company that best fits the platform:

MicroVentures looks for businesses that have a unique idea or a new spin on an old technology. We review the team, traction, market size and other factors to determine if the company will be a good fit for our platform. Additionally, we believe in accountability to the business (or concept), which is one reason we seek to identify firms whose founders already have invested their own capital in their business.

Products Offered

MicroVentures offers equity crowdfunding with the following fees:

$99 application fee
$250 due-diligence fee
5% of what you raise

MicroVentures is an all-or-nothing crowdfunding site. If you raise some money but fail to meet your funding goal by the time your campaign ends, you’ll get nothing and like it.

Requirements

MicroVentures doesn’t spell out any specific requirements to meet in order to be approved to start crowdfunding, but they do state the following:

We review every company that is submitted but we are only able to respond to the ones that we think will be successful on our platform. This is less than 5% of the companies that submit so please include as much detail as possible for us to evaluate.

So, 5% of applying businesses get through. That’s better than SeedInvest’s 1%, but it’s still a high bar to clear!

How To Apply

Takeaway

MicroVentures has a solid reputation in the industry. They offered investments in Facebook and Twitter before each went public. For the 5% of startups that, in MicroVentures’s estimation, have that kind of growth potential, this equity funding site holds great promise indeed.

Read our full MicroVentures review

Visit the MicroVentures website

Final Thoughts

Equity crowdfunding has only been around for a few years. Suffice to say, it is a work in progress. If you play your cards right, however, it might be just the thing to take your startup to the next level. If you’ve done your due diligence in preparing your offering and you possess the ability to excite investors, professional and amateur, then it’s certainly an avenue worth exploring.

The post The 7 Best Equity Crowdfunding Sites For Businesses And Entrepreneurs appeared first on Merchant Maverick.

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Why Financing Can Be Hard For Entrepreneurs To Find (& Why That Shouldn’t Stop You Anyway)

6 Types Of Financing For Entrepreneurs

1) Venture Capital

Pros

Cons

2) Angel Investors

Pros

Cons

3) Debt Financing

Pros

Cons

4) Bootstrapping

Pros

Cons

5) Crowdfunding

Pros

Cons

6) Grants & Subsidies

Pros

Cons

Entrepreneur Financing Tips From The Experts

Make Sure You Really Want Angel Investment

Believe In Your Vision

Getting A VC Firm’s Attention Is Part Of The Interview

Understand The Motivations Of Your Potential Investors

Get Started On Your Entrepreneur Financing Journey

How Venture Capital Works

When You Should Look For Alternatives To Venture Capital

8 Venture Capital Alternatives

1) Grants

2) Crowdfunding

3) SBA Loans

4) Online Business Loans

5) CDFI Loans

6) Personal Loans

7) Vendor Financing

8) Friends & Family

Your Best VC Alternative Offers Funding That Works With Your Terms

1) Be The Point Person Of Your Campaign

2) Research Past Kickstarter Campaigns Similar To Yours

3) Come Up With A Good Business Plan For Your Kickstarter Campaign

4) Record A Professional Video & Post It

5) Recruit Backers From Your Network Prior To Launch

6) Use The Data In The Project Dashboard To Your Advantage

7) Stay In Touch With Your Backers

8) Don’t Be Afraid To Run An Ad Campaign

9) Make Sure Your Funding Goal Is Realistic

10) Don’t Go Overboard With The Reward Levels

11) Don’t Try To Do Everything Yourself

Report Back: How Did You Find Success Using Kickstarter For Your Business?

Personal Loans

Upstart

Lending Club

Prosper

SoFi

Lines Of Credit

StreetShares

BlueVine

Invoice Factoring

Fundbox

Riviera Finance

P2P Loans

Microloans

Kiva U.S.

Accion

Crowdfunding

Kickstarter

Indiegogo

Patreon

Final Thoughts

1) Make Sure Your Business Is Right For GoFundMe

2) Develop A Business Plan & A Realistic Funding Goal

3) Offer Multiple Reward Tiers

4) Refine Your Campaign Pitch

5) Seek Support From Friends & Family Before Launch

6) Market Your Campaign Via Social Media & Email

7) Keep Everybody Updated After Your Campaign Launches

8) Stay Engaged With Your Backers Post-Campaign

Final Thoughts

1) PeerStreet<img class="alignright size-medium wp-image-45667" src="https://shopping-cart-reviews.com/wp-content/uploads/sites/6/2018/03/10-great-real-estate-crowdfunding-platforms-for-businesses.png" alt="crowdfunding real estate" width="300" height="46" />

1) PeerStreet

2) RealtyShares

3) RealtyMogul

4) MinnowCFunding

5) AlphaFlow

6) Fundrise

7) Patch Of Land

8) GroundFloor

9) EQUITYMULTIPLE

10) Small Change

Kickstarter

Indiegogo

Patreon

FundRazr

Fundable

Wefunder

Crowdfunder

Ulule

Republic

Kiva US