Platforms dedicated to alternative funding have grown and established themselves as a serious contender for companies wishing to raise money.
The $16 billion dollar amounts startups and SMEs are now raising via Crowdfunding platforms has emerged from a few innovative platforms to a wider range often specialising in sectors or startup stage. Companies can promote their fundraising campaign on one platform, and engage with multiple investors anywhere in the world.
The main types of crowdfunding platforms are as follows. Glomodus has established expertise and relationships that allow us to provide services to help you manage your crowdfunding journey.
|Rewards-based crowdfunding||Donations are given to ideas, projects or ventures with the expectation of future reward in the form of a good or service or community benefit. All-or-nothing campaign rules often are applied to mitigate the risk of project failure.||Kickstarter|
|Equity crowdfunding |
(Seed & Growth)
|Funds are treated as investments, with ownership of equity given in proportion to the value of the business. Investors can have a wide range of backgrounds and net worth and are often incentivised by tax breaks.||SeedInvest|
|Peer-to-peer lending||Investor funds are aggregated and lent out directly to companies on agreed market rates and terms. Borrowers pay back interest and capital to the lenders as they would for a bank loan.||Fundable|
|Debt securities crowdfunding||Other types of debts such as bonds that already have established international markets for publicly listed companies are being replicated in the form of mini-bonds and made available to public investors.||Crowdcube|
|Revenue / profit / license share||Further innovative ways emerging, including platforms that focus on the revenue potential of ventures or opportunities to license rights of assets, providing an alternative income stream from investors.||Wefunder|
|Hybrid||Platforms have leveraged their market position to offer a wide range of services, involving a combination of the above funding instruments.|
Regional and Sector Specialists
The emergence of new Regulations and tax rules in different countries and regions has meant that Crowdfunding platforms have had to develop expertise in each local market. The rules cover both investors and companies wishing to raise funds, offering varying degrees of protection and incentives. For example, US JOBS ACT outlines very clear rules for raising funds at different amounts and frequencies, with limits on the types of investors they can allow.
For global companies and products, this requires a clear strategy to be thought through to maximise chances of completing a Crowdfunding campaign successfully, and ensure there’s no roadblock to future growth or funding plans.