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Short link http://bit.ly/cfunding
Crowdsourced funding was popularized in 2006 when Sellaband launched to help bands raise money from their fans to produce CDs.
Don't have a rich uncle? Not ready for angels? Try crowdsourced funding for marketing your company or project to Internet users, friends & family, and your social network, and aggregating small investments. The payback varies by offerer and site. Sometimes it's just karma, often for social or creative efforts. Sometimes it's recognition. Sometimes it's a share of revenues or a loan for commercial endeavors. Soon it will be for direct stock in a company.
The U.S. SEC regulates the offering of corporate securities. If you're using a crowdfunding site, it's best to use it for donations or benefits that aren't stock. In May 2012 the U.S. Congress passed the Jobs Act, which enabled U.S. companies to market and sell up to $1 million in stock to non-accredited investors. The SEC however still has not finalized regulations for crowdfunding sites. However companies can raise money on their own. Speak to your attorney to learn more.
These angel investment sites are for accredited investors only (a minimum of $1 million is assets or $200K annual earnings.)
These non-US sites are generally not suitable for US companies raising money.
Crowdsourced or Micro Loan sites are midway between equity and donation services. They provide the promise of a payback but with the high risk that a company might fail and without the upside of stock. The track record of such sites has generally been good with low default rates. Debt sites are more commonly used in the following situations:
Sites:
These sites take a cut of sales, owning not your equity, but a share of your product revenues.
Older crowdfunding sites don't (yet) give buyers equity. Startups can offer anything else, such as product (essentially payment in advance), recognition, special access, or nothing (pure donation).
5% fees, floor, must have US bank account. Kickstarter is the king of crowdfunding BUT it's for projects only, not companies. "Kickstarter is for projects that can be completed, not things that require maintenance to exist. This means no e-commerce sites, web businesses, or social networking sites." If you're raising money for a business, try one of the other sites here.
Kickstarter users pledged $99 million to projects in 2011, 10% of all US seed investment estimated by PricewaterhouseCoopers at $920 million. The company has distributed over $150 million since its launch in 2009. 54% of projects failed to reach their funding target.
There are dozens of crowdfunding sites. These in particular are generally friendly to business fundraising.
The following sites are oriented to individual or group project. They generally are not suitable for business fundraising.