• Finance

9 ways to choose your own crowdfunding adventure

No doubt by now, you have heard of crowdfunding. Whether it be for start-ups that need a little extra capital to get the ball rolling, or people who have been burned by Uber’s surge prices, crowdfunding is a pretty interesting model for raising money, and it looks like it is here to stay.

There are three basic models of crowdfunding: reward-based crowdfunding, equity-based crowdfunding, and credit-based crowdfunding.

Reward-Based Crowdfunding

What is it?

Businesses and individuals pre-sell a product or service to launch a business venture (or make the world’s most expensive potato salad), without accumulating any debt or losing equity. In this model fundraisers offer incentives for donations -- higher donations equals bigger rewards.

Who's doing it?

IndieGoGo offers both flexible and fixed funding. Flexible funding allows people to keep what they’ve earned, while fixed funding is an all-or-nothing approach in which contributors will be refunded their donation if the goal is not met.

Kickstarter is entirely an all-or-nothing platform that only funds creative projects where one specific thing will be created (ie, a product, film, book, etc…)

Rockethub allows you to keep the funds you raise and boasts low fees and fast payouts for projects related to science, business, art, and social good.

Equity-Based Crowdfunding

What is it?

This model of crowdfunding allows individuals to invest in a company that is not listed on the stock market in exchange for shares (or equity) in the company.

Who's doing it?

Crowdfunder enables companies to raise money in exchange for revenue shares, equity, or convertible notes. Tech startups, small businesses, social enterprises, and entertainment (such as films) are the types of companies that are eligible through this platform.

Onevest is an investment platform that connects vetted startups that meet a certain criteria to investors that can invest in exchange for convertible notes and stocks.

Fundable can be either a reward-based platform, or an equity-based platform (but not both at the same time) and is an all-or-nothing fundraising model.

Credit-Based Crowdfunding

What is it?

Credit-based crowdfunding allows investors to loan money to borrowers at typically a lower cost than traditional bank loans and credit cards.

Who's doing it?

Lending Club says it’s the #1 credit marketplace that offers both personal and business loans. This platform allows creditworthy borrowers lower interest rates than traditional bank loans, as well as better returns for investors.

WeFinance is a great and easy peer-to-peer lending site that matches people with debt to people with savings. You can lend and borrow within your established network of connections or with private lenders. The borrower is allowed to set their own interest rate and loan terms as well.

Prosper allows borrowers to choose from a range of loan amount and terms depending on their prosper rating and loan amount. Once the loan has been listed investors can review listings and invest in ones that meet their criteria.

Freelancers, have you ever used a crowdfunding platform for business expenses?

Ashlee Christian is from the north-side of Chicago and will never stop saying "pop" or eating pizza with a fork and knife, so please stop trying to change her. Follow her on Twitter @nomadnation