Crowdfunding is a new way for entrepreneurs, inventors and anyone with a business idea to raise finance to launch their new business.

Although there are many types of crowdfunding investments such as reward-based, equity based or donation based, the core principles are the essentially the same. Unlike traditional venture capital or seed funding, where a single investor provides funding in return for a large share of equity, crowdfunding involves raising relatively smaller amounts from a vast group of individuals.

How Does Crowdfunding Work?

The typical fund-raising process in crowdfunding  is as follows:

Step 1: You sign-up to a crowdfunding platform and submit your pitch for free .

Step 2:  A large group of individual  investors will review your project and invest relatively small amounts if they like your business idea.

Step 3: When deadline is reached, the funds will be transferred to you so you can use it to launch your business.

Some crowdfunding platforms follow an “All or Nothing” model” where it is mandatory to reach your funding goals. If your funding goal is not reached, money raised is returned back to the investor. While others follow a “Keep in All” model where you get to keep whatever is raised irrespective of whether your funding goal is reached or not.

Here are ten crowdfunding platforms that you can use to raise funds and finance your new business idea:

1. Kickstarter.com

Kickstarter is one of the most popular global crowdfunding websites to raise money for your new business venture. It is a great way to get  noticed online by investors.

Kickstarter is the most established platform for funding creative projects and  the site raised $100 Million in pledges in 2011 alone.  Using Kickstarter maximizes the odds of funding your project.

2. Funded By Me

Funded By Me is a successful Nordic platform for crowdfunding that offers reward based and equity based investments in new startup business ventures.

The main aim of the website is to address the frustration in raising funds experienced by entrepreneurs, creative people and enthusiasts when attempting to launch their new business idea.

3. Apps Funder

This is designed specially for App builders or those with an idea for an app. It is a great way to fund the development of your apps. You Keep 100% ownership of your app.

Commissions and Fees:

• Project listing is FREE!
• 8% on the collected funds per milestone, only if successfully funded.

4. EarlyShares

EarlyShares is a premier Equity Based Crowdfunding platform. EarlyShares was named the #1 Equity Based Crowdfunding platform by Worth Magazine.

The website connects entrepreneurs and investors securely and effectively. It provides entrepreneurs with access to capital, while delivering quality deal-flow to investors. Funds will be disbursed to the Issuer after the Project raise is complete only if the target funding amount is raised. 4. Crowdfunder

Commissions and Fees:

• Fee yet to be published on the website

5. Indegogo

Indiegogo is a crowdfunding platform where people who want to raise money can create fundraising campaigns to tell their story and get the word out.

There are two funding types to choose from. You can choose Flexible Funding and keep the money you raise, regardless of whether you meet your goal. Or, you can choose Fixed Funding, which refunds the money back to your contributors if you don’t meet your goal.Its good for non-profits who get special discount on fees.

Commissions and Fees:

• Free to list your project
• 4% if You reach your goal
• 9% if You don’t reach your goal
• Plus Third party fee of 3% for credit card processing.

6. InvestedIn

InvestedIn is a fundraising portal for businesses and charities. It is Available for any country and in any language. It is more than just a place to find investors. It allows you to create a fully customizable whitelabeled fundraising page for your idea with all features needed to raise funds.

Commissions and Fees:

You will be charged 3% fee When you make a withdrawal. Additionally.  plus standard credit card transaction fees.

7. Kiss Kiss Bank Bank

Here hundreds of creative or innovative projects receive the help of thousands of contributors. KissKissBankBank is a community platform for funding projects, designed for filmmakers, musicians, designers, developers, illustrators, explorers, writers, journalists. You must reach or outreach 100% of the goal of your campaign to receive the contributions pledged to your project.

Commissions and Fees:

A total 8% fees applies on successful projects. This includes 5% commission charged by KissKissBankBank plus  3% transaction fees for secured banking transactions.

8. RocketHub

RocketHub is an international and open community that has helped thousands of artists, scientists, entrepreneurs, and philanthropists raise millions of dollars.

Commissions and Fees:

• It’s free to start.
• RocketHub charges 4% of the money you raise, if you reach your financial goal or 8% If you do not reach your financial goal plus 4% Transaction Fee

9. We Fund

Wefund is an online fund raising platform. Wefund connects project creators with potential financial backers allowing Creators to raise money for projects by collecting pledges online.

If the target is not hit or exceeded in the timeframe, all the pledges and authorisations are automatically cancelled.

Commissions and Fees:

Wefund charges 5% commission. Additionally PayPal’s transaction fees apply which is (20 pence in the UK) and  a  variable percentage fee, ranging from 1.4% to 3.4%.

10. Sponsume

Sponsume allows you to show your project to the world, gather support and raise the funds you need. It is a funding platform where creative people sell perks and rewards to fans in order to fund their project.

Sponsume is open to all creative and innovative ventures, big or small, in a wide variety of areas: film, theatre, photography, dance, social enterprise, new technologies, gaming, transmedia, fashion, sport, festivals, music, journalism, gastronomy, animation, publishing…

Creators can choose to fund their project in any of the 21 currencies available. You do not need to reach a target to access your funds.You get to keep all the funds you raise.

Commissions and Fees:

It’s free to apply and publish a project on Sponsume! And we do not charge project backers. You are only charged 4% of the amount raised if and when a project reaches their funding target.

Conclusion:

The ability to raise funding for your new business venture is very important if you want your business to succeed online. You can take advantage of the crowdfunding platforms listed above to finance your new business.

Do you run a small business? How did you raise finance to start your business? We would like to hear from you.  Perhaps you would like to suggest a new crowdfunding platform for this list. Please share your response by leaving a comment below.