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Find Investors Nov 25, 2019 4 min read

Top 7 Best Crowdfunding Platforms for Startups

Noelle
Noelle Baquiche

We asked founders who’d recently closed angel and VC funding on SeedLegals for their recommendations of the best crowdfunding platforms for startups. Here are their top picks for both 1) rewards based and 2) equity crowdfunding:

 

Rewards crowdfunding platforms


1. Kickstarter

kickstarter.com

Size of campaigns: over $500 (£415) and up to a record of over $20m (£16.6m) by the smartwatch Pebble Time.

Choose it if: you want to benefit from the bigger community and brand recognition for your international campaign.

  • The king of the crowdfunding platforms is only 10 years old.
  • In this time they have funded over 160.000 campaigns.
  • Only ‘all-or-nothing’ campaigns – you need to reach your objective to receive the funds pledged.
  • The platform is quite strict in the projects they accept, requiring working prototypes and new to market products and services.
  • Their fees are 5% plus transaction fees.
  • Being a B-corp, they tend to promote the artistic and community projects.
  • But the main categories by money raised on the platform are Games, Design and Technology.
  • Due to the sheer amount of live projects (over 3.5k at any time), they do not offer personalised support.
  • The success rate of the campaigns launched on Kickstarter is of around 37%.
  • The key to success is an engaged community that gives great momentum to the raise.


2. Indiegogo

indiegogo.com

Size of campaigns: over $500 (£415) and up to a record of over $13m (£110.8m) by the bee hive box Flow Hive.

Choose it if: you want to benefit from ‘flexible funding’ modality or the other marketing services offered by the platform.

  • As the second mover, Indiegogo tends to be more innovative in their approach and flexible on the projects they will accept when compared to Kicsktarter.
  • The modality ‘Flexible funding’ allows you can still keep any money pledged, even if you don’t reach your objective.
  • Their fees are 5% plus transaction fees.
  • Similarly to Kickstarter, the most popular categories are Technology and Games.
  • They allow deeper integration with your Google Analytics to monitor key metrics of the campaign.
  • They offer pre-campaign packages to promote your project with their existing community
  • Indiegogo InDemand allows you to continue selling your product after the campaign has closed.
  • Indiegogo does not publish success rates but third party sources cite numbers lower than Kickstarter, probably due to a less stringent ‘due diligence’ in the first place.


3. Crowdfunder.co.uk

crowdfunder.co.uk

Size of campaigns: from £500 to over £100k

Choose it if: you’re running a UK based campaign and/or want to benefit from the multiple match funding opportunities that the platform offers. Also if you want to benefit from their more personal approach.

  • The Cornwall based crowdfunding platform has a community and charity slant, but will also accept for-profit projects.
  • It has lower fees than their american counterparts, at 3% plus transaction fees.
  • For community projects, there are multiple match funding opportunities that will top up nicely the money you’ve raised from your crowd.
  • Being a smaller platform, their Fundraising Coaches are more available to support the bigger raises.


4. Patreon

patreon.com

Size of campaigns: no minimum. The current highest earning creator at the time of writing was ‘El Chapo Traphouse’, raising $137k/month (£114k/month).

Choose it if: you want to monetise the regular content you’re producing, giving your community an opportunity to reward you.

  • This platform allows creators to receive recurrent income from their followers.
  • Popular amongst YouTube channels, bloggers, podcasters and video game producers.
  • Their fees are 5% of the money raised plus transaction fees.
  • The key to success on Patreon is a highly engaged following and consistency in producing more content.

 

Equity crowdfunding platforms


5. Crowdcube

crowdcube.com

Raise range: from £50k to £7.4m (8m€, capped by European crowdfunding regulation)

Choose it if: you want to benefit from their slightly bigger community and brand recognition.

Some features:

  • According to Beauhurst, Crowdcube is the UK leader in terms of capital raised. In 2018 they raised £143.2m in 168 deals (this includes pre-emption rounds, fund campaigns and technology partnerships such as the raises with Brewdog and Monzo that were facilitated by Crowdcube technology).
  • It has a community of nearly 770k registered users that invest from only £10.
  • Some of their popular categories are ’Cleantech’, ‘Retail’ and ‘Food & Beverage’.
  • As of August ‘19, it’s the only equity platform that offers the crowd the possibility to via an App.
  • The official success fees in Crowdcube are 7% of the money raised (excl. VAT) plus a completion fee of 0.75% – 1.25%
  • Quite controversially, in October ‘18 Crowdcube introduced an ‘investor fee’ of 1.5% of the amount invested, with a minimum of 50p and capped at £250.
  • Crowdcube offers a Nominee structure to manage the smaller investments (typically under £20k). The cost for the entrepreneur is £5/investor/year.


6. Seedrs

seedrs.com

Raise range: from £50k to £7.4m (8m€, capped by European crowdfunding regulation)

Choose it if: you want to benefit from their enhanced marketing services and/or avoid the investor and nominee fees.

Some features:

  • According to Beauhurst, Seedrs is the runner-up equity crowdfunding platform in the UK, having raised £81.8m in 158 deals in 2018.
  • Some of their popular categories are ‘Fintech’, ‘Automotive & Transport’ and ‘Clothing & Accessories’.
  • The official success fees are 6% on all funds raised, £2,500 completion fee (excl. VAT) and 0.5% payment processing fee.
  • Like Crowdcube, the minimum investment is £10.
  • Seedrs offers different (paid) packages to enhance your campaign. One of the most popular ones is promoting your raise amongst their community during the pre-campaign phase
  • There is no investor fees on Seedrs.
  • Seedrs pioneered the use of a Nominee structure to manage the smaller investments (typically under £20k). There is no cost for the entrepreneur, but will charge a fee of 7.5% on any profit made to the investor.


7. Syndicate Room

syndicateroom.com

Raise range: from £50k to £7.4m (8m€, capped by European crowdfunding regulation)

Choose it if: you have a strong lead (professional) investor and you want to benefit from their ‘upmarket’ brand perception.

Some features:

  • According to Beauhurst, Syndicate Room was the third biggest platform in the UK in 2018, raising £25.1m in 35 deals.
  • Their approach is more investor-led than their competitors, requiring a professional investor to lead the round.
  • The minimum investment is £1,000, coming only from ‘sophisticated investors’
  • Their most popular sectors are ‘Life Sciences’ and ‘Software and Computer services’.
  • They have a £2,000 setup fee plus a 4% of the funds transacted via the platform.
  • They charge a 1%/year for their Nominee services

In Conclusion

There is a good choice of crowdfunding platforms out there. As the sector matures, it’s difficult to go wrong if you choose from one of the leading platforms. Depending on your objectives and funding tactics, one of them might be slightly better than the others, and hopefully we’ve shed some light on that in this article. If you need help in closing your investment round, don’t hesitate to get in touch with one of SeedLegals funding experts.

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