Understanding Crowdfunding

Crowdfunding is a method of raising capital through the collective effort of friends, family, customers, and individual investors. Crowdfunding exists in the form of loans, gifts and equity but is primarily There is a plethora of “how-to” information on creating and launching a successful crowdfunding campaign. We found this article helpful, but there are many others.  It is worth doing some research since crowdfunding platforms exist in the form of loans, gifts and equity.  Crowdfunding can be an appealing way to raise capital but there are a lot of details to consider in making a successful campaign.

There are various Crowdfunding platforms, each with their own benefits and drawbacks.
Kickstarter and Indiegogo are the two biggest — there are differences between the two – you can read about those here.   Barnraiser is another emerging crowdfunding platform with a great reputation and is focused very specifically on the food system.

Barnraiser is a social and funding community that allows its members to influence and scale the food movement by connecting to innovators of sustainable food and farming, celebrating their stories, and collectively backing projects that shape how we farm and eat, locally and globally.
Best For: food entrepreneurs.
The Cost: Fees amount to 5% for Barnraiser and between 4-5% for the credit card and payment processing partners, based on total number of transactions. If your project does not fund, no fees will be charged and no money will be collected.
The Catch:  If you do not meet your goal, you do not get any money.
See an example of a SMM network Barnraiser campaign:  Apple Creek Farm – Hatching an Expansion 2017

Kickstarter — A haven for emerging artists, Kickstarter is fast becoming the largest platform for entrepreneurs to finance innovative new products.
Campaigns are expected to offer “rewards” to contributors; such perks run the gamut from a thank-you on the company website to a sample of their product.
Best For: Artists, designers, and inventors.
The Cost:  Successful projects pay 5 percent of funds raised to Kickstarter, plus 3 percent to 5 percent to Amazon Payments, which processes contributions.
The Catch: If you do not reach your goal, you do not get any money.
See an example of a SMM network Kickstarter campaign: North Spore Mushroom: Spread the Spore: Fixing our Lab and Making a Workshop Space

Best For: Wide variety of entrepreneurs. Unlike the other two platforms mentioned above, you can keep whatever funds you collect, whether or not you reach your goal.  Indiegogo now has a ‘fee free’ section of their network called “Generosity” geared for non-profits or social causes, see details here.
The Cost: You keep whatever money towards your goal that you make, Fees are 5% for indiegogo, 3% +.30 per credit card transaction.
See an example of a SMM network Indiegogo campaign: Heiwa: Maine’s Finest Tofu 2016


Comments are closed.