Types of crowdfunding platforms

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Each Crowdfunding platforms is distinct and before you begin the registration process you have to take into consideration that structurally the platforms will differ. Crowdfunding platforms define their own terms which determine and influence the typr and how you run your campaign. At the start, check to make sure the platform selected suits your specific campaign needs.

Types
One of the first choices you will have to make is what type of crowdfunding suits your needs best. As described in ‘What is crowdfunding ’ there are several types that you can opt for. In general, when it comes to types of crowdfunding platforms there are two to select from; type specific and hybrid platforms. The latter offers several crowdfunding types, for example donation , reward and peer-to-peer lending based crowdfunding (See: Crowdaboutnow.nl). Type specific platforms offer only one type of crowdfunding, for example equity (e.g. Symbid.com, Seedrs.com), reward based (www.lanzanos.com/) or peer to peer lending (https://www.rebuildingsociety.com/).

Theme

The focus of platforms may vary based on following:

– Industry or theme
Examples of specific industries are the cultural sector, SMEs (Crowdaboutnow.com) or themes like sustainability or social entrepreneurship.

– General 
Some platforms cater to a wide variety of industries and individuals E.g. Kickstarter.

– Niche 
There is a rise of platforms that cater to very specific industries like Tubestart.com for digital video or regions like tilburgvoorcultuur.nl for art projects  in Tilburg (Dutch town).

Allocation of funding
Each platform decides how it allocates funding. There are basically two ways:

All-or-Nothing
This type of funding is mostly for projects that need a minimum amount in order to get started. This means you have to raise 100% of your target amount. If you don’t meet your goal your backers will be reimbursed.

Take It All
This is ideal for projects that benefit from any amount of funding. Every euro that has been raised during the campaign will go to the project owner.

Costs

There are different business models used by various platforms, therefore it will vary when, how much and exactly who will have to pay.

Upfront

Flat fees  in order to register before you start your campaign.

During your campaign

Transaction costs are payment service charges and are charged per online transaction. These costs can be paid for by the backers as add-on, be deducted from the actual amount or be paid for by the project owner.

Afterwards

Most platforms work with a commission or success fee. This mean a certain percentage will be deducted from all funding raised. On average this percentage varies but is usually between 4 – 10%.

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This post was originally published as part of Startup Europe. The European Commission’s Startup Europe initiative was created to connect web entrepreneurs across Europe, providing networks, resources and information to help them startup their business and grow, creating new jobs and transforming the economy and society.
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