6 of the Best Crowdfunding Websites

Over the last ten years, there have been dozens of new crowdfunding websites focused on changing the way individuals and companies borrow money.

Changes in laws and development in technology have enabled crowdfunding websites to challenge traditional banks when it comes to raising capital.

Whether it’s a founder wanting to grow a business, an inventor dreaming up a new product, or an artist creating the next great masterpiece, Crowdfunding makes it possible.

Reward Based Crowdfunding Websites

The creativity found on reward-based crowdfunding websites is endless. Some of the most popular campaigns can raise millions of dollars by merely offering unique rewards—the more creative and unique, the better chance of getting noticed and getting funded.


People love to get something in return for their support. When you get involved in a project by backing it on Kickstarter, you gain access to a wide range of rewards.

A Kickstarter campaign can be used for a variety of reasons, but it’s most commonly used for creative projects. One of the guidelines for creating a project is that it must create something to share with others.

Rewards are shared with the community of backers once the project reaches the finish line. Anything from limited edition copies of the creative work produced to unique experiences qualifies as a reward for the support.

Kickstarter Rewards

To stand out among the thousands of projects listed on the website, creators need to think differently about rewards. Recently an Ice Cream Parlor started a Kickstarter campaign to fund expansion.

Supporters who pledged $200 or more were rewarded with a custom ice cream flavor or frozen drink named after them and featured on the menu. Another campaign was raising funds to build a goat barn. For $150, backers were rewarded by naming their own baby goat, including two photos of your newly appointed pet.

Things a Kickstarter campaign cannot do is raise funds for charity or offer equity. There’s also a long list of items that are prohibited.

Once you back a project, there’s no guarantee that it will be delivered or the money you pledge will be used properly. Project leaders can be liable for legal damages if they fail to deliver on promises made during the campaign.

Bringing Creative Projects to Life

Perry Chen, Yancey Strickler, and Charles Adler launched Kickstarter in 2009, intending to “help bring creative projects to life.”

More than $4.6 billion has been raised for over 445,000 projects since their start. Union Square Ventures and Twitter’s Jack Dorsey are a few of the company backers.


Indiegogo is a similar reward-based crowdfunding website with a slight twist. It’s not an all or nothing model such as Kickstarter.

Creators with Indiegogo campaigns chose between fixed and flexible funding options. The fixed option is when creators know they need a certain amount to get off the ground.

Flexible funding options are used when creators will benefit from any amount of money. You’ll get funded whether or not you meet the project goal.

No Limit to Indiegogo

There’s no end to the unique projects funded through Indiegogo. Flow Hive raised nearly $15 million to create a simplified way to harvest honey for beekeepers.

An electric bike maker created Sondors with a campaign raising over $6 million.

Indiegogo was founded in 2008 by Danae Ringelmann, Slava Rubin, and Eric Schell. Some of the company backers include Khosla Ventures and Zynga co-founder Steve Schoettler.

Why Indiegogo

Debt Based Crowdfunding

Debt-based crowdfunding websites continue to gain in popularity and evolve with changing technology and new regulations.

The main idea is users can raise money from a group of people without going through the traditional banking process for a loan.

The funds can be used for a variety of reasons, and each site has its own rules and guidelines to follow. Borrowers make loans to individuals with the hopes their funds will eventually be returned along with a profit.

Lending Club

Lending Club gives users the ability to borrow money from other people without going through a traditional bank.

Personal loans up to $40,000 and business loans up to $500,000 are available through the platform. Once you apply online with the requested amount and your plans for the funds, Lending Club gives you a loan and payment options along with interest rates you will pay.

Individuals and investment institutions can borrow money through Lending Club and make a return on their capital.

Returns Based on Performance

With a minimum investment of $1,000, you can invest in fractions of multiple individual loans. As borrowers make their monthly payments, investors receive monthly returns based on the overall performance of the loans.

Risky borrowers are charged a higher rate to compensate for the risk of default, just like a traditional bank.

In 2014 the company raised $1 billion, making it one of the largest IPO’s in the United States.

Major Investors

It raised a Series A round of funding in 2007 from venture capital investors Canaan Partners and Norwest Venture Partners. A few other notable investors in Lending Club include Thomson-Reuters founder Peter Thompson, Union Square Ventures and Morgenthaler Ventures.

It’s been recognized as one of FinTech’s most innovative companies receiving numerous awards and recognition. Forbes named it one of America’s 20 most promising companies in 2011 and 2012.

Fast Company awarded it as one of the ten most innovative financial companies in the world.

How the LendingClub Marketplace Works


Prosper is a similar model to Lending Club, where personal loans are made through individual investors.

One thing Prosper does a little differently than Lending Club is the actual loan selection options. Prosper loans are given a rating from AA (lower risk and lower return) to HR ( higher risk and higher return).

These loans historically have yields ranging from 3.6% to 8.3%. Investors are then able to search for individual loans based on your risk tolerance.

One Million Customers

Prosper has connected loans to over one million people. They have raised nearly $17 billion for people needing loans through crowdfunding while returning an average of 5.1% to their investors.

Borrowers in need receive funds within five days of accepting their loan offer.

Founded in 2006 by Chris Larsen and John Witchel, Prosper is backed by some heavy hitters. BlackRock, Sequoia, Accel Partners, Benchmark Capital, Fidelity Ventures, Draper Fisher Jurvetson, and Pierre Omidyar are all investors, among a few others.

Equity Based Crowdfunding

Early investors in successful companies are rewarded handsomely. When a company is just starting, funding is difficult because the product has yet to be perfected.

Investing in companies at the earliest stages is considered highly risky and has historically been left to professional venture capital firms. Congress passed the Jobs Act in 2012 in an attempt to level the playing field.

Soon after, equity-based crowdfunding companies were developed to give individuals access to early-stage investing.


Naval Ravikant and Babak Nivi started a blog in 2010 to help founders locate funding and talent for their companies.

The blog eventually turned into a crowdfunding company called AngelList. Individuals can invest in syndicates led by other venture capital investors.

Early-stage investing can be some of the highest risk investments out there. Many companies fail, and borrowed money is never returned to investors.

However, the companies that survive and grow over many years deliver enormous returns to the early seed investors. With AngelList, individuals can own equity in start-ups before substantial growth occurs.


James Han and Ryan Feit started SeedInvest in 2012, giving individuals the ability to own equity in start-ups. The platform includes over 300,000 investors and has funded more than 200 companies over the last eight years.

SeedInvest was one of the first equity crowdfunding websites to allow individuals to invest rather than only accredited investors.


It’s an exciting time if you are looking for financial backing in your company, product, or creative endeavor.

More Ways to Raise Money

There are more ways to borrow or raise money than ever before. Investors have access to products that never existed just a few years ago. Crowdfunding continues to evolve to connect lenders and borrowers in unique ways.

The financial industry is merging with technology and hopefully will continue to create benefits for all.

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