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Top 10 Crowdfunding Platforms

Top 10 Crowdfunding Platforms

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Published by: Crowdsourcing.org on Jul 17, 2012
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Top 10 Crowdfunding Platforms
By Kara Scharwath | July 16th, 2012
Whether he knew it or not, PresidentObama created a brand new industrywhen he signed the JOBS act intolaw 
on April 5th. Up until now, it’s
been illegal for private businesses tooffer equity to anyone other thanaccredited investors in exchange forfunding. As a result, crowdfundingsites (likeKickstarter andIndieGoGo)  and the investment seekers that use them have been restricted togiving gimmicky thank you gifts and pre-selling new products in exchange fordonations. Although this method of fundraising has proven successful for manyartists, charities, and startups, the payback for the people who are giving away theirmoney has been limited to cheap schwag and a few new toys.The passing of the JOBS Act is about to change all of that. Once the rules are inplace early next year, private businesses and startups will be able to usecrowdfunding to give equity to investors who will get an actual monetary returninstead of a sticker or T-shirt. This shift is expected to attract a huge influx of capital from regular Joes looking for better ways to invest than what is currentlybeing offered by the stock market or the meager 0.5 percent interest from savingsaccounts.Fred Wilson, co-founder of the venture capital firm Union Square Ventures (whichhas invested in Twitter, Tumblr, Foursquare,and Zynga), predicts that once it gets up and running, the equity crowdfunding market will reach $300 billion and willbe largely driven by families and individuals investing a small percentage of theirassets via crowdfunding. As a point of comparison, a study fromCrowdsourcing.org reports that about $1.5 billion was raised from 452crowdfunding platforms in 2011.The opportunity
to cash in on this new industry by creating “next generation”
equity crowdfunding platforms is substantial. Hungry tech entrepreneurs arescrambling to get out in front of this imminent boon; and the market is poised forsaturation. To help you keep track of all the happenings in this space, here is a anoverview of ten existing platforms that may be getting into the equity game, aswell as the status of the newcomers that have been popping up daily.
With more than 63,000 projects and $250 million in pledges raised,Kickstarter has emerged as a leader in the current crowdfunding craze. There hasbeen a lot of buzz about whether they will start helping their users offer equity to
investors once the new rules are in place. But in a recentinterview with GigaOm, 
founder Perry Chan stated that Kickstarter is “not interested in that model.”
Like Kickstarter, Indigogo is a popular crowdfunding platform thatrecently raised $15 million in Series A funding. The company claims that this isthe largest funding round of any crowdfunding platform to date. Indiegogo was asupporter of the JOBS Act, and founder Slava Rubintold TechCrunch that the company may very well decide to open up the platform to equity transactions inthe future.
Founded by serial entrepreneur Wil Schroter and just launched in May, Fundable is currently running a rewards-based funding platform while alsooffering accredited investors the opportunity to invest in small business for equity.Schroter plans to fully open the gates as an equity platform once the new law hasbeen implemented.
This Los Angeles-based company, which also launched in May,has taken a different approach to waiting out the JOBS Act rules before it can startoffering equity through the site. Companies can apply to raise funds and users canvote on those they would invest in without any transactions actually taking place.As of the end of May, nearly 2,000 companies had signed up with crowdfunderspledging $17 million in investments. Crowdfunder is also holding a series of contests in cities around the country where local businesses are judged by a panelof investors and compete for $25,000 in funding. The first event, calledCrowdstartLA,took place on May 22nd and elicited over 700 submissions.
In an effort to raise awareness about the JOBS Act and educateconsumers about its benefits, EarlySharesrecently announced a U.S. tour, hitting 24 cities in 24 weeks on a Nationwide Educational Roadshow. The company isalso co-sponsoring Techweek Launch,a startup competition that offers one winner up to $100,000 in cash and prizes. Although the com
 pany claims to be “the premiere Portal for Equity Based Crowdfunding” they say they can’t list real
companies on the site and are only taking pre-registrations.Once the rules are in place early next year, private businesses and startups will beable to use crowdfunding to give equity to investors who will get an actualmonetary return instead of a sticker or T-shirt.
Launched by a group of young Wall Street alums getting their MBAs at The Wharton School of the University of Pennsylvania, SeedInvest recently wonthird place atPhilly Startup Weekend 3.0. Founder Ryan Feit said that following
their win, he’s had a lot of people from the Ph
iladelphia community reach out tohim about investing and is in the process of seeking a round of funding. The site isstill in the pre-launch phase but entrepreneurs and business owners can apply forearly access.
This shiny new site fromApps Genius Corp popped up just last month and is currently reviewing pre-registrations to be selected for participationin their pre-launch. In a
n effort to attract “the best possible businesses seekingcrowdfunding,” the 25 companies that are chosen will each receive up to $5,000.
A group of venture capitalists, entrepreneurs and investment bankershave teamed up to launch RelayFund, which is the creation of investment bankingfirm Hartwick Capital and investor relations firm Lambert, Edwards & Associates.According toa press release
,the founders view crowdfunding for equity as “the
next major catalyst in transforming the capital markets and connecting everyday
Americans with private equity.” The press release also calls RelayFund “a leading
online community focused on second-
generation crowdfunding…” but the site has
yet to launch.
Founded in January 2010 by an MIT Sloan School of Managementgrad and still in pre-launch, WeFunder boasts a community of 6,100 funderspledging more than $16.5 million in investments.According to Mashable,the platform combines traditional startup funding with equity crowdfunding inamounts as low as $100.
Equity-based crowdfunding is already legal in the UK, and
CrowdCube has been around for a few years already. They’ve raised £2.8 millionfor 15 companies so far. The company hasn’t announced any plans to expand into
the U.S. market but given their experience compared to these new domesticplayers, they are positioned well to do so.There are also dozens of platforms targeted at specific niches and industries likeCircleUp for consumer goods,GreenUnite for green projects,Appsfunder for mobile apps, and New Jelly for artists.

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