What are the differences between a traditional crowdfunding campaign and an equity crowdfunding campaign?
How does Kickstarter compare to “Kickstarter for equity?”
If you’re a startup company looking to get funding for prototyping or expansion, then you’re in the right place!
Today, you’re going to discover the pros and cons when it comes to both crowdfunding and equity crowdfunding. I’ll break down all of that in the video below.
In some ways, these two routes for getting funding are very similar. However, in other ways, they couldn’t be more different. Let’s discus…
What did you think of the video? Was it helpful?
I really tried to comprehensively compare these two funding types so that you can make the best possible decision going forward.
As you can see, some companies will be a good fit for one, but they might not be a good for the other. If you make the wrong decision, it would waste time, money, and result in a lot of frustration.
My goal with all of my content is to speed up the launch process for YOU. If you haven’t yet, subscribe to my YouTube channel for more funding tips.
Who is A Good Fit for Traditional Crowdfunding?
When I say “traditional crowdfunding,” I’m referring to launching a project on Kickstarter or Indiegogo. These are the two major rewards-based crowdfunding websites out there.
You can spend 10 minutes and quickly see the different categories that are available on Kickstarter. Some of these include gaming, design, technology, fashion, music, etc. Kickstarter and Indiegogo are geared towards creative types AND entrepreneurs.
The key part of a Kickstarter campaign is that backers are essentially pre-ordering the product. When they support your project, they are gaining access to a whole suite of different “perks” or “rewards” that could be as simple as a copy of the product or as significant as a producer’s credit in a film.
Backers do not own an equity stake in your company when they pledge money. They are simply “donating” to fund the initial production run of the product. You are under the obligation of making good on your promises.
As a result, I tend to see that service-based businesses tend to not be a good fit for Kickstarter or Indiegogo. Also, apps usually struggle to get funding with traditional crowdfunding. If you’re making a physical product, then it’s a VERY good fit.
Who is a Good Fit for Equity Crowdfunding?
An equity crowdfunding campaign is a different beast than a Kickstarter campaign. Rather than getting to own a copy of the product, backers are actually investors. They’ll own a part of your company when they put up funds.
Of the projects that have gone through the equity crowdfunding process thus far, we’ve seen a lot of food and beverage companies, tech startups, and application companies. I revealed more about this in my guide, Equity Crowdfunding Explained.
This guide is a must-read if you want to launch an equity crowdfunding project. No joke. You’ll get access to a proven roadmap for getting funding (and figuring out all those confusing regulations).
Most of the startups using EC tend to be early-stage startups in the pre-revenue stage. This means that it’s perfect for a seed funding round, or under Regulation CF, a $1 million or less funding round. You can also raise larger amounts under Regulation A+.
The one big difference between these two is that you’re going to need a team around you to help you launch an equity campaign. There are more onerous regulations and compliance requirements. With a Kickstarter, you can pretty much do it yourself.
What’s the First Step?
The first step for getting funding with either crowdfunding or equity fundraising is to become educated! The more information that you have access to, the better.
That’s why I’ve put together two complete guides for you that will guide you every step of the way. They walk you through exactly what ya gotta do to launch one of these campaigns.
The Kickstarter Launch Formula is perfect if you want to raise money using traditional crowdfunding. You’ll quickly become acquainted with the proven techniques and strategies for raising money online.
My other guide, Equity Crowdfunding Explained, is the absolute essential tool for getting started with an online offering for your new company. You’ll save a ton of time and you won’t have to hunt around the internet, trying to figure out the best platforms, service providers, and how to actually pull the trigger.
Of course, you don’t have to invest in either of these (though I do recommend it). You can also look through some of my other YouTube videos which cover some of the broad strokes when it comes to launching a crowdfunding campaign.
I hope you enjoy and good luck with your upcoming launch! Don’t forget to reach out and share your story with me when you are funded :).
