Kickstarter Alternatives for Business Funding

As an entrepreneur, you’re likely of the mind that coming up with a great idea is much more exciting than having to raise the funds to make it happen. It’s tough to get a good idea off the ground, particularly if you’re a newly minted entrepreneur without a ton of experience with business financing. This paradox leads quite a few small business founders to platforms like Kickstarter, where they can appeal to individuals for the money they need to start their business, without needing to navigate the traditional business loan process.

But Kickstarter isn’t the only platform out there: in fact, there are several Kickstarter alternatives for business funding that offer similar (or even better) perks for both you and your backers.

No matter why you might want to consider Kickstarter alternatives, there are plenty of options from which you can choose. We’re not just talking about other fundraising platforms, either. In fact, there are several conventional loans that you may not have considered—each providing a distinct advantage for your business, depending on why you need funding.

What You Need to Prepare Before You Seek Business Funding

Every small business needs to start with a vision, a plan, and proper documentation. This is equally true if you need Kickstarter or Kickstarter alternatives to first launch your business, or if you’re looking to finance your next growth phase.

Here are the essential materials every small business needs before securing any type of business loan (or business loan alternative, like Kickstarter). Without these materials, you may end up raising money for an endeavor that won’t work or isn’t sustainable over the long term.

A Business Plan

A business plan is a blueprint for how you plan to build your company. It spells out what you intend to do, how your business fits into the overall market, and how you plan to accomplish your goals. Conventional investors want to see a business plan before funding your company, since it maps out how you’ll drive your business.

Even if you’re not approaching conventional investors or small business lenders for financing, a business plan still helps you pace along with your initial goals, and can prevent you from getting sidetracked once things get rolling.

Drafting a successful business plan doesn’t have to be overly complicated, either: so long as you cover the basics, such as a company overview, market analysis, organization chart, product and marketing plans, and your financials, you’re good to go.

A Revenue Forecast

Having a revenue forecast in the early stages of your business helps you determine the amount of money you’ll need to bring in, how much you’ll have to spend, and how much you’ll have left over once everything is said and done. Revenue forecasting helps you make sure that you’re charging the right price for your products, and that you’ve minimized inefficiencies and production costs that could eat into your profits.

You don’t have to go overboard with a detailed revenue forecast if you don’t plan to approach conventional lenders for funding, either. Neither Kickstarter nor Kickstarter alternatives for business funding require one, but it’s helpful for your own planning purposes. A good revenue forecast helps you make sure you’re asking for the right amount of money, and that you know how you intend to spend it.

Business Registrations

Any business venture should obtain all of the appropriate business licenses and permits that your locality requires, as well as the proper registrations for your business entity. Even if Kickstarter or the Kickstarter alternatives don’t require them, you’re going to want the protection and peace-of-mind they provide.

For example, registering your company as a limited liability corporation provides you with personal protections against business liabilities (if your company goes bankrupt, for example). You may also want to register for any other local permits as required, based on the nature of your company.

The Advantages (and Disadvantages of) Kickstarter and Kickstarter Alternatives for Business Funding

Kickstarter and its alternatives for business funding offer something that most small business loans don’t: convenience.

A conventional small business loan requires a good credit history, detailed financial records, and additional documentation that proves your creditworthiness as a borrower. It might take awhile before you can demonstrate all of these credentials. On top of that, you’ll need to repay what you owe, plus interest (that’s the nature of a loan, after all).

Turning to crowdfunding can help you avoid these pitfalls. With Kickstarter and Kickstarter alternatives, you don’t have to repay the money you raise—you get to keep what you get, and not worry about how repayments might affect your balance sheet.

But Kickstarter and Kickstarter alternatives are not without their disadvantages. For one, almost every crowdfunding platform has requirements about what kinds of businesses may use their services. You typically have to provide your backers with a tangible product in exchange for their money, which might pose a problem if you offer services instead of goods. Some also use an “all-or-nothing model,” which means that you’ll only get to keep your money if you hit your fundraising goal.

Kickstarter Alternatives: Which Platforms Work for Small Businesses?

Although Kickstarter has the most brand recognition in the world of crowdfunding, there are several Kickstarter alternatives out there that may provide you with better bang for your buck. Plus, it’s getting tougher for small projects to get Kickstarter funding: the platform has seen an uptick in the number of projects with pre-existing investors, as well as the proliferation of projects that are managed by third-party crowdfunding agencies.

Check out these five Kickstarter alternatives. All of these platforms offer a competitive advantage over Kickstarter, which may end up providing more value for you in the long run.

1. Indiegogo

Indiegogo began as a crowdfunding platform for creative endeavors, such as film or music projects. The platform now allows a wider array of projects to use its platform, however, and includes small business funding as well.

Indiegogo is different from Kickstarter in that it lets you create two different kinds of campaigns: an all-or-nothing fundraising campaign (akin to the Kickstarter model); or a “keep whatever you raise” option, which lets you keep the cash you’ve raised even if you don’t reach your funding goal. The platform also doesn’t require projects to come with perks for backers, unlike Kickstarter, although Indiegogo recommends you include them for better results.

Indiegogo also offers free sign-up and campaign creation. You only pay for the money you raise as part of your campaign, with the site taking a 9% cut of the money earned. If you hit your funding goal, that take drops down to 4%, which provides an added incentive for fundraisers to hit their target figures.

2. Patreon

Patreon is a relative newcomer to the top online crowdsourcing platforms. The site lets you raise funds on an ongoing basis, rather than for specific efforts and initiatives. For example, you could set up an ongoing Patreon fund to help finance your company’s expansion without having to raise funds all at once. People who support your efforts provide you with a recurring payment, akin to a subscription model for funding your project.

Patreon is a great fit for companies that might benefit from recurring funding. But if you’re using crowdfunding to support a project with a specific end-date (such as buying equipment, for example), it might not offer your backers an ideal way to help finance your efforts.

3. Fundable

Fundable is a great Kickstarter alternative, since it doesn’t charge a percentage of your overall fundraising take; instead, Fundable charges a flat fee of $179 to sponsor your fundraising campaign.

It’s a steep price, but one that may work in your favor over the long-term, especially if you’re looking to raise a significant amount of money. For example, say you’re raising $200,000 through crowdfunding. A 5% cut of $200,000 means you’re only getting $190,000 of campaign’s total. Paying $179 for a few months’ time ends up costing significantly less in the long run.

4. GoFundMe

GoFundMe allows a wider array of individuals, businesses, and projects raise funds. The company began as a charitable platform, rather than a means for businesses to raise capital. But GoFundMe is open to business efforts now, and is particularly useful if you’re looking to do something notable for your community (akin to something charitable, but there doesn’t need to be an actual charity component involved).

If you’re not launching a venture with a social or charitable angle, GoFundMe shouldn’t be your go-to crowdfunding platform. You won’t get a ton of momentum if you’re looking to fund general business objectives, and you might find other platforms to be a better fit in these scenarios.

5. Crowdfunder

Crowdfunder is a unique Kickstarter alternative, as this platform is designed to offer backers with equity in the company itself, rather than perks and products in exchange for their funds. Of course, that means you’ll need to give up a portion of your stake in your company, but you may benefit in the long-run from recruiting a pool of engaged investors as a result.

Giving up equity is not without its risks, however. You’ll have more obligations to your shareholders, and may need to take on additional management work as you communicate your company’s performance to your backers. Be certain that you can make this model work for your business before you pursue Crowdfunder over other options.

Other Kickstarter Alternatives for Business Financing

You may have already decided that crowdfunding makes the most sense for your funding needs. But if you’re on the fence, or haven’t looked into the wide variety of business loans out there, you might want to consider alternatives before you start your campaign.

There are so many business loan options out there, so your best financing method depends on what you qualify for and what you intend to use your funds for. Here are just a few options to explore:

  • If you can qualify, shoot for small business grants that can help you finance your next big initiative. A major plus? Like crowdfunding (and unlike a loan), you don’t need to repay the money.
  • You may also qualify for an SBA loan if your company’s been in operation for a while, and has a sturdy credit history.
  • Consider equipment loans if you’re considering a crowdfunding campaign to help buy specific pieces of machinery to propel your business forward (and don’t want to fork over collateral in exchange for borrowing money).
  • You may be able to turn outstanding invoices into cash by way of invoice financing, which gives you fast access to funds in exchange for interest payments.
  • Consider a business line of credit if you would benefit from a revolving pool of funds from which you can pull anytime you need,
  • For a more traditional form of financing (but with much more forgiving eligibility standards than you’d find at your bank), look into a short-term loan from an alternative lender.

Which Kickstarter Alternative (or Other Business Loan) Is Right for You?

No matter which funding option you’re initially seeking—be it a Kickstarter or Kickstarter alternative campaign, or conventional funding—the best first step is to do your homework. Understand the ins and outs of your business, whether it’s in the conceptual stage or has already been launched. This will pay for itself in terms of saved money and strategic decision-making about how to get the money you need to move ahead.

Plus, you’ll end up with a better impression of your company’s overall performance as a result. Then, explore all of your options before you commit to anything—you may find that your first option isn’t necessarily your best.

Brian O'Connor

Brian O’Connor is a contributing writer for Fundera.

Brian writes about finance, business strategy, and digital marketing. He is the former director of digital strategy at Morgan Stanley, and has worked at Foreign Affairs magazine, Student Loan Hero, and as a partner of a small consulting firm, too. Combined, these experiences allow him to offer a unique perspective on the challenges small business owners face.

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