5 websites that fund entrepreneurial dreams
Want to launch a small business but lack the cash? Unless you’ve got an angel investor, it’s hard to find people to fund your project. So what’s an entrepreneur to do?
Try pitching your idea on crowd-funding websites, suggests Clifford Lavin, area chair of the MBA program at the University of Phoenix Philadelphia Campus. You simply post your business idea or product so anyone interested can donate money until you reach your financial goal.
“Crowdsourcing sites are all different," Lavin emphasizes. “They charge different rates or have different fundraising criteria, so be sure to select one that best fits your project.”
Before you start posting requests for donations on your Facebook® page, check out these five websites:
Best for: local businesses
This is a great place to raise less than $25,000 to launch or support a local business or project, such as buying employee uniforms or equipment for a hair salon, says Lavin, founder of C Squared Inc., a business consulting firm in Greater Philadelphia.
“You’re not planning on opening up a multimillion-dollar business when you use this site,’’ he notes. “You’re basically looking to borrow money from your friends and family,” who can contribute at the site instead of you contacting them individually.
Best for: talent and innovation-related projects
Creative projects rule the business ideas at this popular Internet location. “I had a student who wanted to write a book on rap music, for example, and this is a great site to fund that,” Lavin explains.
Because of the numerous projects posted, he advises checking out the competition and then posting a better business pitch to get more money.
“Part of building a successful business is being able to sell a dream that differentiates itself from everyone else’s,” he says.
Best for: small businesses
Anyone in the world can pitch a project on this site, but it supports the White House’s Startup America initiative, which promotes U.S. small-business growth.
Project fees for posting here are halved for all Startup America-accredited entrepreneurs, so they can raise money faster. Get accredited by becoming a Startup America member for free.
Best for: technology and science businesses
“The business and project ideas [here] seem to be more outlandish, but it’s proven to successfully raise money for specialty-niche and science-related businesses,” Lavin says of the site.
For example, a chocolatier posted that he needed $8,000 to build engines for a solar-powered cocoa bean roaster. Another entrepreneur nearly doubled his $25,000 goal to launch a line of ultralight sneakers featuring a coil spring technology.
Best for: startups in stealth mode
Too often, Lavin warns, entrepreneurs publicly post science and technology ideas without safeguarding their proprietary information via patent or intellectual property protection. As a result, he adds, “it’s too easy to get your ideas ripped off.”
You can avoid this pitfall, he says, by using this private crowd-funding site for entrepreneurs, since the site allows you to competitively apply for seed money without publicly revealing your ideas.
Y Combinator selects about 160 startups each year, and those businesses move to Silicon Valley, where Y Combinator is located, for three months. They receive hands-on business advice from other entrepreneurs, and free legal advice, Lavin notes. In return, Y Combinator gets a small stake in the startups.
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