The financing of small and medium-sized enterprises (SME) is often a big headache for founders and business executives, and alternative ways of financing come to offer more flexible ways of getting money for business purposes from a global network of private and institutional investors.
Over the past years websites like Kickstarter and Indiegogo have revolutionized the world for startups by giving green light to a number of creative projects. Fundly, in turn, is the best site for fundraising when it comes to charities, non-profits, schools, teams and more, while still being a good choice for individuals too.
According to Statista, in 2017, more than $12 billion were invested into equity- or reward-based crowdfunding projects globally. The World Bank Report estimates that global investment through crowdfunding will reach $93 billion by 2025. In 2018 the average funding per campaign through crowdfunding amounts to $1,065 in 2018. At the same time, Statista expects the number of funding campaigns to amount to 17,287.0 thousand by 2022. This statistic shows a ranking of the most successfully completed Kickstarter projects as of August 2018.
At the end of August 2014, the Coolest Cooler finished its Kickstarter run with more than 13.28 million U.S. dollars in project funding. Up until then, Pebble e-paper watch had held the title for the highest funded project on the crowdfunding website with $10.27 million. In Mach 2015, Pebble's second smartwatch project completed its crowdfunding and publicity run with $20.34 million raised in Kickstarter pre-order funding.
While crowdfunding provides an excellent way for creative projects to find cash, the problem with these established crowdfunding companies is that they are centralized bodies. Blockchain crowdfunding is the next step in startup evolution. Blockchain is here to decentralizes the funding model.
Blockchain crowdfunding works by allowing startups to create their own digital products and sell them. This allows them to raise funds from early investors, while the investors also have the potential to make money if the value of their cryptographic shares increases.
This May the Stock Exchange of Thailand (SET) officially launched a blockchain-powered crowdfunding platform for startups in the country, CCN reports. Dubbed LiVE, the new crowdfunding marketplace enables startups and small enterprises to access funding from venture capital funds and institutional investors directly via peer-to-peer trading.
SET President Kesara Manchusree said: “LiVE” platform will be a key mechanism to help drive forward Thailand’s growth especially enabling startups and SMEs to have more financial accesses through crowdfunding. Businesses can utilize LiVE to promote to a wider target group while using partnership to expand customer base.”
Below are some blockchain-based crowdfunding platforms:
Komodo has introduced the world’s first white label dICO crowdfunding dApp dubbed Utrum. A decentralized initial coin offering (dICO) is a method of crowdfunding a blockchain project via atomic swap technology, which eliminates the need for escrow services, proxy tokens, and any other third-parties like centralized exchanges. This method of raising funds is faster, less costly, and much more secure than traditional ICO crowdfunds.
“Komodo’s dICO tech grants you the freedom to launch your own independent blockchain with zero dependencies and crowdfund successfully without third-party risk,” the Komodo team said on its website. Komodo’s open-source model gives all developers and entrepreneurs access to a free, decentralized blockchain toolkit to jumpstart their project of choice.
Russia-based Boomstarter.Network is a blockchain platform that specializes in funding startups from the tech and business fields of Eastern Europe. The platform has raised $1 million in early financing from venture funds and private companies as part of its ongoing token offering. The fintech company is tokenizing its existing business of generating pre-orders for startups that has been operational since launch in 2012.
Boomstarter.Network will welcome startups from anywhere across the globe and connect them with backers to generate pre-orders of their products at early stages. The company says “this will ensure that entrepreneurs receive funds quickly and focus on product development, instead of struggling with transaction delays and excessive banking paperwork.
The platform will also offer tools allowing to safely mine cryptocurrencies and use them as a means of payment to pre-order products from startups on the platform. Since its launch in 2012, Boomstarter.Network has helped thousands of entrepreneurs in Eastern Europe to raise millions of dollars in pre-orders for their products. This type of funding is known as reward-based
Ethereum Blockchain based platform Acorn is using blockchain to help founders and startups find access to funding. “We provide crowdfunding that is accessible, transparent and more likely to succeed,” says the team behind the platform.
Acron’s Crowdfunding Engine provides the tools to execute successful crowdfunding campaigns, the statistics to make the right decisions and grants access to lists of backers with a proven history of supporting similar campaigns.
“By funding through an ICO and utilizing the Ethereum Blockchain, the Acorn Collective will eradicate the traditional three to five percent transaction fees and five percent platforms fees normally associated with other crowdfunding platforms, such as Kickstarter and Indiegogo,” the Acorn white paper reads.
SportyCo believes that every promising athlete deserves the opportunity to pursue their professional career and every small investor should be able to back an athlete they believe in. Therefore, SportyCo provides a blockchain-based crowdfunding platform, serving athletes, clubs, and other sports organizations in raising the funds required to achieve athletic success.
Each crowdfunding campaign on SportyCo's platform will be listed in SPF Tokens. SPF Tokens will also be used to purchase additional services that SportyCo provided to athletes, sports clubs, investors, and other participating in the ecosystem.
SPF Token is a fully ERC20 compatible utility token of value and is already listed on several cryptocurrency exchanges.
Based in Switzerland, Helveticoin wants to build a platform that allows entrepreneurs and independent, small and medium-sized enterprises to present their projects to a wide range of potential investors and possibly fund them through cryptocurrencies.
They aim to build a platform for the people that are refused or incapable of receiving governmental and industrial support pertaining to their sector and location or lack of resources.
Kenyan startup Drofund has launched a Bitcoin-based crowdfunding platform for African startups and small businesses with a view of helping them access global capital. Drofund uses Bitcoin as a fundraising currency.
The platform seeks to leverage the power of crowdfunding and the power of digital currencies to make it easier for African entrepreneurs to raise capital. However, it charges a 5% fee on all funds raised on the platform.
Lithuania ha recently introduced the DESICO platform that aims to create a safe and legally regulated environment for developing global financial and blockchain technologies. The global EU-based platform will be offering a fully compliant way for businesses to issue ICOs, and for token buyers to acquire and trade these tokens.
Blockchain-based startups will be able to access the DESICO licensed and regulated crowdfunding platform that will operate on the Law on Crowdfunding of the Republic of Lithuania.
