Find and compare crowdfunding platforms

What projects are most often invested in on crowdfunding platforms?

Crowdfunding has grown into a whole industry with separate niches that have formed their own ecosystems and trends. So, to answer this question by naming a few popular crowdfunding project types would be too generic and inaccurate.

It makes sense to research the niches you’re interested in and their best crowdfunding providers individually to identify the most invested projects. For instance, donation-based crowdfunding and equity crowdfunding for small businesses serve different goals and work differently. On top of it, it’s important to remember that the situation within the same domain may vary depending on the country. 

On the whole, creative projects that are well-presented and promoted from a marketing standpoint are understandably getting the most attention. With the growing awareness in the investors’ community, social and environmental impact projects are also favoured today. 

What kind of profit do investors get from investing on crowdfunding platforms?

The potential profit depends mostly on the platform’s or campaign’s crowdfunding type. There are four major crowdfunding types: donation, equity, debt, and reward. 

Donation-based crowdfunding can offer you only moral satisfaction and the feeling that you can make a difference by doing some good in this world and making it a better place. Common initiatives among donation campaigns include raising funds for charities and nonprofits for numerous causes.  

Equity crowdfunding allows startup and early-stage companies to raise funds for their business by offering investors equity shares in exchange for capital. In addition to an ownership piece of a company, investors can count on some dividends, once the business starts making profit. Equity crowdfunding is growing in popularity among entrepreneurs, as a more efficient way to win capital.  

Debt crowdfunding implies inventors lending their capital to individuals or businesses for various purposes. In exchange, they receive a repayment with a certain interest on top of it. In many cases, lenders don’t even know the loan details, since the platform is spreading their money across multiple loans automatically. The repayment schedule and return percentage are usually predetermined, so you know what to expect. 

Reward-based crowdfunding, as the term suggests, involves some kind of reward, goods or services from the borrower, in exchange for the investment. 

Crowdfunding gives an opportunity to build steady passive income and at the same time, support businesses and causes that speak to your values and principles. 

How to make sure the crowdfunding platform is reliable?

The importance of doing your diligence can’t be stressed enough. To come up with a list of crowdfunding platforms that may be of interest to you, check the following aspects to ensure they are secure in the first place. 

1. Reputation. What are the reviews and ratings? Aside from Trustpilot, we recommend looking up reviews on investors’ blogs. People with investing experience who have used the platform long enough can share the details you’re unlikely to come across at the initial stage of participating on the platform. As obvious as it may seem, pay attention if there have been any defaults or other pitfalls, and how the platforms handled these situations.
2. Refund policy and buyback guarantees. What happens if the loan goes into default? See if the platform’s agreement terms clearly state what’s the scenario for such cases. If the wording doesn’t look clear enough, don’t hesitate to contact support. As a side benefit, you’ll get an understanding of the service quality the platform provides.
3. Fees and taxes. What fees does the platform charge and which international or local legislation does it fall into? Just some basic info to be aware of to avoid any surprises and plan your investment strategy. See how transparent the company is regarding these aspects, it says something about its trustworthiness, too.
4. Top management media presence. Is the provider open about the people running the company? You can usually find interviews or LinkedIn profiles of the company’s managing employees. If there isn’t any info at all, that’s a red flag.