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Best crowdfunding platforms for startups in Singapore

Apr 05, 2024

In Singapore's competitive startup landscape, raising capital is crucial for survival. Startups need funds to bring their ideas to life and stay ahead.

Fortunately, there are various ways to raise funds. Crowdfunding platforms for startups have emerged as an effective solution, connecting startups with investors passionate about backing innovative ideas.

In Singapore, several crowdfunding platforms have gained prominence, providing startups with opportunities to showcase their ideas and secure much-needed capital.

What is crowdfunding?

Crowdfunding is a financing method that allows individuals or businesses to raise capital by collecting small contributions from a large number of people, typically through an online platform.

It enables entrepreneurs, artists, nonprofits, and others to bypass traditional funding sources like banks or venture capitalists and directly connect with potential investors or supporters.

Startup crowdfunding campaigns typically involve presenting a compelling project or business idea to attract backers who contribute varying amounts of money.

In return, backers may receive rewards, equity, or simply the satisfaction of supporting a cause or innovation. Crowdfunding has democratized fundraising, providing access to capital and validating ideas through the power of collective support.

Different types of crowdfunding for startups

Equity crowdfunding

Equity crowdfunding for business startup allows startups to raise capital by offering investors a share of ownership in the company. Investors contribute funds with the expectation of financial returns, such as dividends or a share of the company's profits. This type of crowdfunding is regulated and typically involves issuing securities or equity through online platforms.

Equity crowdfunding provides startups with access to a diverse investor base and the potential for long-term investors who become advocates for the company's success.

Reward-based crowdfunding

In reward-based crowdfunding, startups provide individuals who contribute funds with various incentives or rewards. These can include privileges like exclusive access to products, unique merchandise, or personalized experiences.

Startups present their projects and the corresponding reward levels on crowdfunding platforms, enticing supporters to participate. This type of crowdfunding is popular for creative projects, product launches, or prototypes, as it allows startups to generate early sales and validate market interest.

Donation crowdfunding

Donation-based crowdfunding is primarily suitable for nonprofits and social enterprises seeking funds for charitable or community-oriented initiatives.

Individuals contribute money without expecting financial returns, driven by a desire to support a cause they believe in. This type of crowdfunding relies on storytelling and compelling narratives to engage potential donors emotionally.

Nonprofits can offer small tokens of appreciation, such as personalized thank-you notes or recognition on their website, but the main motivation for donors is the impact they can make through their contributions.

Debt crowdfunding

Debt crowdfunding, also known as peer-to-peer lending or crowdlending, involves raising funds by borrowing from multiple individuals. Startups can secure loans with agreed-upon interest rates and repayment terms.

Debt startup crowdfunding platforms facilitate the connection between borrowers and lenders, enabling startups to access capital while providing investors with the opportunity to earn interest on their investments. This type of crowdfunding is suitable for startups looking for a loan-based funding option without diluting ownership or sharing equity.

Best crowdfunding platforms for startups in Singapore

1. FundedHere

FundedHere is one of the best crowdfunding sites for startups in Singapore specializing in equity and debt crowdfunding for startups. It focuses on connecting startups with angel investors and accredited investors in the region.

FundedHere provides a rigorous vetting process to ensure high-quality projects on its platform. Advantages include access to a network of experienced investors, expert mentoring, and potential business collaborations.

However, the platform charges a higher success fee compared to other platforms, and the fundraising process can be time-consuming.

2. Kickstarter

Kickstarter is a renowned reward-based crowdfunding platform that supports creative projects, product launches, and artistic endeavors.

It has a broad international reach and attracts a wide range of backers. The advantages of Kickstarter include a large user base, built-in community engagement, and exposure to a global audience.

However, Kickstarter operates on an all-or-nothing funding model, meaning if the funding goal is not met, the project receives no funds. It also charges a fee on successfully funded campaigns.

3. Indiegogo

Indiegogo is another popular reward-based crowdfunding platform that caters to diverse projects and startups worldwide. It offers flexible funding options, allowing campaigns to keep funds even if they don't reach their full goal.

Indiegogo provides various campaign support and marketing tools, along with access to a large user base.

However, it also charges fees on successful campaigns, and the platform's sheer size can make it challenging to stand out among the multitude of projects.

4. Funding Societies

Another one of the best crowdfunding sites for startups in Singapore is Funding Societies. Funding Societies is a peer-to-peer lending platform specializing in debt crowdfunding for small businesses and startups in Southeast Asia, including Singapore.

It connects businesses with individual and institutional investors looking to provide loans. Advantages include faster funding turnaround, lower interest rates compared to traditional lenders, and access to a diverse pool of investors.

However, it primarily focuses on debt-based funding, and startups need to demonstrate a solid credit history and financial viability.

5. MoolahSense

MoolahSense is a Singaporean startup crowdfunding platform that specializes in debt crowdfunding for small and medium-sized enterprises (SMEs). It connects SMEs with individual and institutional investors who provide loans to fund their growth.

MoolahSense offers faster funding approval and a competitive interest rate structure. However, startups need to have a certain level of revenue and financial stability to qualify for funding, and the platform primarily caters to established SMEs.

Also, read our article on startup funding to explore some of the other available funding options in Singapore, eligibility criteria, and application processes.

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What are the factors to consider when choosing a crowdfunding platform?

Type of crowdfunding

Determine the type of crowdfunding that aligns with your funding needs and goals, such as equity, reward-based, or debt crowdfunding. You should choose a platform that specializes in your desired crowdfunding type to maximize your chances of success.

Legal and regulatory compliance

Ensure that the crowdfunding for business startup platform complies with relevant legal and regulatory requirements in your jurisdiction.

Verify if the platform follows securities laws, protects investors' rights, and provides the necessary documentation and contracts to ensure a legally compliant fundraising process.

Trust and reputation

Research the platform's reputation and track record. Look for reviews, success stories, and testimonials from other entrepreneurs who have used the platform. A trustworthy and reputable platform provides a secure environment for fundraising.

Funding goals and timeline

Consider your funding goals and timeline. Some platforms have a minimum funding threshold, while others have time restrictions or deadlines.

Choose a platform that aligns with your financial targets and the time frame in which you aim to raise funds.

Fees charged

Understand the fees charged by the platform. Evaluate the platform's fee structure, including transaction fees, platform fees, and any additional charges.

Compare fees across different startup crowdfunding platforms to ensure you choose the most cost-effective option.

Evaluate the platform's user demographic and the investors it appeals to

Choose a platform that caters to your target audience and industry. Assess the platform's reach and determine if it attracts potential investors who would show genuine interest in your product

or business.

Payment options

Check the payment options available on the platform. Look for platforms that offer convenient and secure payment methods for your backers.

The availability of multiple payment options can enhance the user experience and encourage more contributions.

Marketing and promotion

Evaluate the marketing and promotional support provided by the platform. Some crowdfunding platforms for startups offer additional services, such as email marketing, social media promotion, or campaign analytics. These services can boost the visibility of your campaign and attract more potential investors.

What is the alternative option to raise capital for your business?

Credit lines provide an alternative option for businesses to raise capital without relying on investors or startup crowdfunding platforms.

By establishing a credit line with a financial institution like a bank or a fintech company, businesses can benefit from several advantages:

1. Flexibility

Credit lines offer flexibility in accessing funds. Businesses can draw funds as needed, up to a predetermined credit limit. This allows for greater control over cash flow and the ability to address immediate financial needs or seize growth opportunities.

2. Lower cost

Compared to equity or debt financing, credit lines often come with lower costs. While interest rates still apply, the overall cost can be more favorable, especially for short-term financing needs.

3. Faster access to funds

Unlike other forms of financing that can take weeks or months to complete, credit lines provide faster access to funds.

Once the credit line is established, businesses can access funds almost immediately, reducing the time spent on fundraising efforts.

4. Builds credit history

Utilizing a credit line responsibly can help businesses build a positive credit history. Timely repayments and responsible credit management can improve the business's creditworthiness, which may lead to better terms and conditions in the future.

5. No ownership dilution

Unlike equity financing where a portion of the business needs to be sold to investors, credit lines do not require ownership dilution. The business retains full ownership and control while leveraging the credit line for working capital or expansion purposes.

While crowdfunding is a great way to obtain capital it is not always the best way, especially when you need quick access to funds that are also easy to pay back.

For such cases, Volopay’s credit line is an excellent option. With Volopay you can get access to much-needed financing almost instantaneously. The repayment cycles for these funds are also pretty flexible.

The best part is that Volopay’s team will guide you through the entire process, making the credit application and approval cycle smooth and hassle-free.

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