Crowdfunding for business: how it works and the best platforms in 2026

What is crowdfunding for business?

Business crowdfunding is a method of raising capital from a large number of individual backers. Each backer contributes a small amount, typically through an online platform as part of a time-limited campaign. Unlike traditional business loans, crowdfunding connects business owners who need money with members of the general public who want to fund their efforts.

For example, you might launch a campaign to raise $100,000 and receive contributions of $1,000 each from 100 individual backers. Crowdfunding allows business owners to sidestep venture capital and angel investors, both of which are more complicated and generally require giving up some control of the business.

Modern business crowdfunding took off with Indiegogo and Kickstarter. These platforms launched in 2008 and 2009, respectively, with rewards-based crowdfunding. Rewards-based crowdfunding allows businesses to offer perks, such as early product access, in exchange for funds.

The Jumpstart Our Business Startups (JOBS) Act in 2012 set the groundwork for legalizing equity-based crowdfunding, where businesses sell shares to private, everyday investors to raise capital. The SEC’s Regulation Crowdfunding (Reg CF) rules came from the JOBS Act and went into effect in 2016.

How does crowdfunding work for a business?

Business crowdfunding involves a pre-launch phase where you choose a platform and funding model, set a funding goal and campaign deadline, get the campaign page ready, and promote it to your own network. Campaigns are normally live 30 to 60 days. After a successful campaign, you receive the capital raised and repay your backers based on your funding model.

Choose a platform and funding model

You have four funding models to choose from: rewards (offering products to backers), equity (selling ownership stakes in your company), donation (backers don’t get anything), and debt (getting a loan from backers). Each platform offers a specific funding model.

Set a funding goal and a campaign deadline

The funding goal is the amount you need to complete your project. A crowdfunding campaign can have either all-or-nothing funding or flexible funding. With all-or-nothing funding, all pledges are returned if the campaign misses its goal. With flexible funding, you keep what you raise even if you miss your target. Some platforms only offer one type of funding, while others let you choose between the two.

When you set your goal, keep in mind that most platforms charge two campaign fees: a platform fee, usually about 5% of the funds raised, and payment processing fees, usually about 3% plus a per-transaction charge.

Get the campaign page ready and film a pitch video

Your campaign page should have a clear explanation of what you’re offering, photos, and a pitch video. The video is the most important part, as it’s often the deciding factor in whether a potential backer contributes to your campaign.

Promote to your own network first

Early backers help a campaign start with a funding surge, which is crucial for building momentum. Platforms promote campaigns with strong funding activity, and the first 48 hours, in particular, are crucial.

Repay backers per your funding model

If your campaign’s successful, the platform will send you the funds raised minus its platform fees and payment processing fees. You’ll then need to fulfill your end of the crowdfunding arrangement, which could mean sending out rewards, issuing ownership shares, or paying back debt, depending on the funding model you chose.

Compare 8 crowdfunding platforms for business

Here’s a rundown of several top crowdfunding sites, including crowdfunding platforms for startups and small businesses:

1. Kickstarter
2. Indiegogo
3. Wefunder
4. StartEngine
5. Republic
6. Kiva
7. Honeycomb Credit
8. GoFundMe

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1. Kickstarter

• Best for: Product launches.
• Funding model: Rewards.
• Fees: Charges a 5% platform fee and processing fees of 3% to 5%.

Kickstarter helps individuals and small businesses fund creative projects. Kickstarter campaigns often appeal to filmmakers, podcasters, musicians, artists, gamers, and food and beverage businesses. Because it’s so widely used and is a recognizable brand, Kickstarter offers some of the best crowdfunding for small businesses. Popular campaigns can take off due to the built-in audience.

2. Indiegogo

• Best for: Technology products and businesses that want post-campaign sales.
• Funding model: Rewards.
• Fees: Charges a 5% platform fee and processing fees of 3% plus $0.20.

Indiegogo is all about fueling and funding creative innovation, primarily for startup businesses in tech and design. The focus here is on raising money for startups and crowdfunding for small business owners who are developing or have developed clever and unconventional products. Indiegogo offers entrepreneurs numerous tools to maximize the odds of a successful crowdfunding campaign, including an expert design team and marketing resources.

3. Wefunder

• Best for: Crowdfunding for startups and local businesses.
• Funding model: Equity.
• Fees: Charges 7.9% of the amount raised.

Wefunder makes investment crowdfunding widely accessible as campaigns can be funded with as little as $100. It aims to be the “pre-Nasdaq stock market.” This popular crowdfunding site caters to a wide range of businesses looking to raise money including healthcare and biotech, consumer products, tech, and more.

4. StartEngine

• Best for: Businesses with a large customer base looking to raise significant capital.
• Funding model: Equity.
• Fees: Typically charges 6% to 10% of the amount raised.

StartEngine offers crowdfunding for business startups. For founders, StartEngine is unique in that companies can raise their first funding round on StartEngine and subsequently give shareholders the opportunity to trade, all on the same site.

5. Republic

• Best for: Early-stage tech startups and crypto/blockchain companies.
• Funding model: Equity.
• Fees: Charges 7% of the amount raised and 2% of the securities offered.

Republic offers equity-based crowdfunding and skews toward innovative technology businesses, including apps, AI, blockchain, robotics, and fintech. Investment minimums can be as low as $150. Republic is one of the stricter crowdfunding platforms and reports that its acceptance rate is less than 5%.

6. Kiva

• Best for: Business owners who don’t qualify for traditional loan options.
• Funding model: Debt.
• Fees: Charges 0% interest and doesn’t have any fees.

Kiva is a microlender that allows small businesses to borrow 0% interest loans of up to $15,000 in the U.S. with no fees. Backers can contribute as little as $25 through the platform, so if you need a small amount of business financing, this may be an excellent option. A Kiva microloan could also help you build business credit, because Kiva can report payments to Experian Business and Dun & Bradstreet (D&B). You need to opt in to credit reporting, which you can do during the application or at any point during repayment. Payments made before you opt in aren’t retroactively reported, so opt in from the beginning if you’re interested.

7. Honeycomb Credit

• Best for: Local businesses with passionate followings.
• Funding model: Debt.
• Fees: Charges a platform fee on capital raised.

Honeycomb Credit provides a platform for local businesses to borrow from their customers and supporters. It’s built for Main Street small businesses, including restaurants, retailers, and local service providers, and it offers fixed-rate loans with terms ranging from three to five years. Honeycomb Credit charges a platform fee, but fees are set per campaign, and it doesn’t have public pricing data. Honeycomb Credit also acquired IFundWomen, a rewards-based crowdfunding platform with flexible funding for women entrepreneurs, in 2025.

8. GoFundMe

• Best for: Charities and very small businesses.
• Funding model: Donations.
• Fees: Charges processing fees of 2.9% plus $0.30.

GoFundMe is a donation-based platform dedicated to helping people help each other. Businesses can launch campaigns on GoFundMe, but the platform is primarily for charitable causes, so it makes the most sense for businesses looking for support with a community-driven cause or recovering from a crisis.

Types of crowdfunding for business

There are four types of crowdfunding that businesses can use:

• Rewards (or incentive) crowdfunding.
• Equity (or investment) crowdfunding.
• Donation crowdfunding.
• Debt crowdfunding.

Reward-based crowdfunding

Reward-based crowdfunding involves exchanging funding for a reward of some type. Reward options include early access to products, special merchandise, or unique experiences. In this crowdfunding business model, the business owner fulfills rewards after the campaign ends.

Best candidates for reward crowdfunding

• Businesses with a B2C product they want to bring to market.
• Businesses that have refined their pitch.
• New businesses seeking validation for a business idea.
• Nonprofits.

Equity-based crowdfunding

Equity crowdfunding, also referred to as investment crowdfunding, raises money from backers in exchange for a small ownership stake in the business. Under SEC Regulation Crowdfunding regulations, a business can raise up to $5 million through equity crowdfunding in a 12-month period. These regulations also limit the amount that non-accredited investors can invest in a campaign. Accredited investors aren’t subject to an individual limit.

Best candidates for equity crowdfunding

• Businesses that want to build a community and gain exposure to venture capital and angel investors.
• Businesses that have some previous experience with fundraising.
• Startups with solid business plans that demonstrate how they will scale.
• Businesses that have demonstrated viability for their products and/or services.

Donation-based crowdfunding

Donation-based crowdfunding is funded through donations from backers. The business owner doesn’t need to repay contributions or offer anything in exchange.

Best candidates for donation crowdfunding

• Businesses in crisis that already have a loyal customer base.
• For-profit businesses focused on philanthropic causes.
• Nonprofits.

Debt-based crowdfunding

Debt-based crowdfunding allows business owners to get small loans from a large group of backers. The business is responsible for paying back the money that funded the campaign, typically with interest. Peer-to-peer lending is in the same family as crowdfunding business loans and ranges from mission-driven microloans with 0% interest rates, such as Kiva, to interest-bearing community loans, such as Honeycomb Credit.

Best candidates for debt crowdfunding

• Businesses that have sufficient cash flow to manage debt repayment.
• Businesses that may have been unsuccessful in seeking traditional small business loans.
• Established businesses that are looking for sustainable and continued growth.

Pros and cons of crowdfunding for business

To help you figure out if crowdfunding is right for your business, here’s a look at the pros and cons.

Pros

• Flexible. Crowdfunding does not typically require the same qualifications as small business loans and other traditional financing options: good credit scores, strong revenues, and/or at least two years in business. In fact, it can be an excellent alternative to startup loans, at least for certain types of businesses.
  
  If you’ve been trying the fundraising route, you’ve probably discovered that very few businesses are successful landing funding through venture capitalists or angel investors. Crowdfunding can be a more accessible option for businesses that want to raise money but don’t have the connections those types of fundraising require. 
  
  A crowdfunding campaign can be used to attract accredited investors (or non-accredited investors if the platform allows it). An investor can review your campaign and decide whether to fund your business, versus you having to make pitch after pitch to raise capital. And keep in mind that some VCs and angel investors participate in crowdfunding campaigns.
• Build interest. One of the best benefits of crowdfunding is that backers become fans. They don’t just support your business financially; they may also help promote your business on social media or to friends and family. After all, they want you to succeed.
• Minimize debt. Of the four available crowdfunding models, only one requires repayment. If you run a rewards, equity, or donation campaign, the capital raised doesn’t need to be paid back.
  
  That’s appealing if you need money to get your business up and running but you’re not comfortable taking on debt right out of the gate. Keeping your budget as lean as possible, at least in the beginning, allows you to funnel money into things that can help fuel growth. 
• Multiple funding options. Crowdfunding isn’t one-size-fits-all, and you have the opportunity to choose a funding option that’s best suited to your business needs. That’s helpful if you’ve been wary of taking on a loan because you aren’t generating steady cash flow yet or you only need to raise a small amount of money for your business. You can even start with crowdfunding, and, as your business grows, qualify for small business loans. 

Cons

• Platform and processing fees take a cut of contributions. Crowdfunding usually comes with a few extra fees that come out of the funds raised. Platform fees and payment processing fees are both common, and they normally total about 8% to 12%, depending on the platform and type of crowdfunding you choose.
• All-or-nothing campaigns are risky. If you opt for an all-or-nothing campaign, missing your goal means you’ll end up with no funding. Many platforms let you choose between an all-or-nothing model or keeping what you raise, even if it doesn’t meet your target.
• A public campaign that fails is visible. Crowdfunding can help a business build momentum when it goes right, but it can be very damaging when it goes wrong. If a public campaign misses its goal, the business’s reputation could suffer. Investors may also think twice about putting their money into the business in the future.
• Campaigns demand weeks of full-time marketing. You need to devote considerable resources to a successful crowdfunding campaign. The pre-launch phase involves building an email list and notifying potential backers, and for the best results, the campaign itself will require a compelling pitch and video. Campaigns typically last 30 to 60 days, and you’ll need to continue your marketing efforts throughout the campaign to maximize contributions.
• Most types of crowdfunding have added fulfillment costs. The only type of crowdfunding that doesn’t require fulfillment is donation-based crowdfunding. If you run an equity crowdfunding campaign, that will dilute your ownership and mean you’re giving up some control of your business. With a reward campaign, you need to fulfill the terms of the rewards you’ve offered. Debt-based crowdfunding requires you to repay the money you receive from backers, possibly with interest.
• Funds raised can be taxable income. You normally need to pay taxes on funds raised through reward-based crowdfunding and donation-based crowdfunding. Money from equity crowdfunding isn’t taxable income, as backers are investing in your business. Debt-based crowdfunding also doesn’t generate taxable income, because the money raised is a loan you repay.

How to launch a business crowdfunding campaign

Here’s a step-by-step breakdown of how to run a successful business crowdfunding campaign.

1. Pick the funding model that matches what you can give back

Start with the funding model, because that will determine which platforms you can use. Rewards are a popular choice and work well if your business has a unique product or experience it can offer. Equity funding makes sense if you’re crowdfunding a startup and looking for investors, and debt-based funding can be a good alternative to traditional small business loans. Donations are harder to get for most businesses but can be an option if there’s a compelling reason for people to donate.

2. Choose one platform where campaigns like yours succeed

Check which crowdfunding platforms accept the type of campaign you want to run. Once you have a few options, look for campaigns similar to yours on each one. If campaigns like yours are succeeding on a platform, that’s a sign of a strong funding market.

3. Set a realistic funding goal you can actually hit

Calculate the minimum amount you need for your project, and then add in the cost of platform and processing fees. Compare this with results of similar campaigns on the platform. You can also use the size of your email list and your expected conversion rate to get an idea of how many backers you’ll have. Most campaigns run for 30 to 60 days, which can help you estimate a realistic funding goal.

Err on the side of caution with your target. If you launch an all-or-nothing campaign, then a goal that’s too high could mean not getting anything. Even if you have a flexible campaign where you keep what you raise, falling short of your minimum goal could look bad and leave you short of the funds you need.

4. Build the campaign page with a pitch video and clear reward tiers

You can hire a professional video production team for your pitch video or take a DIY approach. Either one can work, as long as you have a polished video with a compelling hook, story, and call to action.

If you’re planning a rewards campaign, set up multiple tiers, and be clear on what the backer gets with each one. Having multiple reward tiers is an easy way to get larger contributions.

5. Line up your email list and social media before launch and market to your own network first

A wide network is an integral part of a successful crowdfunding campaign. The more people you’re able to connect with, the more you can spread the word about your project and generate interest. Ideally, you’ll have plenty of early backers ready to support you, as a strong launch can make or break a campaign.

In the weeks leading up to your launch, promote your campaign to your network by email and social media. Set up a landing page so that anyone who’s interested can sign up for email updates on the campaign.

6. Post campaign updates throughout

When your campaign is live, send updates regularly — two to three per week is usually the sweet spot. Updates encourage people who haven’t committed yet to contribute and provide content to share for existing backers. Funding milestones, behind-the-scenes content, and new reward tiers are all popular types of updates. Make sure you send an update when there are 48 hours left, as campaigns often see a funding spike at the deadline.

Along with sending updates, respond to questions and comments promptly throughout the campaign. A responsive team behind a campaign can help convince people to contribute.

7. Deliver on rewards and communicate after funding

If you ran a rewards-based campaign, send a follow-up to backers with a fulfillment window. Delays are a common and frustrating part of the crowdfunding experience, so setting clear expectations and delivering rewards promptly will both generate lots of goodwill with your backers.

For equity and debt campaigns, communication with backers is a compliance requirement. The crowdfunding platform should be able to assist you with this.

Is crowdfunding right for your business?

Crowdfunding works best for consumer products, food and beverages, games, hardware, and creative projects. These all have something tangible to show, so potential backers can see exactly what’s being offered in a 90-second video and decide whether to contribute.

B2B services and any sort of complex offering requiring a long explanation tend to struggle on crowdfunding platforms. An effective campaign needs to hook potential backers and explain the project quickly.

Crowdfunding also isn’t a good fit for businesses that urgently need funding. The process normally takes at least a few months, between the pre-launch and the live campaign, and funding isn’t guaranteed.

If you decide crowdfunding isn’t the way to go for your business, here are a few alternatives:

• Small business loans
• Startup financing
• Business credit cards

The bottom line

Crowdfunding, whether it involves rewards, equity, debt, or donations, can be a powerful way to raise funds for your business. It’s a flexible option, and you can use it whether you’re launching a brand-new startup or you have an established business and you’re funding a specific project.

It’s important to remember that crowdfunding usually doesn’t build the business credit profile that lenders look at. Some debt-based crowdfunding platforms may report payments to the business credit bureaus, but other types of platforms don’t.

Establishing business credit early opens up more funding options that you can tap into if crowdfunding isn’t a match or to supplement a crowdfunding campaign. If you’re looking for a way to get your business credit started, Nav Prime offers up to two tradelines that can help build business credit, with activity reported monthly to the major business credit bureaus. Credit building results vary.

Frequently asked questions