Equity crowdfunding: Instead of borrowing money from financial institutions, you can give a slice of your company to investors in exchange for capital. It’s standard practice for tech startups, and only recently has it become available for non-tech businesses as well. You typically don’t need to submit personal financial information to be successful on the equity crowdfunding platform. But you will need to come up with an investor presentation in addition to the typical business plan and financial projections for loan applications.
Reward crowdfunding: Some platforms help people raise money for a project or for a cause through crowdfunding. You can leverage these platforms to raise money for your business by offering a (future) product or a token reward such as a “Thank You” card, t-shirt or handmade candle. If you are not raising a huge amount of money (< $5,000), this can be a viable option with few strings attached. However, in order to raise funds successfully, you have to be very good at marketing and present your product/business in a way that resonates with people.
Funds received from crowdfunding can generally be used for any business purpose. Check the crowdfunding platform you use for any guidelines on how you can use your funds.