Most startup funding comes from investors but what if it could come from your community?
That’s the idea behind crowdfunding: raising small amounts of money from a large number of people who believe in your product, mission, or idea.
What Is Crowdfunding?
Crowdfunding is when a startup or project raises money by collecting small contributions from a large group of individuals. There are online platforms which facilitate crowdfunding.
Instead of one cheque from one VC, you collect hundreds (or thousands) of smaller ones.
It’s fast, public, and often builds community before product.
Types of Crowdfunding
| Type | What You Offer | Used For |
|---|---|---|
| Reward-based | Product, merch, early access | D2C, hardware, games |
| Equity-based | Small % ownership in the company | Startups, Fintech, SaaS |
| Donation-based | Nothing! backers support the mission | NGOs, community projects |
| Debt-based (P2P) | Repay backers with interest | Lending-focused startups |
Example
You’re building a new kind of ergonomic desk for remote workers.
You launch a campaign on Kickstarter or Indiegogo:
- Ask for ₹10 lakh
- Offer the first 500 backers a discount and early shipping
- If 1,000 people back at ₹1,000 each then you hit your goal
Boom, you’re funded without giving up equity or taking a loan.
Crowdfunding in India
While platforms like Kickstarter and Indiegogo popularised crowdfunding globally, India has been building its own ecosystem which is tailored to local regulations, startup needs, and community-driven capital. Here is the list of crowdsourcing platforms:
SEBI-Compliant Equity Crowdfunding Platforms (For Startups)
These platforms operate under SEBI-registered structures (like Category I AIFs or investment syndicates) and are legally viable for startup fundraising:
| Platform | Type | Ideal For | Notes |
|---|---|---|---|
| LetsVenture | Equity | Tech, D2C, high-growth startups | SEBI-registered; popular with angels |
| ah! Ventures | Equity | Early-stage, curated startups | Operates through SEBI-compliant model |
| 1Crowd | Equity | Startups with strong mentoring networks | Works via SEBI-regulated AIF route |
Platforms Operating Outside SEBI Crowdfunding Scope
These platforms are widely used in India for community support or alternate financing — not equity crowdfunding under SEBI norms:
| Platform | Type | Use Case | Why Included |
|---|---|---|---|
| Tyke | Micro-VC / SAFE | Retail investors in early-stage deals | Popular among founders; grey-zone use |
| Fueladream | Reward/Donation | Social impact, creative campaigns | Useful for non-dilutive capital |
| Wishberry | Reward | Creative/film/art projects | Popular for project funding |
| Ketto / Milaap | Donation | Medical, NGO, personal fundraising | Not for business funding |
| Catapooolt | Reward/Equity | Consumer startups, fans as investors | Mixed-use, regulatory clarity lacking |
Note: Kickstarter is not directly accessible to Indian founders due to payment gateway restrictions and the lack of local legal coverage. Indian entrepreneurs cannot launch campaigns directly from India and must do it another way. Indiegogo is accessible to Indian founders, though it comes with certain payment processing limitations and higher fees. Most Indian startups looking to crowdfund equity legally should stick to platforms working under SEBI-compliant frameworks.
When Should You Consider Crowdfunding?
- You have a product with mass appeal or a passionate niche
- You want to validate market demand before full launch
- You want to build a community of early believers
- You want to raise non-dilutive funding (in rewards or pre-orders)
- You want to let your users become micro-investors (equity crowdfunding)
Pros of Crowdfunding
- Fast go-to-market with real user feedback
- No dilution (in reward-based models)
- Market validation without big ad budgets
- Builds early user community and loyalty
- Can fund production, inventory, or pilot runs
What to Watch Out For
- Crowdfunding campaigns need strong marketing and storytelling
- Fulfilment risk: you must deliver what you promised
- Some platforms charge 7–12% in fees
- Public failure (if you don’t hit your goal) can hurt brand perception
- For equity crowdfunding, ensure legal + cap table clarity
Pro Tip
More than money, crowdfunding is a product launch with a public deadline.
You need a great pitch, video, pricing strategy, and fulfilment plan and you need to treat it like any other go-to-market launch.
Final Thought
Crowdfunding is more than raising capital, it’s about building belief.
When you don’t have investors yet, you can still raise from your future customers, believers, and community. And sometimes, that’s even better because they’re placing trust in you, your product, your vision and backing you.