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56 November 2016 | beautystorebusiness.com Taryn Hemmings, COO of Sweat Cos- metics for Active Beauty, says the popular crowdfunding site Indiegogo helped the company raise needed capital with greater ease than a traditional source of funding would have provided—while also giving the brand traction early on. "It was a perfect way to get some excitement built up and information about the brand out, without having to fully launch any- thing. It was nice receiving encouraging feedback from it. Our expectations were definitely more relaxed with our crowd- funding campaign than they would have been with traditional fundraising," notes Hemmings. Sweat Cosmetics for Active Beauty creates cosmetics that are suit- able for physical fitness and contain SPF. For Janice Fredericks, CEO of Fabu- lous Freddy's Beauty Supply & Boutique, crowdfunding was an answered prayer. She says that after praying about how to finance the opening of her second store in Brooklyn, New York, she had the idea to create a crowdfunding campaign. "So I did," she says. "Doing a crowdfund- ing campaign gave me so much more enthusiasm because I was out there tell- ing my story, basically talking about my business to anyone who would listen. I received so much support from my com- munity, locally and nationally. It meant so much to me to get the support from people who resonated with my story as a young, female African-American entrepreneur." Her campaign was fully funded on Indiegogo. CROWDFUNDING VARIETIES Determining the right type of crowdfund- ing platform for your venture is critical to success, so you'll want to consider each type. Crowdfunding platforms exist for every cause imaginable, from families seeking financial support during unfortu- nate circumstances to real estate inves- tors' endeavors. "I think it's important to pick a site that caters to your industry; a demographic that you may represent," explains Fredericks. "For example, there were a few female crowdfunding sites that I considered, but unfortunately, they did not have a large following. I looked for how popular the site was and the fees." Indeed, crowdfunding has become so popular that the sky's the limit when it comes to available options. Crowd- funding platforms generally fall into the following categories: rewards-based, donations-based, equity-based and debt- based. While some platforms specialize in a specific type of funding, others allow users to fund absolutely anything at all. A summary of crowdfunding cat- egories follows: • Rewards-based crowdfunding allows the campaign to offer goods, services or some other reward in exchange for a donation. • Donations-based crowdfunding is characterized by campaign fundraising for disaster relief, nonprofit, personal needs and the like. The goal is to meet personal needs. • Debt-based crowdfunding connects businesses with a host of investors who are themselves seeking invest- ments, bypasses bank requirements and provides faster processing time. • Equity-based crowdfunding facili- tates a partnership in which the donors become part owners in the business, including shares and royalties. From there, users may choose from hundreds of crowdfunding varieties. TOP CROWDFUNDING SITES AND SUCCESS RATES Today's top crowdfunding sources, including frontrunners KickStarter and Indiegogo, are all online. Different crowdfunding companies offer a variety of support options, from design, promotion, marketing and ana- ly tics to post-campaign resources, such as fulfillment and manufacturing options. "We mainly chose Indiegogo over others because we [connected] with a company that exclusively helped design, create and run campaigns through it, and so had a lot of expertise for us. It was also a bit more flex- ible than others we looked at," shares Sweat Cosmetics' Hemmings. Indi- egogo offers its users varied support, from the design and implementation of a campaign to audience analytics and post-campaign retailer partnerships. Thomas Clipper, which offers small- batch and limited edition men's grooming products rooted in modern British design, had specific reasons for choosing Kick- starter. "It's the biggest, most renowned and competitive crowdfunding site. Most importantly, Kickstarter backers (those who pledge toward campaigns) really value quality craftsmanship, which is at the heart of Thomas Clipper," says co- founder Antonio Weiss. Although crowdfunding to date has been responsible for raising billions of dollars for individuals, nonprofits, busi- ness ventures and so forth (donations- based GoFundMe, alone, has helped users raise $2 billion in just the past year), business entrepreneurs need to temper expectations for success. According to Entrepreneur magazine's January 2016 article, "Less Than a Third of Crowd- funding Campaigns Reach Their Goals," between 69 and 89 percent of projects fail to reach their goal. Furthermore, less than one-third of projects, across some of the top crowdfunding platforms, actually reach their goal. Kickstarter, for instance, was highlighted as having the highest number of successes at 31 percent. Indiegogo prefers to observe a neu- tral, more optimistic perspective of campaign success versus failure. "Our flexible option allows campaigns to be successful even if they don't reach their goal because they can keep what they earned," says an Indiegogo spokesperson. The company offers users both Flexible Funding and Fixed Funding options. Its flexible option allows users to keep all of the contributions they receive, even if they don't meet their campaign goal. The fixed option allows all contribu- tions to be returned in the event that the campaign does not reach its goal. As a result, success versus failure truly becomes relative, as companies may see whatever contributions they do receive as a win, in addition to any exposure, feedback and loyalty they may gain in the process. THOMAS CLIPPER Uses Kickstarter SWEAT COSMETICS FOR ACTIVE BEAUTY Uses Indiegogo Images courtesy of Sweat Cosmetics, Fabulous FreddyÕs Beauty Supply & Boutique and Thomas Clipper. FABULOUS FREDDY'S BEAUTY SUPPLY & BOUTIQUE Uses Indiegogo