Artists, filmmakers, and musicians flock to sites like Kickstarter to raise cash for their projects. Now, entrepreneurs are getting into the game. There are dozens of crowdfunding sites, including some geared specifically to start-ups. It's not just money that users are after: A successful campaign can also generate buzz and provide proof of concept to professional investors. But raising small sums from hundreds of strangers is hard work. Your pitch must be concise and compelling. And because crowdfunding happens online, it helps to be a whiz at using Facebook, Twitter, and other social sites to spread the word about your project. The chart below looks at four services with very different approaches to crowdfunding—and introduces four companies that have found success using them.

Kickstarter

What It Is
A haven for emerging artists, Kickstarter is fast becoming a platform for entrepreneurs to finance innovative new products. The site has seen more than 13,000 successful campaigns since its launch in 2009.

How It Works
Each project on Kickstarter gets a fundraising page, which includes the funding goal, a video explaining the venture, and the deadline (one to 60 days after the launch). Campaigns are expected to offer "rewards" to contributors; such perks run the gamut from a thank-you on the company website to a prototype. If you don't hit your goal by your deadline, you won't see a penny.

Best For
Artists, designers, and inventors

The Catch
Kickstarter accepts only 60 percent of the 2,000 or so projects that apply each week -- and it's especially picky about entrepreneurial endeavors. Service providers, beware: Kickstarter takes projects of only an artistic or creative nature. "That's where our heart lies," says co-founder Yancey Strickler.

The Cost
Successful projects pay 5 percent of funds raised to Kickstarter, plus 3 percent to 5 percent to Amazon Payments, which processes contributions.

Avg. $ Raised
$5,000

Success Story
Jessica Genet and Stephan Angoulvant, co-founders of the Los Angeles -- based design shop Lumi, were convinced that the textile printing process they had invented was innovative and exciting. They also knew that they needed a lot more research and development before they could convince anyone else that it was commercially viable.

They launched a Kickstarter project in late 2009. Eight weeks later, they had raised $13,597 from 188 funders, in exchange for coasters, card wallets, bags, and other items they had designed. The campaign, say the pair, brought them instant credibility. Indeed, a furniture designer that learned about Lumi as a result of the Kickstarter campaign wound up hiring the company to produce textiles. "All of a sudden, we're working with a major client, we have furniture lines going out the door, and our work is being exhibited at international furniture shows!" says Genet.

Indiegogo

What It Is
Founded in 2008, IndieGoGo takes an anything-goes approach. As long as the project is neither pornographic nor illegal, it's accepted. "We're open to any campaign, any idea, anywhere in the world," says co-founder Slava Rubin.

How It Works
Each project gets a profile page, with a video, a written summary, descriptions of perks for funders, a fundraising goal, and a deadline (one to 120 days from the launch date). Businesses can keep whatever they raise, whether or not the goal is reached. Contributions can be made via check, credit card, or PayPal.

Best For
Anyone with an idea—and a willingness to compete against thousands of others

The Catch
IndieGoGo's unfiltered approach has a downside: Entrepreneurs must share the platform with as many as 10,000 other causes and projects at any one time—including the guy asking people to chip in for his root canal and the miniature horse in need of surgery. That's a lot of clutter to cut through.

The Cost
IndieGoGo takes 4 percent if the fundraising goal is met and 9 percent if it isn't. There's also a third-party payment processing fee of 2.9 percent.

Avg. $ Raised
$15,000

Success Story
Brian Lamb and Vladimir Tetelbaum recently raised $24,680, 123 percent of their goal, on IndieGoGo. The money is nice. But even nicer for their Belmont, California-based company, Satarii—which is developing a camera mount that lets users easily take videos of themselves—are the metrics. By the time the campaign was completed, Satarii had some pretty impressive numbers: 500,000 views of its YouTube video, 10,000 comments and e-mails, and 283 backers, 63 of whom were so impressed that they kicked in $200 or more to receive a prototype of the device—some 30 percent more than the device's anticipated retail price. "When you walk in and say that to someone, they pay attention," says Lamb. He and Tetelbaum have gone on to raise seed funding from a number of angel investors and a manufacturing company. A commercial product launch is expected at the end of 2011.

Profounder

What It Is
Co-founded by Jessica Jackley, one of the brains behind the peer-to-peer microlending platform Kiva, ProFounder helps start-ups launch private rounds of crowdfunding. Investors get equity or a percentage of revenue over a set period of time.

How It Works
The site guides entrepreneurs through every stage of raising capital, including creating pitches and term sheets to send to potential investors. ProFounder also provides tools that help ensure entrepreneurs comply with various states' investment regulations. The site even helps calculate and manage dividend or revenue-share payments to be made in the months and years after the raise.

Best For
Entrepreneurs with well-developed networks of potential investors

The Catch
The pitch won't go viral. The SEC exemption that allows this kind of fundraising (Regulation D, Rules 504 and 506) prohibits general solicitation, which means investors can be only people the entrepreneur already knows, such as friends, family, and customers.

The Cost
It's free. (Some states charge a fee for filing paperwork.)

Avg. $ Raised
$29,000

Success Story
Bronson Chang's Uncle Clay has owned a candy and snack shop in Honolulu for almost as long as Chang, 23, can remember. When Chang learned that his 63-year-old uncle was struggling to make ends meet, he got to work on a new business plan, which included a bright new storefront, locally sourced products, and a new name: Uncle Clay's House of Pure Aloha. To get money for the venture, the House of Pure Aloha turned to ProFounder. Once the effort was launched, Chang and his uncle worked full time for a month to invite friends, family, and longtime customers to invest, sending weekly e-mails and hosting conference calls and in-store meetups. They wound up raising $54,000 from 19 investors, in exchange for a 2 percent share of revenue over five years. "Our business has been all about the community," says Chang. "ProFounder helped us tap into rich connections that have always been there."

Microventures

What It Is
Launched in 2010, MicroVentures is an online broker-dealer that connects start-ups with more than 1,000 angel investors nationwide looking to make equity investments of $1,000 to $50,000.

How It Works
Companies that make it through the application and due-diligence process can raise $100,000 to $500,000. MicroVentures handles investor relations throughout and after the raise. Investments are placed in escrow until the goal is reached. If you don't reach your goal, funds are returned to investors.

Best For
Technology firms seeking experienced angel investors

The Catch
Though MicroVentures accepts projects from all industries, the platform and its investors currently specialize in technology start-ups.

The Cost
You pay $100 to submit a project, $250 for due diligence, and 5 percent to 10 percent of the total if the raise is successful.

Avg. $ Raised
$150,000

Success Story
Julius Schorzman and Dave Matthews, the co-founders of Shopobot, knew they had a good idea: a website that tracks price changes at online retailers, alerting shoppers to the best time to buy. But they were spending so much time raising funds that they barely had time to work on the site. In June, the pair signed up with MicroVentures, where launching a campaign required little more than a day's work and a conference call to answer questions from potential investors. Freed from distractions, the co-founders dug in on Shopobot. They interviewed job candidates, added features, and spent more time on marketing. Two weeks later, they had raised an undisclosed amount from 20 individuals in seven states. They had also doubled the number of registered users on their site. Says Schorzman: "As opposed to just talking about what we're going to do, we were able to start doing it."
From the November 2011 issue of Inc. magazine