In the past few years, all the small and midsized enterprises (SMEs) have started to show their interest in gathering funds for their business. There are even taking the help of crowdfunding platforms to do this. These crowdfunding sites have become an irreplaceable source for ventures to get extra funds. Some of them even tried to build a crowdfunding platform despite using other available sites in the market. This approach to collect extra resources and funds are famous in different industries such as agriculture, real estate, non-profit organizations, science/space, entertainment, etc.
It was predicted by Forbes that just real estate crowdfunding sites will be valued at $300 billion by 2025 seeing at its popularity. Hence, various businesses are coming forward to create a crowdfunding platform. Customized crowdfunding platforms are becoming the preferred choice for businesses as they serve the comprehensive needs of business owners and capitalists in a better way. Crowdfunding platforms also must have smooth functionality, better business models, different payment processing options, and other facets to ensure profitable results. What else it must have? Get to know about how to create a crowdfunding website or app in the below article. It will help you to have an efficient solution while attaining significant financial advantages amidst a large ocean of benevolent individuals.
Get an Overview of Crowdfunding Platforms
As the name implies, we can see that crowdfunding refers to finance by the crowd or participatory financing by a large number of people. Primarily, it is carried out by the sites on the web and three forms including donation, crowdfunding, and crowdlending.
In layman’s words, a crowdfunding platform can be a basic website or an app that is dedicated to capitalizing on a particular business project. It is a simple approach for raising funds via putting the collective endeavour of all the business partners, individual funders, customers, and other sources.
Crowdfunding can also be done via social media platforms as the fundraisers can share their ideas on these platforms to motivate others to add some contribution to their campaign. It is the easiest way businesses can go to raise the funds, otherwise, it would take a hard and long time to acquire it. The method of crowdfunding is secure and legal in most countries as it is voluntary and there is no compulsion of any kind.
How Does It Work?
It is better to know how a Crowdfunding platform works before having crowdfunding website development services. Businesses are choosing this platform to develop due to its flawless and easier work process. let’s get to know how does it work?
- To use the crowdfunding platform, even the project manager needs to register on the platform and create an account.
- After that, the project manager specifies the different fundraising methods including the required amount.
- PM also selects the duration of the ongoing campaign following how long volunteers or individuals can contribute to the campaign?
- To contribute, sponsors also need to register to the platform.
- When the period of the requested amount has come to an end, the total fundraised will be received by the project manager.
- On the other hand, the crowdfunding platform also takes the commission (5% to 12%) usually on the overall raised amount.
Market Growth & Stats of Crowdfunding Platform
The crowdfunding market is expanding at a fast rate and entrepreneurs who are adopting this approach avail all the advantages offered by it. When businesses used to apply standard methods such as marketing, funding, and product launching, here there was least interaction between businesses and customers until the product reaches them.
Crowdfunding platforms have enabled businesses and related people to interact with the customers, that’s the reason why ventures are showing their interest to know how to make crowdfunding platforms?
In the below representation, we can see the forecast period of the global crowdfunding market between 2020 to 2026. The crowdfunding market is expanding including different product types, apps, etc. As per the sources, the crowdfunding market worldwide is forecasted to evolve at more than 16% CAGR from 2021 to 2026.
Also, in 2019, crowdfunding platforms raised the global amount in the thirties of USD billion. Additionally, it has been predicted that there were around 6,445,080 crowdfunding campaigns that were hosted in the year 2019. This market is estimated to get growth three times more than current by 2025.
Different Types of Leading Crowdfunding Platforms
Whether you are having readymade, customized, or white label crowdsourcing platform development services, it is necessary to pick the one that can fulfil your purpose. To decide what type of crowdfunding platform you want, you can go through our provided below points.
1. Reward Crowdfunding
People can invest in this system for their projects to get rewards or compensation for their support. This system is reward-based fundraising in which many people provide support to a business idea planned by a project manager. In this, the project manager holds the full value of business capital funding via a reward crowdfunding system based on the remuneration. Crowdfunding sites such as Indiegogo and Kickstarter follow this approach.
2. Donation Crowdfunding
It simply refers to the crowdfunding process based on the donations provided by lots of people. Here, others donate money for a specific cause while expecting nothing in return. Although, some of the crowdfunding platforms also offer various benefits, specific products, discounts on some of the chosen goods, or rewards in return for donations. Still, there is no real return on the provided funds by people linked with it. Donation is done with the charity purpose to the non-profit organizations or politics to finance a campaign. GoFundMe that is a popular crowdfunding platform has chosen this platform.
3. Equity Crowdfunding
Gradually, every business is applying this approach but initially, it was launched by start-ups. This technique includes many investors who capitalize on a small business or start-up by having equity in return. It is similar to any other investment that can also be done using an online process without any trouble.
The company in which the user has invested, if it makes a profit, then it will have a high value of shares and investors can get profit through it. The process of equity crowdfunding is also known as investment crowdfunding. Equity crowdfunding comprises sites like Fundable, AngelList, CircleUp, and Crowdfunder.
4. Peer-to-peer Lending or Loan-based Crowdfunding
Businesses like to prefer this type of crowdfunding platform by taking the help of a crowdfunding website development company. Right from the launch of these crowdfunding platforms, there have been conducted various programs to date to support organizations for causes involving equity, rewards, donations, and lending.
This platform plays an important role between project creators and investors. Through this, borrowers get the money at a certain percentage to execute their ideas, and later, they return the money with interest to investors.
Popular Examples of Crowdfunding Platforms
While knowing about how to create a crowdfunding app or a website, it becomes significant to take reference from the existing as well as popular platforms in the market. It makes the development process easy as now you know with whom you are competing? Let’s check out below about popular crowdfunding platforms-
It is one of the most popular crowdfunding platforms, the average success rate of its campaigns is 37.92%. Businesses choose this platform to raise the funds and they can initiate their creative campaign across 15 different categories. Among all these, the category which has the highest project launched is films & video including 75,140 projects, the second rank is secured by music comprising 82, 894 projects and then, games with 54,269 projects.
This site works on the concept of all or nothing at all. The project manager or creator enters the goals and deadline for fundraising. When the goal is achieved, funds will be collected from the supportive partners but if the project fails, the project creator will not get any funds.
GoFundMe is a famous site that permits different organizations, charities, and people to come forward and get the benefits via fundraising for a reason. This site has supported users a lot since 2010 as it helped them to raise the fund around $9 billion from more than 120 million donations. Specifically, GoFundMe is used to get funds for college fees, tuition, medical treatment, and graduation dresses. It doesn’t provide any deadline to achieve the goals of GoFundMe campaigns. But any campaign will not stop after achieving the goal. This way, these platform successes to provide more funds to project creators than expected.
Indiegogo is a renowned platform to take reference from while having crowdfunding app development or website development services. This platform supports charities, start-ups, and individuals with innovative ideas to get financial help from them while launching their projects. It permits no deadlines for campaigns so that it will be easy for project creators to collect funds to achieve the goals. Indiegogo also follows the approach of fixed campaigns (all or nothing). This platform provides an average success rate of 17.1% with fixed funding.
This crowdfunding platform permits entrepreneurs to get financial support for their projects in return for shares in their firms. Unlike other crowdfunding platforms, Crowdfunder has some least investment amount that may reach tens of thousands of dollars sometimes. It is a large network comprising 130,000 businesspeople and financial supporters who have helped a lot of creators to achieve their goals worth an average of $1.18 million.
This platform is specifically used by content creators and artists so that they can get money for what they have created. It works on the patronage principle, in which sponsors, or Patrons submit the fees monthly to get early access to the content of an artist, implicit additions, or for an additional connection. This way, artists are also paid for their work regularly. This site has helped around 150,000 artists since its release in 2013.
It is one of the preferable choices for non-profit organizations as it provides them a lowest-cost platform to get the funds while offering some of the tools at free cost. Mightycause site is compatible with CRM (customer relationship management) systems such as Salesforce and it also provides free demo to investors.
This platform comprises a broad range of campaigns and charges an average processing amount of 1.2% of the total fund you raise via the platform including 29% per money transaction. It offers a free starter option that helps creators to get the money by creating fundraising campaigns such as peer-to-peer, year-around, event-related, etc.
List of Features to have for Crowdfunding Platforms
Below we have compiled a set of features different for each panel including admin, backers, and platform owner (creator). These are worth considering while creating a crowdfunding platform like Kickstarter, Indiegogo, etc. Taking the help of a website development company will be helpful to complete the feature integration process. Following are the must-add features-
Admins have the responsibility to manage all the operations within the crowdfunding platforms, hence they must have the features that can help them in every possible way. Look at below-
Every admin must register to the platform and then, they must be able to login into it. Different accounts help to know which admin did the alteration to the website. It is necessary to maintain transparency and trust between all the admins.
A crowdfunding platform must have a filtered and sorted list of all the backers and creators. Thus, it will be easy for the admin to take necessary action if any of them break the rules or misbehave.
Managing Transactions & Investments
All the transactions will be handled by the app admins. If there is a transaction error, the admin can solve it by getting through the payment details and reporting errors and flaws to users.
Managing Projects and Categories
If any of the platform rules are infringed by the users or any other individual, admins must be able to deactivate projects. They should also be able to manage the project lists and examine the project descriptions.
If any platform user is having any problem related to the project or funding process, the admin must look after it and provide the appropriate solution. He/she can also view the feedback from creators & backers, and filter contact requests.
Like admins, backers also need to have some features so that they put their ideas to the front and can support the idea of others. Although, having different features for each panel will enhance the Kickstarter like website development cost but all will be worth it in the end-
Crowdfunding platforms have an easy process to register with the site for backers. These have social media integration so that backers can register with the existing accounts of Google, Facebook, or Twitter. After that, they can log in to the account via email and password, and update their basic information like name, password, email, or phone number.
Backers can maintain their site profile by putting up a display picture and adding basic details such as bio, name, contact number, etc.
Backers will be able to see a wide range of categories & projects included in these. They can also see the project details to decide if they want to support it or not? Hence, backers must add necessary descriptions, photos, videos, and details to alleviate the risks and enhance the growth opportunities.
The setting of Payments & Investment
Crowdfunding platforms must provide better security to the backers when it comes to payment services. Users must be able to choose the convenient payment method, manage their transactions, and have the money back if they find a project inappropriate later. They should be able to see the history and details of transactions.
For Platform Owner
To manage the entire app, platform creator or owner must need some of the features, they are as follows-
The creator can register within the platform via existing social media accounts and can log in with the email and password next time. After login, they will be able to edit the account details.
Managing the Profile
Creators can add the details to manage their profile including adding description, avatar, and some of the required details. It will help others to know the details about the creator.
Platform creators or owners can create different projects to raise funds for the same. They can also add descriptions, photos, videos, and other plans to the projects to let the backers know where they are going to invest.
Campaigns creators can view the pledges’ details to know how much they have been raised. They can end the campaign if they have achieved their goal.
Integration of advanced features simply refers to the increased cost to develop a crowdfunding website, but these provide a competitive advantage to your crowdfunding platform.Have a look at the following advanced features to add to the crowdfunding website-
A crowdfunding platform should be created in such a way that users can interact with each other easily there. It will help them to announce anything such as competitions, grants, scholarships, and internships. It will also enhance the number of feedbacks on the projects created by start-ups leading to the chance of improvement.
Project Support & Assistance
Not all start-ups or businesses know that what exactly they must do on crowdfunding platforms. They don’t understand what is the process, and how they can get funds? Hence, you must provide them assistance or support to help them get to understand the use of the platform.
Confirmation and Reminders
There are various things on a crowdfunding platform that need to be considered such as interaction with the users, having a reminder tool that can remind you of important emails, or action to be added, etc. As an owner or creator, you must be aware of everything.
Calculating the Funds
This advanced feature will help businesses to calculate the exact amount of raised funds, earned commissions, taxes, or payments. This feature of automatic calculation will make the app more fun and comfortable to use.
This feature enables you to create a page for the campaign that has not yet been started by you. It helps to attract investors and individuals, and makes them curious that what is something interesting coming the way?
Crowdfunding Platform Monetization Models
A crowdfunding website is not just a platform to raise funds via donations and other ways. It can be used as an innovative idea to earn high revenue. Let’s go through different monetization models that can be applied to a crowdfunding platform.
It is the most used strategy to earn money, in which platform charges monthly or yearly fees to users by providing them subscription or membership. For instance, Fundable applies a $179 monthly fee to users for raising funds.
This monetization technique allows the platform to get a percentage from the total amount raised by the campaign. For instance, Indiegogo charges a 5% fee from the users.
Ads and Promotion
One of the best monetization approaches used by crowdfunding platforms is to display the advertisements of other businesses on their site. Businesses who want to promote themselves will pay a specific amount to the site. It is the reason why crowdfunding sites allow non-profit organizations to initiate the campaigns for free as they earn revenue from ads and promotions.
Loan Processing Fees
This technique is mainly applied by loan-based or peer-to-peer crowdfunding platforms. Such platforms charge a particular percentage of the amount lent by the users. For instance, Landbay applies from 2% to 2.5% charges to every loan and charges 0.5% to 1% for the entire loan balance yearly.
Part of Future Sales
Unlike other platforms which take a percentage of the overall raised funds by the campaign creators, you can take the portion of future revenue of the campaign’s creator. This technique is now used by a lot of crowdfunding platforms to gain high revenue. For instance, PledgeMusic applies 15% from the creator’s future sales.
How To Develop a Crowdfunding Platform?
While creating a crowdfunding website, having assistance from a crowdfunding platform development company is necessary. You must consider all these following crowdfunding development steps one by one to make it long in the market and outshine among the competitors. Have a look below-
Step 1: Conduct a Market Analysis
Getting deep knowledge about the market before having web development services helps you in numerous ways. You must examine other platforms to stay competitive with them. There are many criteria that you have to observe. First of all, you should go for selecting the type of crowdfunding platforms among donation, equity, peer-to-peer, and reward that we have described above. Second is you must check out the success rate of your chosen platform, if it is low, then you must not go for it.
The last one is your targeted audiences as the success of the platform directly depends upon them, if they like the platform and get attracted to it, you get succeeded. You can measure success based on the number of social media followers, active participants, etc.
Step 2: Execute Your Business Plan
The idea you proposed, and your goal must be aligned and evaluated properly. For this, you must have proper knowledge about how to create a crowdfunding website? Consider and discuss the entire project carefully along with the budget as nobody wants to invest in a project that is going to be a flop.
It would be great if you create a community on a crowdfunding platform for the website development, this way you can have more fundraisers for the same. Additionally, you must have a well-planned structure to follow for your business so that desired results can be achieved. You should also arrange the resources required to turn your idea into a well-executed business plan.
Step 3: Have an Attractive UX Design
Your chosen crowdfunding platform development company must have an expert and skilled web designing team to provide you with an attractive and eye-catching website design. Your platform should be designed in a way according to the target audiences you are aiming for, it must be focused and identifiable for them. The platform design must follow a step-by-step process so that users can get to know how to register, view the project list, and invest money.
A good UX design always consists of a user-friendly interface, adaptability, pleasant and colour combination. While having crowdfunding website designing services, consider it starts with creating the wireframe. This method helps the designers to look at every aspect in detail and make it created appropriately.
Step 4: Platform Development
After completing the website design, be it creating a design from scratch, using templates, or ready-made solution, we will here talk about the development phase including writing the site code. Crowdfunding website development is not so easy as it must cope-up with various legal entities and norms.
After dealing with that, it would follow the regular development process. As a crowdfunding platform owner, you must decide which development process would be most appropriate for your website? Would it be a customized solution, or a white-label crowdfunding platform, or something else, you will go for. In this step, while using the latest technology stack, you can also integrate any required third-party API services within the platform. You must hire crowdfunding website developers to have a scalable solution in the end.
Step 5: Testing Phase
The next step is to examine what we have created, it is necessary to know about the performance and abilities of the website. Crowdfunding platforms must be highly secure and confidential along with fast performance so that users don’t have to wait for long to get the process done. If there has been found an error while testing, it must be removed quickly to make the app immaculate.
Step 6: Launch an MVP
Does your business need a full-fledged crowdfunding platform or an MVP version? It is something that must be decided in the starting phase of the development process. Launching an MVP will provide you with an idea about the market and the response of the audience about your solution. It is a quick and cost-effective way to take control of the market by improving the final solution as per the target audience’s feedback.
After introducing the MVP version of the crowdfunding platform with basic features in the market, you can update it with the latest features and functionalities according to the user’s feedback.
Required Tech Stack for Crowdfunding Platform Development
You must have an experienced website development team that has rich knowledge about the newest technologies and their appropriate use while developing the platform. An appropriate tech stack for crowdfunding platform development is as follows-
- Programming Languages: Python, Ruby, PHP, Node.js
- Databases: MySQL, PostgreSQL, MongoDB, NoSQL, Redis
- Analytics: Google Analytics
- Web Framework: Ruby on Rails
- Web Server: Nginx
- Widgets: Facebook, Twitter
Cost Evaluation of Crowdfunding Website Development
While planning for crowdfunding website development, different businesses have a different perspective as some of them want to develop it from scratch and some only want an MVP version as they don’t have a high budget. To decide it correctly, you must go through the details of the time and cost applied to create an efficient crowdfunding platform.
The cost to develop a crowdfunding platform like Kickstarter would be around $15,000 to $25,000 with a core set of features. If you want to include advanced features along with the marketing approaches, it will cost you higher than the estimated price. Despite it, there are multiple factors such as features and functionality, developer’s location & experience, legal entities, and compliances, attaining licenses, team structure, and tech stack, etc. that can fluctuate the overall website development cost.
The Final Verdict
Undoubtedly, creating a crowdfunding platform is a formidable task as there are various challenges to face but it becomes fun when you have the right technology partner by your side. In the above article, we have brought up a precise guide about how to create a crowdfunding website to help you throughout the process. Though, the market is full of efficient crowdfunding solutions, still there are chances to grow by entering the sector with the right platform while fulfilling the needs of audiences.
If you are also looking to create a crowdfunding website but are still confused about what to do and where to start, let SemiDot Infotech help you. Be it on-demand app development or website development, our professional team is always here to assist you. Feel free to Contact Us anytime for a free consultation!