According to Statista, the annual transaction value of crowdfunding has passed $1bn worldwide. In the U.S. alone, this amount is reaching over $500m in 2022.
Zippia claims that the average amount per crowd-investing campaign is about $5,270, whereas successful fundraisers raise about $28,656. Fortunate projects can get about $96 from each individual backer.
Knowing what benefits all parties help make better decisions before dedicating time and money to crowdfunding. That is why this article will show you how to start a crowdfunding website and successfully scale.
Crowdfunding Platform Benefits
Traditional fundraising attracts only a limited number of investors and has lots of regulatory issues that may hinder the progress of the project.
However, crowdfunding has an investor verification process that is simple and straightforward. It has no strict investing limits for sponsors. So, it is great to be in this day and age where fundraising platforms have overcome these challenges to raise capital.
Unlimited Number Of Sponsors
One of the fastest ways to raise capital upfront is by getting funding from backers. This is great for art or non-profit projects.
A good example is the Veronica Mars Movie Project which successfully raised more than $2 million through a crowdfunding website to finance their movie.
Get Attention Through Online Platform
Starting a business or project using an online platform can have very good marketing outcomes and create new hype on social media.
For example, the famous Fiido X, an electric folding bike raised a capital of $1.5 million through crowdfunding from more than a thousand investors.
New Way To Generate Funds
Crowdfunding is not only for startups. It is also practiced by well-known brands that need some capital to build and launch new products on the market.
For example, Ostrichpillow used crowdfunding to raise over $300,000 in capital for their eye mask idea in just 25 minutes. That’s a lot of money to raise in that short amount of time.
Businesses can pre-sell ideas or products not yet on the market by pitching a crowdfunding campaign. It also helps to obtain customer feedback on the product for improvement.
Get Feedback On New Project
Using a crowdfunding website, entrepreneurs can put out their idea to the public to see their reactions and get advice from experts. This is often critical to gauge the potential or future success of the product you intend to release in the market. It will help prevent loss of capital or failure of the entire project.
How To Build A Crowdfunding Website
It is challenging and confusing when you need to create a new software product with no idea where to begin. However, there are standardized steps to follow when building a platform to ensure its success and scalability. Here, we will show you some of the steps to follow:
1. Find Your Niche
Choosing a specific niche ensures that you narrow your target audience and start limiting yourself from the millions of other similar businesses out there. This will also play a part in the type of backers your project will attract.
Pitching your project to people you know are already interested in it is a great way to find backers.
2. Set A Goal
The crowdfunding website should be started on solid foundations and clear goals. It will help you be able to measure your success in the long run.
Your goals will also help solidify the trust and willingness of backers to invest in your project. Here are some goals to keep you motivated:
- Final release date
- Features for implementation
- Number of backers actively engaged with the platform
- Amount of funds raised on the platform in the first few months
3. Build Communication
Building a crowdfunding platform that has a strong community encourages backers to contribute more. It makes them feel safe when investing in something they understand.
You can engage the community by defining your mission and ensuring that the audience knows what you’re aiming for. People tend to share their beliefs and get inspired to achieve common goals.
Another way to build communication is to share success stories of creators and backers that motivate sponsors to contribute to specific ideas and bring them to life.
4. Provide More Reward Options
Every backer has their personal motivation. So you should keep that in mind when building your crowdfunding platform.
Some desire to get equity share, creators’ products, or other commercial purposes, while others contribute with altruistic impulses. In any case, allowing investors to choose from various reward options helps encourage them for more contributions.
5. Ensure Security
It is always vital to ensure the safety and protection of clients’ sensitive information when creating a crowdfunding platform. It not only protects the users but will also save you lots of trouble.
Development Approach For A Crowdfunding Website
Choosing a development approach will help you understand how to build a crowdfunding platform eliminating possible hurdles in the future. Below you can see options that are commonly used for this purpose:
The CMS-based development approach is a type of web development that deals with the use of content management systems for the development of websites and web applications.
This approach is popular because it does not require any coding skills or knowledge about programming languages in order to create a site. Instead, the user can simply log into their CMS and edit the site’s content. There are many different types of CMSs, but some examples include WordPress, Drupal, and Joomla.
The CMS-based development approach is a popular choice for small business owners who are looking for an easy way to maintain their sites without having to learn how to code.
The main issue with using the CMS-based options to build your crowdfunding platform is that some functionality can be unavailable to execute without modifying code. Also, your platform will not be unique as it will be using built-in templates used by many other people.
A white-label solution is a type of cooperation between two companies: one creates a product or service, and the second promotes it under its brand and logo. This allows companies to do what they do best and get maximum profit.
Building a crowdfunding solution from scratch can sometimes be time-consuming. For companies that don’t have free time, Sloboda Studio offers a ready-made crowdfunding development solution that you can buy and rebrand as your own.
This ready-made solution will help you launch faster than competitors, even on a tight budget. It will save you 2X development time and comes with base features such as:
- Log in/Sign up
- Auth via Facebook and Google
- 3-step profile creation
- Ability to add image sliders to show “How it works” (You can do that easily with a WordPress slider plugin, btw)
- Ability to add three types of sessions: online (Zoom), offline, and recordings (Vimeo)
- Zoom integration
- Search & Navigation
- Video upload
- Stripe Connect integration
- User subscription logic
- Admin panel
Custom development is the process of creating software for a specific purpose. It is often undertaken by an organization’s in-house developers, but it can also be contracted out to an external developer.
Custom development can be used in many ways:
- to extend the functionality of an existing system
- to meet new requirements not met by off-the-shelf products
- as an alternative to purchasing software from commercial vendors
Custom development provides organizations with the ability to create software that meets their specific needs and requirements. It also allows them to create applications tailored to their business processes and workflows, which may not otherwise be possible with off-the-shelf products.
Sloboda Studio is one of the top Custom software development companies on the market recognized by Clutch.co. They have tons of experience building crowdfunding platforms. One of their most prominent projects is CrowdInvest.
CrowdInvest is a social crowd-investing app for investment clubs. Thanks to it, users can collaborate, invest, and earn together.
Sloboda Studio’s team built the MVP of the social crowd investment mobile application with clear architecture and lots of features, including registration, invites, email and SMS notifications, and access to real-time market data.
Build a crowdfunding platform and benefit from industry popularity and growth that opens up new and long-lasting business opportunities. The crowdfunding market is expected to grow and expand through niche crowdfunding software products.
Sloboda Studio can provide you with a team of top software developers who understand the ins and outs of custom crowd-investing website development. This will eliminate many possible risks and get a scalable solution.
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