Do you actually know the worth of your ideas? There are always risks involved in creating something unique. Every idea goes through many brainstorming sessions, sleepless nights, and market analysis.
But you never know which concept will make the long journey and bring its creators huge ROIs. Many ideas were buried due to uncertainties and financial worries. However, crowdfunding platforms may assist entrepreneurs, business owners, startups, and individuals in turning their ideas into reality.
Funding a business idea can be challenging. Money does not come as easy as you believe it will, and loans to start your entrepreneurial journey require a minimum credit score and collateral. Building a crowdfunding website or app for business is gaining traction and rising to the top.
This blog will discuss crowdfunding principles, market overview, types of crowdfunding, core features, crowdfunding website development costs, and much more.
So, let’s dive in.
What is Crowdfunding?
Crowdfunding means when many people fund a project. It is a platform where people raise funds for a particular cause that they think is encouraging.
Users’ donations may be little, but with a good campaign, they can assist you in scaling your startup into a booming business quicker than you envision.
The projects can quickly begin by obtaining the required money. Most campaigns occur on crowdfunding platforms with predefined deadlines to raise funds and reveal remarkable financial objectives.
Crowdfunding today is a prospering industry, and a leading web and mobile app development company can help entrepreneurs and businesses to build a robust crowdfunding platform.
Crowdfunding Platform: Market Overview
Let’s know some of the significant stats on the global crowdfunding market. It is challenging to estimate the overall size of the crowdfunding market accurately as it depends on various aspects like the worldwide volume of transactions, equities earned and their unstable value on the market, donations, indirect contributions, etc.
- According to Fundera, the crowdfunding market is projected to be worth more than $300 billion in 2030
As per reports, on average successful crowdfunding campaigns have raised $28,656.
- The digital sector of the industry is still in its infancy despite its rapid development. This means new crowdfunding platform businesses have even more chances to raise online money that will change the game and stay current with trends.
According to these figures, the crowdfunding business is now very substantial and is projected to continue expanding over the coming decades.
Let’s go into more detail about developing a crowdfunding platform.
Types of Crowdfunding Platforms
1. Equity Crowdfunding
Equity crowdfunding is a way of raising capital online from investors to finance a business. In return for money, investors receive equity ownership in the company. Every investor is authorized to a stake in the business proportional to their investment.
Popular Equity-based Crowdfunding Examples
2. Donation Crowdfunding
Donation-based crowdfunding is when individuals give a campaign, business, or person money to support personal or social causes with no financial returns for the contributors.
Popular Donation-based Crowdfunding Examples
3. Reward Crowdfunding
In Rewards-based crowdfunding, individuals donate to a startup or a crowdfunding idea with the expectation of accepting a non-financial reward in return, like goods or services, T-shirts, etc. Rewards crowdfunding varies by the size of the funding based on how much contribution participants provide to a campaign.
Popular Rewards-based Crowdfunding Examples
4. Peer-to-Peer Lending
Peer-to-Peer (P2P) lending permits individuals to receive loans directly from other people, eliminating the financial organization as the middleman. The money pledged by supporters is a loan and must be refunded at an agreed interest rate by a specific deadline.
Popular Rewards-based Crowdfunding Examples
- Lending Club
5. Real Estate Crowdfunding
In business, real estate crowdfunding presents people with prospects to invest in real estate projects. It is particularly beneficial for people interested in real estate investing but does not want to deal with contractors, mortgage brokers, or real estate agents.
Popular Rewards-based Crowdfunding Examples
6. Human Capital Crowdfunding
It is a method for individuals to raise money to support their personal development or projects. Investors are offered the chance to fund a project in exchange for a percentage of the winning amount.
For example, various sports players crowdfund money to play and then allocate a share of their winnings back to investors.
7. Profit-sharing / Revenue-sharing Crowdfunding
Profit-sharing or revenue-sharing is a fundraising mechanism that delivers lenders recurring payments based on the business’s financial results. Enterprises can give a percentage of sales revenue or a share of pre-determined net profit from their business quarterly or annually.
Most Popular Crowdfunding Platforms in 2023
Kickstarter is a major crowdfunding platform. It is a rewards-based donation platform that has been assisting enterprises in raising money since April 28, 2009. A platform like Kickstarter is ideal for startups, SMEs, designers, techies, artists, musicians, filmmakers, etc.
According to Kickstarter’s official website, they have raised more than $6.5 billion with more than 220,083 successfully funded projects till now.
Successful Kickstarter campaign:
- Four Secret Novels by Brandon Sanderson (2022) — $22 Million; Ongoing.
(185,341 backers pledged $41,754,153 to help bring this project to life.)
Founded on May 10, 2010, GoFundMe is a donation-based crowdfunding platform. It is ideal for charitable initiatives, startups, service-based causes, artists, designers, etc. Moreover, enterprises can also take advantage of the platform. Since its inception, GoFundMe has been liable for generating more than $5 billion for various projects.
Successful GoFundMe campaign:
- Time’s Up Legal Defense Fund- $22 million
Established in January 2008, Indiegogo is a reward-based platform that delivers two kinds of funding.
Fixed funding authorizes you to set a goal for a specific amount of money, and if you do not reach your target, all funds are returned to donors.
Another one is flexible funding; it is when you are searching for any amount of monetary help, all of which you can keep whether you hit your goal or not. It is ideal for small-scale businesses, service-based causes, techies, startups, and service-based causes.
Successful Indiegogo campaign:
- MATE X: Raised almost $17.6 million
Launched in January 2012, RocketHub is a global crowdfunding platform for startups. This business crowdfunding platform is ideal for SMEs, scientists, startups, artists, social projects, etc.
You can develop an interest for your backers by pitching your idea, which brings more feedback on your project alongside extra funding.
Successful RocketHub campaign:
- Clean the World- $12,034
Launched in 2006, MightyCause (earlier known as Razoo) crowdfunding platform is not aimed much toward for-profit making business funding as it is all meant for helping deserving causes. It is ideal for nonprofit organizations, social causes, engrossing donors with online fundraising, etc.
It has successfully generated more than $600 million for addressing real causes. From multi-million dollar companies to individuals, donations are gathered for those in need.
Must-Have Features For Your Crowdfunding Platform
- Sign up and sign in
- See the ideas
- Fund the ideas
- Payment management
- Chat or Audio call feature
- Present feedback
- Loyalty points & referrals
- Admin login panel
- User profile management
- Ads management
- Premium and subscription model
- Revenue management
- Verify the account of users
- Help & support
- Manage the feedback
Steps For Crowdfunding Platform Development
In the discovery phase, the crowdfunding platform development firm and customer work jointly to collect appropriate and needed information to create an excellent user experience. Discovery services include the following aspects:
- Validating the Idea: Entrepreneurs or business owners can quickly validate your crowdfunding idea. The procedure starts with documentation of your vision, ideation, market research, wireframing, and concluding the technical infrastructure.
- Building an MVP: Building an MVP of your crowdfunding platform can assist you in understanding the real-time feedback of the market without investing significant funds at risk. Minimum viable product (MVP) comprises the main features of a product. You can build the platform in less budget and time than a fully-fledged version. You can consult an MVP development company to assist you in making an MVP for your crowdfunding platform.
- Create a Detailed Budget Plan: A complete estimation of crowdfunding website and app development costs should cover all essential process elements. The best method to create a sophisticated budget plan is to list the entire prerequisites and take the assistance of a mobile and website development company to help you with their experience in providing the most precise cost estimation.
The design has multiple segments that work together to improve the experience of your website and mobile application. The UI/UX developers will assist you with the design, including graphic design, interface design, etc. These components decide how your crowdfunding app and website look, feels and works on different devices.
The deployment of a crowdfunding platform consists of two segments:
App Deployment: A mobile app development company will use the following steps to deploy your crowdfunding app to various stores-
- Build your developer account
- Link your merchant account
- Build a crowdfunding app
- Prepare store listing
- Upload an APK file for Android and .ipa file for iOS
- Set up pricing and distribution
- Release the app to stores
After completing the deployment of the platform module, it is time for website and mobile app testing to find bugs and glitches that might hamper the platform’s performance.
Support and Maintenance
The web and mobile app development company ensures the platform functionality stays intact through maintenance services. Thus, they keep on working for additional improvements and the inclusion of new features.
How Do Crowdfunding Platforms Make Money?
Crowdfunding in business makes money through platform fees and the type of campaigns fundraisers choose.
Platform Fees: Platform fees are the primary method for crowdfunding platforms to make money. There are two kinds of fundraisers:
All or Nothing Campaigns: In this, startups, entrepreneurs, or individuals must reach the goal they set to keep the funds that they raised. Usually, the platform takes 5% of funds raised if the campaign is successful.
Keep What You Raise Campaigns: You can keep the number of funds raised by the campaign, even if you have not achieved your goal at the end of your fundraising time. Platforms typically will charge a total fee of 8-10%.
Most crowdfunding platforms also charge a payment processing fee, which averages around 3%; however, it varies from platform to platform.
So, if you are a business owner looking to build a crowdfunding website, you can take the assistance of a reliable crowdfunding platform development company.
How Could Blockchain Help Crowdfunding Platforms?
There are multiple areas where Blockchain could help and improve the crowdfunding platforms using Blockchain technology. It will assist in eliminating the requirement for intermediaries or third parties.
Since Blockchain is decentralized, the decision-making capability will transfer from a centralized entity to a distributed network. The crowdfunding platform will become more transparent, and the project can get maximum visibility.
Also Read: Complete Guide On DeFi App Development
To deliver investors equity or ownership, Blockchain could depend on asset tokenization. For instance, for an individual who intends to build numerous new products with the incoming funds and give a small equity stake in the company.
Any project that uses a Blockchain-based crowdfunding model can get financed. Any individual with an internet connection can donate to projects.
Using Blockchain as asset tokens give makers and entrepreneurs more freedom. Asset tokens have their currency to help companies to hire specialists and advertisers.
You can hire a Blockchain development company to build an engaging and secured crowdfunding platform for scalability.
How to Develop a Crowdfunding Platform: The Technology Stack
Selecting the technology stack is crucial for crowdfunding platform development. Given this, an essential thing for business owners would be to choose a reliable crowdfunding developer.
The team of professionals you will require to develop your crowdfunding platform incorporates a Project Manager, Business Analyst, UX/UI Designer, CTO, Back-end developer, Front-end developer, QA tester, and DevOps. The main benefit is their expertise in crowdfunding website design.
Tech Stack For Crowdfunding Website Development
Your team of crowdfunding developers should have an extensive understanding of the following tech stacks.
|Development Element||Tech Stack|
|Front-end tools||Swift, Kotlin, React|
|Back-end tools||Laravel, NodeJ.S., MySQL, Redis, MongoDB, VULTR|
|UI/UX||Figma, Principle, balsamiq|
|Hosting||Amazon Web Services|
|Management||Jira Software, slack, confluent|
Tech Stack Crowdfunding For Mobile App Development
For an iOS-based App
- Programming Languages: Objective-C, Swift
- Toolkit: Apple Xcode
- SDK: iOS SDK
For an Android-based App
- Programming Languages: Java, Kotlin
- Toolkit: Android Studio and Android Developer Tools
- SDK: Android SDK
How Much Does It Cost To Build a Crowdfunding Platform?
The precise cost relies on various development factors, some of which contain the complexity of the business model, elements, functionalities, and the experience of the web development company.
Crowdfunding development solutions providers influence the cost by the team type you choose.
Cost to Create a Crowdfunding App
The cost of creating a Crowdfunding app relies on your business model, needs, and other factors. The factor on which the cost of a crowdfunding app depends is
- The application design and development.
- Basic features
- The advanced features of the crowdfunding app
- The platform used (Android or IOS)
- The intricacy of the app
- Mobile developer’s experience
Thus, it is challenging to provide an exact estimation of a crowdfunding app because it will depend on various factors such as app design, platform, app development team, technology stack used, location, etc. However, the approximate cost of creating a crowdfunding app ranges from $50,000 to $80,000.
Crowdfunding App Development Cost Based on Location
|Location||Approximate Cost (Per Hour Basis)|
|United States (USA)||$30-$150|
|Australia & New Zealand||$35-$150|
The contrast based on team location is usually because of labor laws and the relative cost of living in each country.
For startups, launching a new crowdfunding platform can be a profitable endeavor. It’s not always easy to build a successful business.
However, the success stories of crowdfunding platforms like Kickstarter or GoFundMe demonstrate that it is the best course of action to materialize ideas.
At SparxIT, we know the challenges of building a sizable live crowdfunding website or app. Our developers have successfully delivered more than 500 projects. We have professionals who are equipped to deliver outstanding crowdfunding platform development services.
Additionally, we are a well-known, reliable, and gold-verified digital solution provider.
Doubt our knowledge? View our Clutch profile.
Contact us to schedule a free consultation about your crowdfunding business idea.
Frequently Asked Questions
How do I make a crowdfunding platform?
To build a crowdfunding platform, use the following steps:
- Perform market research and know your competitor’s strategy
- Determine your niche
- Decide on the sort of finance, like a donation, investment, or loan
- Select the monetization method
- Identify target audience
- Create a business strategy.
- Launch your crowdfunding platform and get feedback
Are crowdfunding platforms legal?
Yes. The laws that apply to your crowdsourcing business will depend on your location.
Which type of crowdfunding is most popular?
Rewards crowdfunding is the most well-known kind of crowdsourcing, thanks to reward-based platforms like Kickstarter.
What are the rules for crowdfunding?
All regulated crowdfunding transactions in the US must be conducted online through a broker-dealer or funding portal that has registered with the SEC as an intermediary.