Earlier, to get your business financed was a matter of asking investors for capital. And in return these investors were given return on their investments or equity position in the company.
Then entered Crowdfunding- a concept that completely changed the traditional method of raising funds from investors. Crowdfunding is a method through which businesses can raise capital through the collective effort of friends, family, customers, and individual investors. The process of raising funds through crowdfunding is very easy as a company or a person has to submit their project details or business idea on the crowdfunding websites. Crowdfunding websites like Kickstarter have made it very easy for anyone to raise money for their personal or business projects.
Keep reading the blog to have complete knowledge about crowdfunding and how you can make your own crowdfunding platform just like Kickstarter, GoFundMe and others.
Benefits of Crowdfunding:
- Having a crowdfunding platform will give you an access to thousands of accredited investors who can see, interact and share your fundraising crusade.
- A crowdfunding campaign can help you avoid risk and provides you with a valuable learning experience. It even allows entrepreneurs to gain some market acceptance before taking out the product concept into the market.
- A crowdfunding platform serves as a marketing tool for businesses as they help in highlighting a venture’s overall mission and vision to the market.
- Crowdfunding makes it possible to show investors and convince them that your venture has received ample market validation at an early stage.
- With the help of crowdfunding, entrepreneurs have the ability to engage the crowd and receive feedback as these are valuable and can help understand the new aspects of their business.
- It introduces prospective loyal customers as crowdfunding campaigns not only allows an entrepreneur to present a business or product but also provide them the opportunity to share the purpose and the message behind it.
Types of Crowdfunding
There are different types of crowdfunding and users can choose among them as per their preferences-
- Donation-based crowdfunding: In this type of crowdfunding, there is no financial return to the investors and this method include fundraising for disaster relief, charities, non-profits and medical bills.
- Rewards-based crowdfunding: It involves individuals who contribute to your business for a ‘reward’ in the form of product or service your company offers. This method is a subset of donation-based crowdfunding as there is no financial or equity return.
- Equity-based crowdfunding: This type of crowdfunding allows your investors to become a part-owners of your company by trading capital for equity shares.
How to build your own crowdfunding platform?
To make your own crowdfunding platform, you need to take many decisions, including your business model and how to create a platform to suit that model. Following are the stages you need to go through in order to create your own crowdfunding platform.
- Define your purpose for starting a crowdfunding platform
- Choosing a model which is best for your business is a crucial decision. There are basically, three crowdfunding models, donation-based, reward-based and equity-based.
- Select the right technologies for your crowdfunding platform in order to make it a success.
- Choose the right payment gateway for your crowdfunding platform using two common models- ‘all or nothing model’ and ‘partial payment model’.
Crowdfunding apps and websites help these small startups, entrepreneurs, social workers and charities gather funds for their projects or ventures. A crowdfunding solution is a complete software package consisting of applications and websites for managing the system and viewing reports and statistics.
- Publish projects: With the help of app and website, project concept can be easily published.
- Videos and images: Project owner can upload video presentation and images of the project easily.
- Browse and search projects: Projects can be easily browsed by category and searched by keywords.
- Shortlist or save: Interesting projects can be shortlisted and saved for future preferences.
- Project milestones and projects: To easily track and understand, project milestones and progress are displayed in the vertical chronology tree view.
- Comments and likes: Against every project people can give likes and comments.
- Login/Registration: Easy and fast registration or login.
- Notifications and emails: All the shortlisted and contributed projects receive timely notifications and emails on each activity or updates.
- Social Media sharing: Projects can be easily shared on the social media pages.
- Queries and feedback: All the project related queries and feedback can be easily sent to the project owners.
- Various payment options: Various payment gateways can be easily integrated with the system for payment of contributions and investments.
- Project owner dashboard: Project owners can create or update projects, view contributions and other relevant details from their dashboard in the app or website.
The cost of developing an app and web like Kickstarter
To develop your own crowdfunding platform would cost you around $3000 to $6000. If you want to add on some advanced feature the cost may increase respectively.
In this blog we have mentioned all the essentials related to crowdfunding. If you are looking for the similar platform like Kickstarter, so you should know all these things in relation to the crowdfunding platform.