How to Start a Crowdfunding Website in 8 Steps

Do you know how the British rock band Marillion got the money for their 1997 US tour? Well, the musicians launched a campaign on the internet and their fans donated $60,000 to support the idea. Pretty impressive, huh? In fact, that was the first noteworthy case of online crowdfunding. Since then, a lot has changed, but crowdfunding still is an efficient way to raise money for the desired project. So, let's find out how to start a crowdfunding website and fulfill the dreams.

In this article, you'll learn the crowdfunding basics and get the easy-to-follow guide on crowdfunding website development. So, let's get started.

Crowdfunding in a Nutshell

What exactly is crowdfunding? As it comes from the name, it's a process when lots of individuals finance a certain project via special internet platforms. And the great news is that any business idea (charity, arts, blogging, finance, marketing, or technologies) can be sponsored in this way. So, if you've ever supported a YouTube blogger via Patreon, it means you've already participated in a crowdfunding campaign.

So, what makes crowdfunding stand out among the other fundraising activities? Well, the difference lies in its multiple benefits that involve:

• High accessibility
• An unlimited number of supporters
• Lower maintenance costs 
• Advantages for the sponsors

Considering this, it's easy to guess why the global crowdfunding market is predicted to reach $300 billion by 2030.

Types of Crowdfunding

Since there are various crowdfunding models, let's try to classify them according to what is offered in exchange for the received funds.

Donation-Based

Donation-based crowdfunding takes place via the charity platforms like Causes or Crowdrise, where fundraisers usually do not offer anything in return for donations, except for the information. 

Reward-Based

By using reward-based websites, funders back campaigns that attract them, with the promise of receiving something in return. Typically, a copy of whatever product they're backing.

Equity-Based

Equity-based crowdfunding refers to the practice of selling the shares of a certain company via a special platform. Still, legal constraints imposed by some states slow things down in certain regions. 

Debt-Based

A debt-based crowdfunding takes place via peer-to-peer lending sites like LendingClub. The P2P model enables savers to earn more and borrowers to pay less, which is the ultimate advantage.

How to Create a Crowdfunding Platform?

Do you want to earn money by helping people fulfill their dreams? If so, launching a crowdfunding platform can become a possible solution. And below, you'll find the step-by-step instruction on how to create a crowdfunding website.

Step #1. Perform Market Analysis

Those who want to build a successful crowdfunding site start planning everything at least 6 months in advance. So, stick to this advice, and don't forget to conduct an analysis of your potential competitors. Pay special attention to the website's success rate and the target audience's peculiarities.

Step #2. Define Your Business Model

Once the analysis is complete, it's high time to choose the business model of your future crowdfunding platform (donation-, equity-, debt-, or reward-based). Also, think through the monetization model, i.e., decide how your website will generate revenue (via fees, paid features, ad campaigns, or targeting options).

Step #3. Make a Budget

To start a crowdfunding site, you'll need a considerable sum of money. So, if you don't want to overpay, calculate the expected costs and set the budget in compliance with all regulations.

Step #4. Choose a Reliable Developer

If you want to build an upscale product, choose a reliable software development vendor. This way, you'll get a clear project roadmap and feel safe about the time and cost of crowdfunding platform development.

Step #5. Start with an MVP

An MVP is the simplest version of a digital product with the number of features sufficient for launching and offering it to early users. So, in case you want to create a top-notch crowdfunding platform with the minimum effort, the MVP approach is a perfect option.

Step #6. Create a Crowdfunding Platform

After the MVP version is tested, it's time to start a full-scale development process. This step takes the most time and effort, so a well-knit development team is a must.

Step #7. Launch Your Product

Now, when the platform is ready, it's essential to think through the launching process. This event will call special attention and predetermine the future of your product. That's why create promotional campaigns in advance and prepare certain benefits for the first fundraisers.

Step #8. Stay Updated

After the platform launch, don't forget to collect and process feedback. This will help you enhance the crowdfunding website. Also, since such a complex product requires further maintenance, make sure you’ve included it in the budget plan.

Must Feautures for a Crowdfunding Website

Upscale crowdfunding platforms contain certain obligatory features. And we've decided to shortlist these features for you. So, don't forget them, when developing your website.

• User-friendly design suitable for any device
• The payment gateway allowing transactions with different currencies
• Reliable security measures to prevent fraudulent activity
• Progress meter to monitor the campaign's success
• Share buttons that help expand the campaign info across social networks

Our Tips for a Successful Campaign

It's essential to know your customer, when building a quality crowdfunding site. So let's analyze what makes a crowdfunding campaign successful to keep this in mind while developing the platform.

• The campaign text should be short (from 350 to 500 words), informative, and easy to get.
• Images and videos help boost the campaign, so don't forget to embed such an option into your crowdfunding platform.
• Сampaigns that contain personal information turn out to be more successful.
• When adding the targeting features, bear in mind that the first and last three days of the campaign are the periods when 42% of the money is raised.
• People aged 23–36 are more likely to take part in crowdfunding campaigns.
• To prepare and launch a successful campaign, a fundraiser needs up to 12 days.

The above-mentioned information is proved by our experience and statistical data.

FAQ

Now, when you know the crowdfunding basics, it's high time to discuss costs and fees.

How Do Crowdfunding Platform Owners Make Money?

Although most platform owners don't charge fees for the campaign creation and launch, they take a percentage of the amount raised. Also, they earn money when offering advanced paid features to fundraisers to boost a crowdfunding campaign. What's more, website owners can increase their revenue by selling the ad space to multiple advertisers.

How Much Does It Cost to Build a Crowdfunding Website?

Creating a crowdfunding platform requires time, effort, and money. According to our rough calculations, to start a crowdfunding platform with basic features, you'll need about $60–230,000. The exact cost will depend on the number of embedded options and the experience of the development team.

Is Crowdfunding Profitable?

Lots of individuals wonder whether it is profitable to become a sponsor. Well, as it was mentioned above, every type of crowdfunding presupposes some type of reward and, therefore, can be profitable. But if you choose a crowdfunding campaign as part of the investment strategy, don't forget to conduct a fundamental analysis of the project. Also, remember that high revenues always imply high risks.

Thoughts to Go

As you see, crowdfunding opens up vast opportunities for fundraisers, backers, and website owners. Still, before you plunge into the crowdfunding business, don't forget to find out whether it's legal in your country (mostly, it touches upon equity-based and debt-based crowdfunding). Since it's a relatively new fundraising strategy, not every state has worked out proper regulations yet. But if you live in the US, UK, UAE, Europe, or Saudi Arabia, feel free to build your own crowdfunding platform.

Please, get in touch with us to learn how to get a crowdfunding website tailored to your needs. Qulix Systems is a real expert in the custom software development field, ready to offer you upscale products and services.