Probably everyone has heard of Kickstarter, Patreon and other similar platforms that help raise money for various ideas and projects. But few people know that these sites work for a reason: they charge 5% of the funds raised as a reward for the brokerage services. This is a significant gain. In this article, we will tell you how to create a complete analogue of such a platform.
But first, let’s look at some numbers:
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What is a crowdfunding website and how does it work?
First, let’s start with the definition of crowdfunding. So crowdfunding is a way to raise money to finance projects and businesses. This allows fundraisers to raise money from a large number of people. Crowdfunding is most often used by start-ups or growing companies as a way to access alternative funds. It is an innovative way to find funding sources for new projects, businesses or ideas.
- A crowdfunding platform is a website that is needed to host and promote various startup projects. Simply put, it’s a place where people can post their business ideas to raise money and bring potential projects to life.
- The idea of crowdfunding is simple. The entrepreneur opens an account on the platform that suits him best. Indicate the financing method (if the platform offers several) and the desired amount. A campaign cannot run infinitely, so the platform limits the maximum duration of the campaign.
- In case the required amount has been reached, the investor’s account is debited and the project manager receives funds. For its part, the platform charges a commission on the amount raised (usually 5-12%) if the goal is achieved.
When creating a crowdfunding platform, you need to take care of both investors and creators. To provide the best experience, it’s key to consider the set of features required by sponsors and creators. There are three types of users on a crowdfunding website: administrators, investors, and creators. Creators create a page to showcase their project details and prototypes using text, videos, and photos.
Project creators set the funding goal and timeline. The creators also create reward tiers for backers who pledge specific amounts. The more the sponsor pledges, the higher the reward. When a sufficient number of backers fund the project, the creator can develop and realize the vision of it. Depending on the complexity of the project, backers may have to wait months for the finished product.
What is Kickstarter?
Kickstarter is a crowdfunding website where creators they can raise funds to bring their innovative ideas to life. It all started in 2002 when Kickstarter co-founder Perry Chen wanted to organize a Kruder & Dorfmeister concert in New Orleans. The concert did not take place, but the Kickstarter idea was born. Perry came up with the concept of building a space where everyone could share their ideas with the public, and if other people liked the idea, they could give some money to help bring it to life.
- For a long time time, the idea was just an idea. Then everything changed in 2007. That’s when Perry Chen met Charles Adler, a designer who asked him to create a website. The work was completed in 2009, and in April of that year, three friends officially announced the launch of the project.
- As of July 2021, nearly 20 million people have pledged to provide monetary support to anyone of the more than 500,000 projects launched on Kickstarter (whether successful or not). Additionally, more than 6.7 million people have supported more than one project on the crowdfunding site.
- From July 2012 to July 2021, a total of nearly $6 billion was allocated to projects in the Kickstarter crowdfunding platform.
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The 5 Key Business Models of Crowdfunding Platforms
Modern crowdfunding platforms come in many different types and forms, such as peer-to-peer, equity, business, profit sharing, or donation platforms, but you should choose the one that suits your project, business, or venture.
✅Peer-to-peer lending This type of crowdfunding platform involves a crowdfunding loan to the company. Users donate money to support a specific project , and after the end of the campaign, a certain amount goes to the owner of the project.
✅ Equity Сrowdfunding for commercial purposes, mainly engaged in investments in commercial packages The platform is very similar to the venture capital of conventional exchanges.
✅ Reward-based People can participate in various projects in exchange for non-financial rewards, usually goods or services that the company produces. company.
✅ Profit sharing In this model, companies receive financing now in exchange for their future profits or profits.
✅ Donation -based Usually these crowdfunding platforms are for charitable projects. After all, people can donate small amounts to cover larger funding.
Kickstarter Busin Model ess
Before moving into the development process, consider creating a business plan for the crowdfunding website. The Kickstarter business model includes:
✔ All-or-nothing strategy IT means that the project receives money only if the required amount is reached. Otherwise, no money will be collected from the backers’ cards and the creator will not receive funding.
✔ Time limits Each campaign has its funding time, and if the project does not receive the full amount before the “deadline”, the money will not be collected.
✔ Rewards from sponsors Creators must provide rewards to sponsors.
✔ Anonymous If backers do not wish to reveal their names, they can remain anonymous and take an oath of incognito.
The purpose of Kickstarter is to help start-up companies to obtain financing for their fledgling project. Also, Kickstarter keeps 5% of the money raised. Amazon, as a payment processor, charges an additional 3-5%
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The list of the most popular crowdfunding websites
Let’s take a look at some of the most popular Kickstarter alternatives.
🔹Indiegogo
Launched in 2008, Indiegogo runs donation-based fundraising campaigns for a wide range of segments. Get paid 9% of the funds raised and return 5% if the campaign reaches its goal.
🔹 Kiva
Not all crowdfunding platforms are for money. Kiva is a non-profit organization that uses the concept of crowdfunding to reach those without access to financial institutions. The team has been working towards the goal since 2005 and helping those in need around the world.
🔹 CrowdfunderCrowdfunder is a platform for startups and social enterprises. The team is recognized for building investment ecosystems and connecting fundraising entrepreneurs with local investors.
🔹 Crowd Supply
Crowd Supply goes one step further by helping manufacturers and innovators with physical product projects. It is not only a fundraising platform, but also an online store that promotes sales. Features products from a wide variety of categories.
🔹 Bankable
Fundable offers rewards-based campaigns and promotions for small businesses. The platform does not take any percentage of the campaign, but charges up to $180 for each month of the campaign.
Crucial Features for Developing a Crowdfunding Website
Here we describe the set of features for each type of user.
Feature set for creators
⚙ Registration It is key to give the opportunity to register using email and password or using social media accounts.
⚙ Authorization and accounts Creators must sign in with an email address or phone number and be able to reset passwords.
⚙ Profiles Creators should be able to submit information about themselves and their teams and add an avatar.
⚙ Managing projects Users need the opportunity to build projects to get money. So they should be able to add project descriptions, videos, photos, and business plans.
⚙ Manage your investments Campaigners need to see contribution details, view how much they have raised and see if they have achieved their goals.
Investor Feature Set
⚙ Registration To make registration easy, allow backers to register not only with email but also with email accounts. social networks.
⚙ Authorization Allow sponsors to log into their accounts with email and password, update their phone numbers, change passwords, and delete their accounts.
⚙ Profiles Backers should be able to select an avatar and provide brief information about themselves.
⚙ Project scouting Investors need the opportunity to see the profiles of the projects they like. which should contain detailed descriptions, videos, photos, and summaries of project risks and opportunities.
⚙ Payments Backers should be able to select payment methods, manage transactions, and get their money back if the project is not fully funded.
Feature set for administrators
⚙ Account Management Adminis nee ds to filter and sort author lists and sponsors. It’s also critical to be able to ban users if they break the rules.
⚙ Administrator Accounts Separate accounts help define which administrator made specific changes. Increases the transparency of the change history on the website so that changes can be reverted in the event of an admin error.
⚙ Project and Category Management Admins must sort List projects, read project descriptions, and deactivate projects if they violate platform rules. They also need the opportunity to add or remove categories from the list.
⚙ Investment and transaction management In case of problems with transactions, administrators need to view payment details and Report bugs to customers. .
⚙ Support Admins have to control and filter contact requests and be able to read reviews from investors and creators.
How to create a website like Kickstarter in 10 easy steps
Now, when you are familiar with all the critical points about crowdfunding website development, we can move on to the workflow. The Code&Care team created a simple step-by-step guide for you.
Stage #1. Analyze Competitor Performance Analysis of competitor platforms is key. It will help you understand the way they are building a crowdfunding website. Before starting, we recommend comparing platforms based on three points: the form of financing, the platform fee, the audience.
Stage #2. Select the type, monetization method and target audience After completing the analysis, you can choose the optimal crowdfunding business model to launch your crowdfunding site. Literally, how your site will attract money from investors and on what terms.
Stage #3. Turn your idea into a business plan A real budget is required to run a crowdfunding campaign. The budget defines the resources that the company needs to “use” the cash and balances the costs and benefits so that the cash flow of the company is always positive. There are expected costs involved in creating the video presentation of the project, press releases, and digital content needed to promote your crowdfunding operation. Then there are the costs of the platform and, depending on the type of financing desired, legal or audit costs.
Stage #4: Choosing the best web development partner When developing a crowdfunding campaign, the development team must set a clear objective: the site must be recognizable and directed to the target audience. Going to the platform page, the user should immediately understand what the site is focused on and how to perform certain actions: register, launch a project, view a list, invest money.
Stage #5. Start with the MVP of your idea Once you know exactly what kind of crowdfunding platform you want to build, you can start building your MVP. This is best done using prototyping techniques. Its essence is to take the efforts, desires, pleasures, preferences and behavior patterns of the user characters and relate them to the functions of the platform that is being created.
Stage #6. Create a design When creating a crowdfunding site, always focus on your target audience and create designs and features specifically for them. However, make sure that the site interface remains familiar and understandable, otherwise visitors will feel uncomfortable using the website.
Stage #7. Testing After the crowdfunding platform is prototyped, it should be tested: first with the help of QA specialists, and when most of the bugs and shortcomings are fixed with the help of real users. The approaches can be completely different.
Stage #8: Begin Website Development The most voluminous stage of launching a crowdfunding platform is writing the code for the site, testing it, and implementing it. You can start a crowdfunding design from scratch, which is time consuming and expensive, but gives you maximum control and allows you to create a truly unique website. Or you can use templates and ready-made solutions from the Internet.
Stage #9. Test and run your project Launching your website should be a big problem, or rather, you should be doing it. This will attract maximum attention to the crowdfunding site. To do this, you need to:
- Find authors of various interesting and worthwhile crowdfunding campaigns who agree to use your platform to raise funds. Make sure early initiatives raise money as quickly as possible.
- Organize email and social media marketing campaigns ahead of time.
- Make discounts available on all projects at launch .
Stage #10. Start assembling the full-size product With a prototype ready and successfully tested, you can continue developing the platform, adding some additional features.
Practical tips to make your crowdfunding platform unique
There are already many crowdfunding platforms on the market. When wondering how to launch a crowdfunding website, think about the fact that you need to not only create a project “like Kickstarter”, but also make it different in a certain way so that it stands out in the market.
- Tip #1. Select a niche Kickstarter is all about creative crowdfunding projects. Some crowdfunding platforms try to focus on a single category: this approach narrows the target audience, but at the same time makes it much easier to attract them. So who said you can’t pick a specific niche to focus on? When you are about to launch a crowdfunding site, look around you: many areas need support, such as health, business, actions, local initiatives, science, etc.
- Tip #2. Add features that no one else has Think about unique features every time you ask yourself the question of how to build a crowdfunding website. Think about how you can update the platform: enable social interaction, let people find like-minded people and create campaigns together, start a creative laboratory – everything unique will increase the interest of clients in your project.
- Tip #3. Provide a convenient user experience The overall value of ease of use is to make your interface simple and even intuitive to use – your customers should have no difficulty navigating your platform. But you can go further: make your site fun to use.
Technology stack for building a crowdfunding website from scratch
When you’re just starting out developing a crowdfunding platform, selecting a set of technologies can be a matter of time and budget. As we mentioned earlier, the best thing to do when building a project is to start with the MVP: the first implementation of a product that has the minimum set of features needed to keep the product running and attract the first customers and attention. of future sponsors.
At this stage, we recommend selecting technologies that will save you time and budget. The Code&Care team recommends you choose one of the following options:
🔹 The first is to select PHP for back-end development, Vue.js for front-end development, and MySQL and Redis are used as the database. 🔹 The second is to use Node.js for back-end, React.js for front-end development, and PostgreSQL and MongoDB as database.
✔ We recommend you choose Stripe or Paypal for payment. ✔ Possible third-party integrations are Google services (Maps, Drive, Gmail, etc.), Google Authenticator, Facebook authentication, Apple authentication, QuickBooks. ✔ Perfect tools for support functions are Zoho Desk or Monday.com integration.
How much does it cost to set up a crowdfunding platform like Kickstarter?
If you’re thinking about crowdfunding platform development from scratch, then you probably want to know your cost. The organization of a website like Kickstarter is not tied to the development and visits to social networks. Other stages are also important:
- Hiring employees;
- Formation of a technical support base;
- Obtaining permits and licenses.
And this is not a complete list. The final cost can vary from $40,000 to $80,000 depending on the capabilities and needs of the team (specialist) implementing the project. The other factors to take into account are the selected programming languages, the complexity of the design, the number of integrations, etc.
The best option is to contact the Code&Care team for a full consultation and quote. preliminary.
Conclusion
To create a space where an organization can maintain a relationship with the Internet community, it is necessary to develop a dedicated platform, spending a sufficient amount of money and time. Our company offers services for the creation of crowdfunding platforms that allow you to draw attention to your project and raise the necessary funds.
Due to the wide possibilities of crowdfunding, more people will be able to learn about your project and participate in it. she. Code&Care offers solutions to open new portals and add crowdfunding functionality to an existing site.
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