How to Build a Crowdfunding Platform?

Crowdfunding has been a trend for quite some time, and it doesn’t come as a surprise. This fund-gathering model has helped tens of thousands of startups, small businesses, and independent inventors raise millions of dollars for their projects. Among other things, crowdfunding is a promising business model, which can be monetized, this way offering not only social impact but monetary benefits to crowdfunding website owners.

In this post, you’ll discover how a crowdfunding business works and makes money. Besides, you’ll review the core features of crowdfunding websites, and understand how to create a crowdfunding platform step-by-step. 

Crowdfunding Market Overview

The crowdfunding market continues to grow rapidly, driven by the increasing demand for alternative financing solutions across various sectors. In 2024, the global crowdfunding market size is estimated to be $17.87 billion, up from $15.42 billion in 2023, reflecting a Compound Annual Growth Rate (CAGR) of 15.9%​​. By 2028, the market is projected to reach $32.93 billion, with a CAGR of 16.5%.

At the same time, the annual transaction value in the Crowdfunding market is continuously at $1.2 billion. In the US, Crowdfunding in the Capital Raising market is experiencing a surge in popularity among tech startups seeking alternative funding sources.

As of 2024 and potentially beyond, key growth drivers in the crowdfunding market are:

• Diversification of crowdfunding models
• Technology integration
• Social media utilization

As can be concluded, there’s an opportunity for new market players to enter a specific niche in the large market and thrive. 

What Is A Crowdfunding Platform?

A crowdfunding platform or website is an online solution that allows individuals or organizations to raise funds for various projects or causes by collecting small amounts of money from a large number of people.

Crowdfunding websites provide instruments for campaign creation, management, and promotion. They enable project creators to reach a wide audience and gather financial support, this way supporting innovative or just small-scale projects. 

Types of Crowdfunding Platforms

Crowdfunding platforms can take many forms, depending on the ways to gather and distribute money as well as money recipients. Before you hire a crowdfunding platform development company, you should understand what crowdfunding platform type is most suited for your intended business model:

#1 Donation-based crowdfunding 

It supports charitable causes without expecting any financial return. Donors contribute to support causes they believe in, like disaster relief or medical expenses.

Examples: GoFundMe, JustGiving.

Use cases: Medical expenses, disaster relief, community projects.

#2 Reward-based crowdfunding 

In this method, backers receive a tangible reward or product in return for their contributions. Often used for creative projects and product launches.

Examples: Kickstarter, Indiegogo.

Use cases: Creative projects, product launches, innovative gadgets.

#3 Equity-based crowdfunding 

Investors receive equity or shares in the business they fund. Suitable for startups and small businesses seeking capital.

Examples: Crowdcube, Seedrs.

Use cases: Startups, small businesses, early-stage companies.

#4 Debt-based crowdfunding or Peer-to-Peer lending

Backers lend money to individuals or businesses and receive interest in return. It facilitates loans without traditional financial institutions.

Examples: LendingClub, Funding Circle.

Use cases: Personal loans, business loans, real estate projects.

#5 Real estate or equity crowdfunding 

Investors pool funds to invest in real estate projects and properties. Provides an opportunity to invest in real estate without buying properties outright.

Examples: Fundrise, RealtyMogul.

Use cases: Residential and commercial real estate investments, property development.

#6 Royalty-based crowdfunding 

In the last example of crowdfunding business, investors receive a percentage of revenue or royalties from the funded project. This model is often used for creative works like music and films.

Examples: Royalty Exchange.

Use cases: Music albums, film production, intellectual property projects.

How Do Crowdfunding Platforms Make Money: Monetization Models?

Niche-specific crowdfunding sites and platforms are becoming increasignly popular. Their quick success is related to the fact that they exclusively concentrate on one market sector or kind of product. They help company owners stand out in a market crowded with huge fundraising aggregators. You could compare it to the rise of cryptocurrencies which couldn’t be possible if a certain entrepreneur didn’t first build a crypto trading platform.

It is always a good idea to decide what your business model is before building a crowdfunding platform. Many businesses opt to start crowdfunding platforms and charge fees for their services. Although this is a popular strategy, it is not the only option to monetize your website. You may choose the most profitable technique from the four major approaches indicated below.

• Paid features or services. You may charge clients to access premium features on your crowdfunding site or supply them with extra, specialized services to earn cash. One example is the creation and management of presentation materials. Another example is campaign marketing or administration. You may also give contributors with full profiles that include complex stats for their campaigns.
• Commission. This is the most common income source for new crowdfunding sites, proving its efficacy. The creators pay no fees until the financing goal is met, at which time the platform earns a fee. The average cost is 5%, however it may vary from 2% to 20% depending on the conditions. If you’ve chosen this business approach, your crowdfunding website must have a consistent supply of patrons and campaigners.
• Advertisement. Including this kind of monetization is a terrific method to make some additional money throughout the crowdfunding website construction process. By using this business approach, you may boost the monetization of your app by placing adverts for third-party services and commodities.
• Campaign promotion. Fundraising campaigns can take several months to reach their goals, causing them to drop in search rankings as newer campaigns appear. To help campaign creators maintain visibility and attract more backers, you can offer a paid service that promotes their campaigns, keeping them at the top of search results. 

Choosing the best revenue model for both you and your customers is dependent on the platform you’ve chosen.

Core Features to Create a Crowdfunding Website

Having a sufficient suite of functionalities integrated into your crowdfunding business startup platform has a beneficial impact on the number of users and monetization opportunities. While creating an own crowdfunding platform, developers must work out the following features.

1. Welcome page. The home page is the online equivalent of a first impression. Furthermore, it is quite relevant to the crowdfunding website. This area of the website is vital since it provides the major objective, short description, goals, and mission of the project to prospective customers. You are warmly encouraged to use this website.
2. Log in and sign up. Signing up by email or social media might sometimes be enough to finance a project across many sites. Anyone over the age of 18 may contribute to or purchase equity in the firm without having to fulfill any specific financial restrictions.
3. Search page. Making it simple for investors to find projects that meet their requirements is critical. This feature requires the ability to choose categories and establish project deadlines. Backers should be able to see the duration of the campaign and the current amount raised if you use a search page, short description, photo, or video to pitch your proposal.
4. Project details. If they find an appealing proposal that meets the specified criteria, backers will want to learn more about the project. Crowdfunding platform developers should create features for checking the background, the promised incentives, the estimated number of investors, a thorough pitch, and a business strategy for the product.
5. Statistics and analytics. Given the large number of backers who contribute to numerous projects, crowdfunding platforms should allow donors to check in on their investments on a regular basis. An analytics dashboard must include information from ongoing project reports in order to track project development.
6. Payment methods. When the campaign finishes or the goal is met, the money are sent to the fundraiser in accordance with the platform’s requirements. Pledged funds for a project or company are kept in an escrow account maintained by the platform until the campaign ends. The inclusion of multiple common payment methods simplifies funding activities on a global scale.
7. User profiles. Each user should have a profile that tracks their contributions, investments, and personal details. Profiles help build a community by showcasing user activity and enabling communication between backers and project creators.
8. Social sharing. Integrating social media sharing buttons and features allows users to easily promote projects on their social networks. This increases visibility and can attract more backers, enhancing the overall success rate of campaigns.

Looking for custom fintech development services for your project? Don’t hesitate to reach out to the DashDevs team. 

Steps To Create A Crowdfunding Platform

So, you wonder, “how do I start crowdfunding” and need a roadmap? Here’s a step-by-step development process for creating a crowdfunding website you should undergo with a crowdfunding platform developer:  

#1 Conducting Market Research

A competitive analysis of alternative platforms will provide insight on how they acquire investors and publicize their ideas. Furthermore, by performing market research, new firms may learn about their target demographics and market sectors, determine the amount of demand for their product, and obtain vital information into the product’s potential commercial success.

To achieve financial success with your crowdfunding platform business, you must first research the industry and determine your competitors’ revenue sources. To begin, you must answer the following three questions:

• What are the most lucrative business models in the current day?
• How does the investor in these models assume credit or default risk?
• How do these platforms assess, mitigate, and communicate possible risks to users?

You can discover how the DashDevs team approaches market discovery from our respective service page. 

#2 Determining the Monetization Model

Determining the monetization model is crucial for the financial sustainability of your crowdfunding platform. The majority of platforms use a revenue model in which a commission is paid only if and when a certain quantity of money is achieved. This approach incentivizes both the platform and project creators to successfully meet funding goals. Additionally, this model requires a continuous influx of new projects and investors to maintain revenue flow.

To ensure that your crowdfunding platform has the best-fit monetization model, try the following approaches: 

• Analyze competitor models
• Evaluate your target audience
• Test different models and their combinations

#3 Choosing a Development Team

Depending on your needs, your successful crowdfunding platform may be designed in-house or by a third-party team. Outsourced approach allows businesses to establish more varied and experienced teams. As a product owner, you may reduce development costs in order to focus on other vital responsibilities, such as marketing or promotion of your product.

When you engage with an outsourcing firm, you have access to a team of developers that are solely dedicated to your project. Here at Dashdevs, we have helped our clients put together teams of talented engineers and diligent managers. Our development team is ready, willing, and able to contribute to your best project. 

#4 Building the MVP and Proceeding with Full-Scale Development

The best method to assure the success of a new enterprise is to first develop a Minimum Viable Product (MVP). 

The MVP provides a limited set of features necessary to meet the basic requirements and validate the idea in the market. After market research and deciding on a technological stack and project architecture, the design team starts work on a clickable prototype. The front-end developers then bring the design to life and connect it with the back-end systems. Meanwhile, back-end developers focus on optimizing the server, server-side applications, and databases to ensure a seamless, consistent user experience. 

Once the MVP is validated through user feedback, proceed with full-scale development by adding more features and refining the platform based on user insights.

You can discover differences between MVP and prototype and how MVP is beneficial for a project from another our blog post. 

#5 QA Testing the Crowdfunding Platform

Quality Assurance (QA) testing is a critical step in the development process to ensure that your crowdfunding platform functions flawlessly and provides a seamless user experience. Here’s the types of testing it’s recommended to run:

• Functional testing
• Usability testing
• Performance testing
• Security testing
• Compatibility testing
• Regression testing
• User Acceptance Testing (UAT)

#6 Launching a Crowdfunding Platform 

Now is the time to launch a minimum viable product and measure market demand. At this stage, it is critical to conduct surveys to discover consumer pain points, determine what new user-oriented features should be introduced in the future, and collect customer complaints to produce suggestions for correcting them. 

As new technologies become available, you should offer continuous platform maintenance, upgrades, and support. It is critical to make essential product modifications in a timely way in order to give a better quality experience for the end user.

How Much Does It Cost To Create A Crowdfunding Platform?

Investment to develop a crowdfunding platform can vary in the range of $50,000 - $125,000 for an average software solution and can reach up to $250,000 for most fully-fledged platforms. The overall cost and development time are influenced by multiple factors. Here are the main of them:

• Complexity and the suite of features
• Custom development or white label development 
• Development team location and expertise
• Technology stack
• Project timeline
• Complexity of UI/UX design
• Legal and compliance costs

For a more accurate estimate of the cost to develop a successful crowdfunding platforms, reach out to DashDevs team directly, and our experts will consult you. 

DashDevs Experience In Crowdfunding Platform Development

Challenge

In one of our past cases, a representative of Downing reached out to us with the request to help them improve the outdated infrastructure and scale the platform. Downing is a peer-to-peer investment platform used by over 25,000 British investors. At that time, it had some shortage of in-house domain expertise and high technical debt and needed high-security standards applicable to the financial industry.

Solution

We provided web application development services for the Downing investment management platform. It included: UI/UX design, solution architecture, back-end development, front-end development, QA, and business analysis. 

Results

We are product to showcase the following results from the case: doubled revenue growth, from £1,8M to £3,6M, £13M of funds raised, 25,000 user base growth.

You can discover more about Downing investment management platform development from our respective portfolio page. 

Final Take

Crowdfunding websites are trending as of 2024 and potentially beyond. They present a lucrative business opportunity as ways to monetize them are many. However, the development of such a solution is complex, so it’s advised to apply for crowdfunding platform development services from an external agency to approach it properly. 

DashDevs has been on the market for more than 13 years, constantly delivering fintech software solutions. With our diverse expertise and more than 500 projects under our belt, we can provide you with excellent development assistance should you need it for a crowdfunding platform or another project. 

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