How to Build a Crowdfunding Platform for Fundraising
We all heard about Kickstarter, Patreon, Indiegogo and other platforms that help to raise money for the implementation of various ideas and projects. But few people know that these sites work for a reason: they keep 5% of the funds raised as a reward for intermediary services. These are huge profits, and today we will talk about how to grab a piece of this pie for yourself by building your own crowdfunding platform to raise funds.
The first thing you need to start a crowdfunding platform is to determine its positioning. Will it be a site to raise money for charity projects, film making, real estate development, video game development or something else? You will finance only large projects, support beginners or everyone (for example, to collect money for potato salad).
For example, if you create a site to raise funds for the construction of real estate or launch large business projects, then you can not do without KYC. If this is a platform to support content creators, you need pop-up windows for subscriptions and donate messages (with their voice acting). If this is a platform to support blockchain startups, smart contracts are needed to raise funds and pay tokens.
Focusing on successful competitors, you can understand what tools should be integrated into the platform of one or another orientation. Here are some popular niche crowdfunding sites.
What other things need to be included in the financing terms:
Listing fee. When investors are offered equity participation in a project (shares, share of profits), the platform, as a rule, takes a fee in the form of a one-time payment for listing the project. This is due to the fact that, according to SEC regulations, such sites are not entitled to charge investment fees. Fees vary by site.
Service fee. Such a model is typically used by P2P credit platforms, such as LendingClub, Prosper and Landpay. They charge a fee for payments from borrowers, take a share of the loan taken, charge a fee to view a borrower's profile, or charge a percentage of the lenders' annual margin. So, LendingClub charges 1% of each payment of the borrower, and on Landpay you need to pay 2 -2.5% for viewing the profile and issuing a new loan and 0.5-1% for the annual margin.
Subscription fee. This is rare, but some crowdfunding platforms charge for “membership” or “subscription”. Usually, fees in this case are fixed and tied to access to services. For example, you pay $ 100 a month and you can run 3 projects, $ 150 - 10 projects, $ 300 - an unlimited number of projects. This model is popular on sites for musicians, photographers and other people who can look for money for small short-term projects. Example of a site with a subscription - Fundable, for access to which you need to pay $ 179 per month.
Payment for advertising and additional services. The fee for the fact that the crowdfunding project is placed on the main page of the platform is at the top of the listing or recommended to regular investors. In addition, you can take money for consulting services, due diligence materials and the placement of regular contextual advertising. This model of monetization is usually used as an addition to one of the above. And involves a paid promotion projects.
When developing a design, a clear task must be set in front of the development team - it should be recognizable and target-oriented. When you go to the platform page, the user should immediately understand what the site is focused on and how to perform certain actions: register, run a project, view the listing, invest money.
Another thing to think about is developing a personal account and a mini-CRM. The Sponsor’s statistics will be collected in the Personal Account: how much money he invested in which projects, whether they achieved success, what the reward will be and the like. Mini-CRM will help project authors to view profiles of sponsors, filter them by region, type and amount of reward, set statuses and communicate with them.
Easy and quick registration. The process should be as clear, simple and fast as possible. Ideally, registration should be via social networks or Google accounts with the ability to edit your personal profile.
When you finally decide that you are ready to develop your own crowdfunding platform, before you do something, ask for legal advice. Quite often, such activity requires registration or a license from a government agency, for example, the SEC in the USA or the FCA in the UK. This is especially important if you provide a platform for financing the construction of real estate, loans or participation in high-risk investment projects.
A lawyer is also needed in order to correctly draw up a User Agreement and typical contract forms that will govern the relationship of the parties on your platform.
Best of all, if you take a good lawyer in the staff or hire a law firm on a permanent basis.