From the books subscriptions and war bonds in the 19th century to modern platforms, crowdfunding has a long history.
But what was the first crowdfunding website? Kickstarter, for sure.
Today, just on this crowdfunding platform, there has been $4,770,949,649 pledged to almost 200,000 projects.
The number of crowdfunding platforms is growing, as well as their revenue. But we have decided not to reinvent the wheel and take this platform as an example to show you all the benefits and pitfalls of crowdfunding development.
You will see that even giants such as Kickstarter need some time to grow. And this is OK! Below we have a number of tips on how to start a crowdfunding website.
The Kickstarter history
What is a Crowdfunding Website?
A crowdfunding platform is a platform that is used to host and promote various startup projects on the Internet. In other words, this is a place where people can post their business ideas in order to gather money for their implementation.
Different crowdfunding platforms may offer various rules for campaigns and backers, but, in today’s blog post, we choose to focus on the first-ever and the top crowdfunding website – Kickstarter.
Types of Crowdfunding Platforms
The modern crowdfunding platforms are represented in different types and shapes, like peer-to-peer, equity, business, profit-sharing or donation platforms – but you have to choose the one that is suitable for your project, business, or venture.
- Peer-to-peer lending. This type of crowdfunding platform implies the crowd lending money to a company. The users give money to support a particular project and, once the campaign is over, an amount goes to the project owner.
- Donation-based Usually such crowdfunding platforms are dedicated to charity projects. People can donate small amounts to meet the larger funding in the end.
- Equity Crowdfunding for business goals, dedicated mostly to investment in business stakes. An idea of such a platform is very similar to venture capital of common stock exchanges.
- Rewards-based People can contribute to various kinds of projects in exchange for a non-financial reward – usually the goods or services the company produces.
- Profit-sharing: In this model, companies receive funding now in exchange for their future profits or revenues.
Top 7 Crowdfunding Platforms
Kickstarter was the first one and it has launched the whole new market of online funding platforms.
Let’s turn to the most well-known Kickstarter alternatives.
A global crowdfunding platform, Kickstarter, focuses on creative projects.
Another top crowdfunding website, Indiegogo, allows people to support funds for an idea, charity, or startup business
The crowdfunding platform Patreon is focusing mostly on supporting creators of video content, music, and art.
Fundable offers both rewards-based and equity-based campaigns for small businesses. Fundable bases on fees: the platform doesn’t take any percent of the campaign, but charges up to $180 for each campaign month.
A platform for charitable crowdfunding campaigns – GoFundMe.
Fundly is a platform for any kinds of charity projects, including non-profit organizations, schools, or social teams.
Surely, the leading crowdfunding platforms are Kickstarter and Indiegogo. Let’s have a closer look on them.
How Does Kickstarter Work?
“To help bring creative projects to life” – this is how Kickstarter represents its mission.
Kickstarter was the first to successfully implement the crowdfunding model: to focus on a middle ground between patronage and commerce, so people could offer their creative ideas in exchange for support from backers.
The platform appeared to be a real salvation for young entrepreneurs: according to the Kickstarter stats, there has been almost $5 billion pledged and over 170,000 projects backed during the platform’s existence.
Let’s have a closer look at the business model of Kickstarter.
Before jumping to the development process, consider creating a crowdfunding website business plan.
Kickstarter business model includes:
- All-or–nothing strategy. That means that the project gets money only if the desired amount is reached. If it is not, the cards of backers won’t be charged and the project authors won’t be funded, even if they are just a couple dollars away from their goal.
- Time limitations. Each campaign has its time limit for funding, and if the project fails to get the full amount before the “deadline”, no money will be collected.
- Rewards for backers. The campaign creators are required to provide the backers with rewards.
- Anonyms. If the backers do not want to show their names, they are allowed to remain anonymous and pledge incognito.
The ultimate goal of the Kickstarter platform is to help startups to receive funding for their young project. At the same time Kickstarter takes 5% of the money involved. Amazon, as a payment system, charges an additional 3-5%.
How Startuppers Get Funded
To start collecting money for the project on Kickstarter, any startupper needs to be registered on its platforms and add the project on it.
The Kickstarter platform has a number of requirements for suitable projects:
- Description and clear pictures;
- Being creative;
- Fits one of the Kickstarter categories: Arts, Comics & Illustration, Design & Tech, Film, Food & Craft, Games, Music, Publishing;
- Has a physical prototype;
- Has a manufacturing plan.
Depending on the type of your future crowdfunding website, I encourage you to choose the requirements that would filter the projects and make your product more credible.
On Kickstarter, the project creator must indicate the deadline (but no longer than 3 months) and the minimum amount of funds to be raised.
If the project does not raise the required amount by the end of the term, the money is returned to the donors.
Kickstarter does not claim ownership of the projects or products that participate in campaigns; however, once the funding is complete, downloaded information and materials cannot be edited or removed.
How to Start a Crowdfunding Website: Choosing Features
When you start to build a crowdfunding website, it’s important to note that there isn’t a unified optimal set of product features. In most cases it would be unfair to speak about the features for a particular type of product.
A necessary set of features should be worked out during the project discovery phase through the analysis of the business model, competitive market, available time, and budgets.
But, on the whole, we can discuss the two core groups of crowdfunding platform features:
These are the features your crowdfunding platform can’t survive without. We recommend starting their development first as they are crucial for your platform.
- Unique product features are needed to differentiate you from your competitors and heavily depend on your exact business idea and model.
- Additional features may be really vital and greatly improve your user experience. But unlike the unique features, they aren’t that necessary when developing the first version of your product – your MVP. In most cases, it is better to implement the additional features later on and save some budget for promoting the MVP of the platform.
6 Core Features to Create Crowdfunding Website
The welcome page is the face of any website, and it’s 100% relevant to the crowdfunding platform. This part of the website describes the main mission of the project, gives customers a short description, and presents goals and the mission. This page welcomes users.
Kickstarter Welcome Page
Log In/Sign Up
Needless to say, these features will let your customers complete their registration. This step is required as long as only registered users are allowed to add their campaigns, back existing ones, like projects, or follow their creators.
Kickstarter Log-in/Sign Up Feature
The user account comprises features such as profile, settings, messages, and user activity. As we can see on Kickstarter, this page can also have recommended projects, saved projects, listings of people your customers have chosen to follow, and their own projects.
User account section
Saved Projects Section
Recommended Projects Section
Following Accounts Section
Starting a Crowdfunding Campaign
When startupers think of how to start a crowdfunding website, this feature is usually what they start with.
This feature stands for adding a new project by users so they can start Starting a crowdfunding campaign is when users add a new project so they can start receiving money from backers – people who donate to support the users’ idea.
On Kickstarter, this feature consists of three steps:
- The first step lets the users choose their campaign topic so they can find their “target audience”. Topics include: arts, comics & illustration, design & tech, film, food & craft, games, music, publishing. This step could be edited later.
Starting a campaign on Kickstarter: Step 1
- The second step is the Project Idea: the users are asked to describe what their project is dedicated to.
Start a campaign on Kickstarter: Step 2
- The third step is confirming the customer’s eligibility: choosing a location, age, verifying a bank account and government-issued ID and confirming that the user has a debit/credit card.
Start a campaign on Kickstarter: Step 3
Categories are needed if the crowdfunding platform is dedicated to several topics. For example, Kickstarter has eleven categories: Arts, Comics, Illustration, Design, Tech, Film, Food, Craft, Games, Music, Publishing. Therefore, each category has its own page that you will need to develop.
Kickstarter Design & Tech Category Page
Although, if you are considering creating a niche crowdfunding service that is dedicated to a single topic, you can skip this feature.
No money, no crowdfunding. But without a solid payment system, the proper processing of funds is going to be troublesome.
When starting to build your own crowdfunding platform, consider there is a big number of payment providers on the market. But, in reality, this choice appears to not be that easy.
For instance, Kickstarter uses Amazon Payments and Stripe, and Indiegogo uses PayPal and Stripe. But apart from these payment solutions, you can consider payment gateways such as MANGOPAY, Adyen, Skrill, PayPal, Braintree or Stripe.
NB: When choosing a payment solution, you should first consider your region and the region of your target audience. Even the world’s leading payment providers may be restricted in your target market. For example, Stripe is restricted in Bulgaria, Cyprus, Emirates, Czech Republic, Malta, Hungary, and Romania. Similarly, Braintree doesn’t work in Switzerland, Norway, Australia, and most Asian countries.
Support a campaign on Kickstarter
3 Steps to Build a Crowdfunding Website
Now that we have determined the key features, it’s time to talk about the development process.
Choose a Team
Depending on your needs, you can choose an outsourced or in-house team for the development of your crowdfunding platform:
- Working with remote employees provides companies with an opportunity to attract diverse talent and find an experienced team. As a product owner, you can reduce development costs and focus on other important tasks, such as the marketing or advertising of your product.
- Working with an in-house team may cost more money, but you can fully control the development process and be ready for discussion as fast as needed, as long as you work together with the team.
Conduct a Discovery Phase
When starting a crowdfunding platform, begin with a discovery phase. The discovery phase should be the initial stage of any project development. During this stage, your team will conduct the market research throughout, analyze the competitive market, and come up with the essential functionality of your product and the tech specs of the further development.
Nowadays, even the discovery phase is often associated with unnecessary costs, but, at the same time, the discovery phase helps the team to create a detailed business plan, foresee the risks, and avoid lots of issues in future development.
Choose the Technology Stack
When you are at the start of crowdfunding website development, choosing the technology stack may be a question of time and money.
As we mentioned above, the best thing to do when founding a project is to start with an MVP: the first implementation of a product that has a minimum set of features needed to keep the product alive, and attract the first customers and attention of the potential investors.
At this point, we’d recommend choosing the startup-friendly technologies – technologies that are going to save your time and budget (like Ruby on Rails or PHP) over the more advanced and massive ones (like Java). For example, such crowdfunding giants as Kickstarter, Indiegogo and Fundly were created with Ruby and Rails.
How to Make a Crowdfunding Website Unique
What is the best crowdfunding platform? Hard to answer. There are already a lot of crowdfunding platforms on the market. When you wonder how to start a crowdfunding website, consider that you not only need to create a project “like Kickstarter”, but make it different in a certain way to differentiate on the market.
Take a Niche
Kickstarter is dedicated to the crowdfunding of creative projects. Some crowdfunding platforms try to focus on just one category: such an approach definitely narrows the target audience, but, at the same time, makes it much easier to attract this audience:
- Slated – film crowdfunding direct to investors;
- Pursu.it – funding for Canadian athletes;
- Credibles – funding your favorite local food business;
- Small Change Fund – funding environmental projects;
- Spot.us – community funded reporting.
So who said you cannot choose a particular niche to focus on? When you’re aiming to start a crowdfunding website, take a look around – there are a lot of spheres to support, like health, business, equities, local initiatives, science, etc.
Add Features No One Else Has
Think about the unique features every time you ask yourself a question about how to build a crowdfunding website.
Let’s take a step aside and talk about Patreon – another Kickstarter competitor. This platform has not only taken its niche by supporting content creators. It allowed people to create relationships within a platform: while backers can support a creator with money, the backer should post his or her content on Patreon. So we have some kind of social network with a possibility to fund people whose work backers like.
You don’t have to turn your crowdfunding website into a social network, but you can adapt the pattern. Think about how you can upgrade a platform: enable social interactions, allow people to find like-minded people and create campaigns together, launch a creative lab – anything unique will increase the customers’ curiosity about your project.
Provide a Friendly User Experience
The common meaning of user-friendliness is making your interface easy and even intuitive to use: your customers shouldn’t have any difficulties while navigating your platform.
But you can go further: make your website interesting to use. Take a look at how Kickstarter helps the customers to get the right recommendations using this funny questionnaire.
Kickstarter Questionnaire for Adjustable Feed
Now as you know how to start a crowdfunding platform – you are ready to move on to development.
Remember the things to do before you start to create a crowdfunding website:
- Conduct a discovery stage and create a business plan;
- Meet the team and choose the technology stack;
- Choose the key features of your future platform.
In Sloboda Studio, we have been developing online platforms for 10 years. Each project is special and needs a personal approach. Feel free to book a consultation about Your Idea.