How to Create a Crowdfunding Platform in 2023: Complete Step-by-Step Guide

Crowdfunding is gaining traction and becoming a leader in the digital economy. In 2021, the global crowdfunding market size was over $17 billion and is projected to reach a value of about $43 billion by 2028.

More than half of crowdfunding campaigns achieve success. What’s more, 78% of projects raise more money than had been set as the initial funding goal.

The crowdfunding topic has piqued the interest of both small businesses willing to gather the capital for their growth and investors thinking of building their own website.

However, as new players are entering the market every day, how to create a crowdfunding platform now before it’s too late?

One of our clients came to us with a similar question. Being a financial advisor and an investment strategist, the customer wanted to open new market opportunities.

As a result, the Sloboda Studio team built a social crowd investing app where users can create their investment clubs, collaborate, and earn money.

Sure, even giants such as Kickstarter need some time to grow. Below we have a number of tips on how to create a crowdfunding website, including the technical aspects of development, possible challenges, market trends, and more.

How to Start a Crowdfunding Platform

To start a crowdfunding platform, begin by defining your platform’s niche and target audience. Design a user-friendly interface and create a secure payment system. Develop robust features for project creation, promotion, and fund disbursement. Adhere to legal and regulatory requirements. Launch, market, and attract both project creators and backers.

Market Overview

Crowdfunding is the sector of the economy showing a higher-than-average growth rate of over 16%. Equity represents the largest segment, while the reward-based type experiences the fastest growth.

Global Crowdfunding Market Report

Yet, despite the dynamic development, the digital side of the industry is still in the early stages. For new crowdfunding platform businesses, this means they have even more diverse opportunities to raise game-changing capital online and keep up with new trends.

The study by ResearchGate revealed that investors are most interested in creative and tech-oriented projects. Examples include developing a game, recording an album, or making a film.

Project Success Based on its Category

Crowdfunding Industry Development: Gaining Leading Role in Digital Economy and Future Trends

American analysts Yancy Strickler and Fred Benenson found that crowdfunding project success depends on how information is spread. The most value is achieved through dissemination via social networks and interactions with friends or acquaintances.

Most of the donations come at the beginning of the project. To maintain the dynamics of fees and avoid the project’s “dead zone”, fundraisers need to launch various promotions, advertising, and other events.

Crowdfunding Industry Development: Gaining Leading Role in Digital Economy and Future Trends

Based on Startups.com statistics, the business and entrepreneurship sectors along with social causes markets, raise the most money.

Startups.com

Clearly, the platform’s success also depends on knowing the target audience to form the right community around the project author. The statistics show that general crowdfunding participants are between 24 and 35 years old. Men are more likely to invest in an unknown startup.

New Trends to Watch in the Crowdfunding Industry

Crowdfunding companies expand their reach to conquer a global audience through a variety of channels, including social media platforms. The latter simplifies campaign promoting and sales marketing.

Based on the Global Crowdfunding Market research by Skyquest, the demand for crowdfunding activities through social media is projected to increase. The growing usage of smartphones and the Internet will also foster crowdfunding growth. Reward-based and small donation models are the fastest growing methods in terms of raising revenue.

The above research showed that most people are more likely to donate for a greater cause like the environment or animal protection and innovative recycling projects. Investment in real estate is considered reliable and trustworthy. In turn, cryptocurrency seems both trendy and intangible.

All in all, a list of major trends to watch according to Skyquest, include:

• Reward-based crowdfunding. Raising capital through online platforms and offering investors gifts, perks, or rewards for their contributions. For example, early-stage companies looking for investors for a specific project can generate higher revenue in the future. As a bonus for larger deposit amount, investors can win a personal meeting with the founder or get a free version of the product.

• Social media crowdfunding. Raising capital for small projects through social media channels in the initial stage or after the MVP launch. It is a way to get funding for a specific purpose. Plus, social crowd investing apps and investment clubs are also raising significant funding and gaining traction.

• Micro-donation. Transferring money through payment terminals or payslips. This is a great solution for young people searching for ways to get involved in crowdfunding projects but who do not have enough financial means.

• Crowdfunding in real estate programs through financial securities. Financing new real estate development projects, constructions, or renovations. Real estate is expected to be a great investment for years to come. The average return on investment (ROI) in the US real estate market represents 8.6%. The number may change within the market based on the specialized area of the sector. For example, the residential real estate performance is 10.5%, while REITs is 11.8%. Real Estate Investment Trust (REIT) is a reliable long-term investment when you don’t need to buy or own physical property. Investors get the returns earned by commercial real estate.

• Crowdfunding in sustainability projects and renewable energies. The crowdfunding market in the renewable energy sector is increasing, representing about 75% growth. Social expectations of sustainable investors who want to give meaning to their savings contribute to the profitability of projects, as well as project owners who have also financed their own, which are the main reasons for the sector’s growth.

• Crowdfunding of cryptocurrency projects. This method is relatively new. Still, projects that have raised millions already exist. For instance, Ethereum’s ICO (initial coin offering) managed to raise $16 million in 2014 by selling ether tokens.

How to Create a Crowdfunding Platform: 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.

It is necessary to work out a set of features during the project discovery phase by analyzing the business model, competitive market, available time, and budgets.

On the whole, we will discuss the two core groups of crowdfunding platform features below.

6 Core Features to Create a Crowdfunding Website

These are the features your crowdfunding platform can’t survive without. We recommend starting their development first, as they are crucial for your platform.

Welcome Page

The welcome page is the face of any website. And it’s 100% relevant to the crowdfunding platform. This part of the website is require as it:

• describes the project’s main mission;
• gives customers a short description;
• 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

User Account

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;
• their own projects.

User account section

Saved Projects Section

Recommended Projects Section

Following Accounts Section

Starting a Crowdfunding Campaign

The campaign begins when users add a new project to start receiving money from backers – people who donate to support the users’ ideas.

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, and 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. It involves 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

If the crowdfunding platform is dedicated to several topics, there is a need to add Categories. 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.

Kickstarter Categories

Payment System

No money, no crowdfunding. But without a solid payment system, the proper processing of funds is going to be troublesome.

There is a large number of payment providers on the market.

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 instance, Stripe is restricted in Israel, Panama, Emirates, and Thailand. Similarly, Braintree doesn’t work in Switzerland, Norway, Australia, and most Asian countries.

How to Create a Crowdfunding Platform: Optional Features

Optional features usually fall into the following categories:

• Unique product features are needed to differentiate you from your competitors. Their choice is based on your exact business idea and model.

• Additional features may be vital and significantly improve your user experience. But unlike the unique features, they aren’t necessary when developing your product’s first version – 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.

How to Create a Crowdfunding Platform: The Best Technology Stack

Choosing the technology stack may be a question of time and money. Given this, the most logical thing for startups would be to consider open-source programming languages. Their main advantage is that the original source code is available for free and open to the public.

At the MVP building point, Sloboda Studio developers would recommend choosing the startup-friendly technologies that will save your time and budget, like Ruby on Rails or Python, over the more advanced and massive ones like Java.

For example, such crowdfunding giants as Kickstarter, Indiegogo, and Fundly were created with Ruby on Rails.

For our CrowdInvest project, the Sloboda Studio team chose Python to bring the client’s idea to life. We developed a working MVP with the core features and integrated external APIs.

For another Sloboda Studio project, the Origin Research platform, we used Ruby on Rails. We selected this framework as it allowed us to implement our client’s ideas faster and more cost-effectively.

How to Create a Crowdfunding Website: Challenges You May Face

There are four major challenges crowdfunding platforms face, namely:

• Privacy and security

To transfer money safely, the platform should work under a secure protocol. Also, the SSL certificate is required on every site that processes personal data.

• Fraud

Fraudsters may raise money for a fake project. Finding ways to verify the identity of both fundraisers and potential donors is critical. The effective solution is to integrate KYC (Know Your Customer) verification tool into your platform to ensure data privacy and security.

• Building trust

Potential sponsors need to understand where and why they invest their money and what impact their donations will have. The platform should include detailed information on the direct results of donations and an explanation of how the money will be raised through this campaign with time limits.

• Regulatory compliance

Governments worldwide have created a legal framework to regulate this kind of business. As a rule, crowdfunding platforms must receive legal status to conduct their activities transparently. 

Crowdfunding platforms must be registered as brokers in France, Italy, the United Kingdom, and the United States. In Italy, the platforms have to be attached to a financial institution.

At the European Union level, there are several directives in place:

• Regulatory registrations with the national licensing authority;
• Institutional and capital requirements for platforms;
• Limiting the models of crowdfunding.

8 Steps to Build a Crowdfunding Website

Once we have determined the key features and tech stack, it’s time to discuss the development process. Here are 8 steps to take a crowdfunding platform from initial concept to final market launch.

1. Doing Market Research

The market analysis of other platforms will help you understand how they collect money and make their projects visible to crowds.

Also, market research allows startups to:

• identify the key demographics and market segments;
• understand the demand;
• see how their product will perform in the real world.

The European Commission offers the following checklist to help startups identify the right direction when doing market research.

European Commission

2. Identifying Market Leaders

The crowdfunding market is fragmented in nature and characterized by a high level of competition.

Based on Yahoo! Finance, Kickstarter is the industry leader with more than $6 billion raised since it was founded in 2009. Their portfolio includes almost 223 thousand funded projects. It is followed by GoFundMe with over $5 billion in pledges and contributions, Seedrs ($2.3 billion), Indiegogo ($1 billion), and CircleUp ($253 million).

Before developing your crowdfunding platform, you need to figure out how your competitors generate revenue. To start with, three questions should be answered:

• What are today’s most successful business models?

• How are these models exposed to credit or default risk for the investor?

• How do these platforms assess, mitigate, and communicate those risks?

Also, it is essential to determine the following:

• Relations between the number of existing platforms and the types of projects that prevail in the region you will operate. It lays bare implications for liquidity, credit, or default risk.

• The financial regulatory framework in which crowdfunding platforms operate. It will help learn the financial instruments they offer and the adopted rules, regulations, or restrictions in place in a given location to create an additional level of protection.

3. Determining the Monetization Model

Most platforms use the method of generating income when commission is paid only when the necessary amount of money is raised. This monetization model requires a constant flow of new projects and investors to bring revenue.

There are other ways to make money with crowdfunding:

• Fees for extra services and features on the platform like assistance with project management, marketing campaign, videos, branding, and prototype creation.

• Commissions for advertisements placed on your platform.

• Charging for better visibility and being on top of search results on the platforms.

Let’s look at the Kickstarter monetization models that proved effective:

• All-or–nothing strategy. That means the project gets money only if the desired amount is reached. If it is not, the cards of backers won’t be charged. The project authors won’t be funded, even if they are just a couple of dollars away from their goal.

• Time limitations. Each campaign has its time limit for funding. If the project fails to get the full amount before the “deadline”, no money will be collected.

• Rewards for backers. The campaign creators need 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.

4. Choosing a Team

Based on your needs, you can choose an outsourced or in-house team to develop your crowdfunding platform:

• Working with remote employees allows companies 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 quickly as needed, as long as you work with the team.

• Partnering with an outsourcing vendor helps to set up a dedicated development team for your project.

Our company, Sloboda Studio, has helped its clients find the right team compositions with skilled engineers and dedicated managers. We follow a rigorous process of hiring people so our customers can save time and money.

At the same time, Sloboda Studio is flexible at work. Once a project needs scaling, our engineers will help extend the product by adding more features. As of now, we’ve completed over 200 projects worldwide and have more than 30 projects that are currently scaling or in stages of development.

5. Conducting 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 need to:

• market research throughout;
• analyze the competitive market;
• come up with the essential functions of your product and the tech specs for further development.

Sometimes, the discovery phase can be associated with unnecessary costs. Yet, it helps the team create a detailed business plan, foresee the risks, and avoid many issues in future development.

6. Building the MVP

The best thing to do when starting a project is to build an MVP (Minimal Viable Product) to test the idea. MVP is the first implementation of a product with a minimum set of features needed to keep the product alive and attract the first customers and the attention of potential investors.

The design team starts building a clickable prototype once the market research is done, the technology stack and project architecture are determined.

Then, the front-end developers write coding and create your platform’s interface, connecting the design to the back-end.

In the meantime, back-end engineers improve the server, server-side applications, and databases, creating a functional, seamless experience for the end-user.

Typically, the development team involves:

• designers;
• front-end and back-end developers;
• a project manager;
• a business analyst to inform you about the progress and possible challenges.

7. Testing the First Version

After the MVP is created, QA (quality assurance) specialists test it to eliminate errors and deficiencies. It is done to ensure that all users have a good experience with your platform, and prevent issues later on.

8. Launching a Crowdfunding Platform and Gathering Feedback From Users

Finally, it is time to launch the first MVP to get market feedback. At this step, it is essential to:

• Conduct surveys to identify pain points users have.
• Determine what new user-oriented features to add in the future.
• Collect customer complaints to brainstorm potential solutions.

The technologies constantly evolve, so you should support, upgrade, and maintain the platform. A timely product modification helps in delivering a better user experience.

Our Experience in Crowdfunding Platform Development

Sloboda Studio is a professional team with years in custom web and app development for the FinTech industry. Our specialists have been ranked as Top Ruby on Rails Developers by Clutch.

We have successfully completed over 100 projects for customers from the United Kingdom, the USA, Canada, Germany, Japan, and others.

CrowdInvest

Social crowdfunding investing app CrowdInvest is an application for investment clubs. Its users can communicate, get access to real-time market data and stock prices, invest, and earn.

Our client’s goal was to first create a social crowd investment mobile app for IOS and Android. For this project, Sloboda Studio’s team suggested developing the MVP with the following core features:

• Registration;
• Invites functionality; 
• Chat function;
• Email and SMS notifications;
• Dashboard.

To automate communication and messaging, we integrated a messaging system SendGrid, Google Firebase, and Sendbird.

Also, our team enabled integration with external APIs, namely Plaid, Xiginte, Verify, and IDAnalyzer to simplify the investment and verification processes.

As a result, Sloboda Studio built the MVP of the social crowd investment mobile app with clear architecture, key features, and integrations.

How Much Does It Cost to Start a Crowdfunding Website?

The cost and time depend on various development factors, including:

• the project’s complexity;
• the business model;
• features;
• the development team’s expertise, etc.

Creating a crowdfunding platform from scratch may cost about $80,350, depending on the complexity of the requirements.

If you want to launch quickly to validate your idea at minimal cost, use a white-label solution. We can help you set it up and customize it to your business needs. The cost may start from $56,450.

Of all the factors influencing the price, the development team is the most significant. It affects the cost in several ways:

• teams’ experience;
• type of a team: in-house, freelance, or outsourcing agency;
• their location.

The average timeline for building a crowdfunding platform MVP is about 4-6 months.

How to Make a Crowdfunding Website Stand Out

When thinking about crowdfunding websites, Kickstarter is usually the first that comes to mind. However, this doesn’t mean that smaller businesses cannot compete with big brands. In the US alone, there are 1,356 crowdfunding companies. And each can become an alternative to famous names. It is especially true if you do a project that is different in a certain way.

Sloboda Studio will share some ways that can help distinguish your product from the competition.

Take a Niche

Kickstarter is dedicated to the crowdfunding of creative projects. Some crowdfunding platforms focus on just one category. Such an approach definitely narrows the target audience. But, at the same time, it becomes 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.

While equity-based campaigns, charity, and other forms of investment are often perceived as usual, real estate crowdfunding is trendy, offering something that others can’t. Investors find it attractive as they are in charge of cash flow and their own assets.

For startups, it can be confusing to decide whether a niche is worth pursuing. In this case, choosing a white-label solution will be a better investment than creating a crowdfunding platform from scratch.

This way, companies get a ready-made platform with all the needed functionality and throw it to the market with fewer efforts.

For example, Sloboda Studio has developed a real estate crowdfunding white-label platform that businesses can purchase, adjust with their own design, and bring their idea to life faster.

The solution allows investors to get a profit out of commercial real estate available for buying or renting out. In addition, platform users have access to an investors’ dashboard. It allows them to track their records and a list of properties to invest in.

Add Features No One Else Has

Think about the unique features every time you ask yourself a question about how to create a crowdfunding platform. 

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 also allowed people to create relationships within a platform. While backers can support a creator with money, the backer should post their content on Patreon. So this is some kind of social network with a possibility to fund people whose work backers like.

There is no need to turn the crowdfunding website into a social network. Yet, it can be regarded as a pattern to adapt. 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 intuitive to use. Your customers shouldn’t have any difficulties navigating your platform.

But you can go further: make your website enjoyable to use. Look at how Kickstarter helps customers get the right recommendations using this funny questionnaire.

Kickstarter Questionnaire for Adjustable Feed

Top 7 Crowdfunding Platforms

Kickstarter was the first to launch a whole new market of online funding platforms.

Let’s turn to this platform and the most well-known Kickstarter alternatives.

Kickstarter

A global crowdfunding platform, Kickstarter, focuses on creative projects.

Kickstarter Home Page

“To help bring creative projects to life” is how Kickstarter represents its mission.

Kickstarter was the first to successfully implement the crowdfunding model. The platform focuses on a middle ground between patronage and commerce. As a result, people can offer their creative ideas in exchange for support from backers.

The platform appeared to be a real salvation for young entrepreneurs. Based on the Kickstarter stats, about $6.8 billion was pledged. There were over 225,000 funded projects during the platform’s existence.

Kickstarter Stats

GoFundMe

The world’s second-largest platform, GoFundMe, is specializing in charitable crowdfunding campaigns. It has generated over $5 billion in pledges and contributions. Also, the platform has funded over 50,000 projects since its inception in 2010.

GoFundMe Home Page

Seedrs

An equity crowdfunding platform, Seedrs, offers shares in unlisted early-stage businesses or business ventures in exchange for participation in their future profits.

This year, the company passed £2 billion in total investments recorded. In 2021, Seedrs investors managed to hit the £1M target in 20 minutes.

Seedrs Home Page

Indiegogo

Another top crowdfunding website, Indiegogo, allows people to support funds for an idea, charity, or startup business. The platform was launched in 2007. Since then, it has raised $1.6 billion. The total number of platform users has surpassed 11 million with 7,000 active campaigns.

Indiegogo Home Page

CircleUp

Founded in 2012, CircleUp now connects early-stage brands and innovative companies to capital in three ways:

• internally-managed funds;
• credit programs;
• private markets of institutional investors.

The platform has generated more than $300 million. 92,000 data points have been monitored and evaluated on the platform.

CircleUp Home Page

Fundable

Crowdfunding platform Fundable offers both rewards-based and equity-based campaigns for small businesses. It is based on fees. The platform doesn’t take any percent of the campaign. It charges up to $180 for each campaign month. The average crowdfunding campaign lasts about 9 weeks and gains around $7,000.

Fundable Home Page

Fundly

A platform Fundly is used for any charity projects, including non-profit organizations, schools, or social teams. The platform has raised a total of $330 million.

Fundly Home Page

What is a Crowdfunding Website?

A crowdfunding platform is a platform where people can post their business ideas to gather money for their implementation.

Different crowdfunding platforms may offer various rules for campaigns and backers. Let’s focus on them below.

Types of Crowdfunding Platforms

Online crowdfunding platforms are represented in different types and shapes, like peer-to-peer, equity, business, profit-sharing, or donation platforms.

• Peer-to-peer lending. This type of crowdfunding platform implies crowd money lending to a company. The users give money to support a particular project. 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 is mainly dedicated to investment in business stakes. The 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. For example, these are the goods or services the company produces.

• Profit-sharing. In this model, companies receive funding now in exchange for their future profits or revenues.

Final Words

Launching a new crowdfunding platform can be a successful endeavor for startup companies.

Sure, the path to a profitable business isn’t always smooth. Yet, the success stories of market leaders like Kickstarter or GoFundMe show that the only right way is to start materializing ideas.

Overall, here are a few things to do that can help streamline the website creation process:

• Conducting a discovery stage and creating a business plan;
• Setting the development team and choosing the technology stack;
• Selecting the key features of your future platform.

At Sloboda Studio, we have been developing online platforms for 13+ years. FinTech has been one of our core expertise from the start. This allowed our team to collect enough information and gain relevant experience that we successfully applied to each project we worked on. Feel free to book a consultation about your crowdfunding business Idea.