Nowadays, crowdfunding platforms like Kickstarter and Indiegogo have made it easy for startups to raise funds. The last decade was a boon for startups and innovative ideas. To keep this startup trend fueled by lucrative investments, there will be a need for many other crowdfunding platforms. Hence, there is an increase in demand for crowdfunding app development.
Questions like the crowdfunding app development cost, how long will it take to develop one, and the features that should be incorporated into a crowdfunding app are crucial to answer. But, before we jump on answering these questions, let's first understand the market trend and some industry jargons.
Crowdfunding Market Trends
According to Statista, the crowdfunding segment is expected to reach $1,053.7 million by the end of 2021. Post-2021, the transaction value will see a compound annual growth rate of 3.33% during 2021 and 2025, where the total investment will reach $1,201.1 million by 2025.
Forbes states that currently, Chinese crowdfunding platforms by JD, Taobao, and Alibaba are leading the global market, even though China has a closed ecosystem on the internet.
These crowdfunding leaders already had funded some loud projects, such as Poweregg drone raised $15 million on JD, whereas fingerprint smart lock inventor Kaadas received $4.5 million funding through Taobao.
What You Should Know to Build a P2P Crowdfunding App
There are things you should know before you learn how to create a successful crowdfunding app. So, before sailing off, let's understand the basics:
It isn't rocket science to build a peer-to-peer crowdfunding app; you need the right mindset and arsenal to break through the fear of jargons, FinTech regulations, and development.
Mobile platform - It depends on your target audience. You can pick among iOS and Android or create your crowdfunding app for both mobile platforms. If most of your intended users are on one mobile platform, it's better for you to launch your app's MVP (Minimum Viable Product) for the single platform and test your app idea. This will significantly reduce your initial investment.
Off-the-shelf softwares - There are several ready-made software crowdfunding solutions available in the market that allow you to shorten your journey to launch your crowdfunding app. However, these solutions are more targeted to small communities and events. On a grander scale, these off-the-shelf software solutions fail to deliver the promises.
Outsourcing - With Fintech development outsourcing, you’ll be hiring a FinTech development company that will develop the crowdfunding app for you. You can also partially outsource the development, meaning that the work your in-house development team finds hard to execute, you can outsource those particular tasks to the FinTech development company. However, I would recommend you to go with complete outsourcing as some FinTech developers are tremendous when it comes to implementing technology into the financial space. They are aware of best practices related to user experience and FinTech compliances.
Digital signature and encryption - Since your P2P crowdfunding app will be dealing with a lot of sensitive financial data, it is crucial for you to invest in security. Also, safeguarding the customer's personal and financial information is a compulsory requirement across the world.
UI/UX - Although it is true, we shouldn't judge a book by its cover; we don't have control over user preferences. Especially at these times, when there are already some big players in the market. If your crowdfunding app looks lame, no one will give credit to your functionalities and offerings. The look and feel of your app is as essential as its existence.
Crowdfunding Business Models
Indeed, building a crowdfunding app is a great idea. But, how would you make money out of your crowdfunding app? There are several different business models for crowdfunding apps. It would help if you brainstormed on them at the time of building your app concept. This will make your requirements more clear and straightforward.
- Peer to peer lending
- Royalty-based earning
- Equity-based earning
- Donation-based earning
- Hybrid model
Among all these business models, P2P lending is the most popular since it enables startups to borrow funds directly from the investors. There is no intermediary except your crowdfunding app, which acts as a platform to bridge the gap between investors and borrowers.
The P2P crowdfunding platforms don't bear any risk for investors, and these platforms can grow to a scale that was impossible with traditional crowdfunding methods. Some P2P lending platforms even invest their own money alongside the retail investors'. Such platforms have more trustworthiness than other crowdfunding platforms. They really democratize investments.
The P2P crowdfunding platforms can quickly determine borrowers' credit ratings using open-banking APIs and automatically perform the risk assessment. Based on the analysis, they set an interest rate for every crowdfunding campaign. The borrowers can also repay the loans using the platform. This means that your crowdfunding platform will have access to loads of financial data that can be used to improve the platform's trustworthiness.
Usually, the borrower is charred an initial upfront fee for the crowdfunding campaign. The fee ranges from 1 to 5%, and this is the primary source of revenue for these crowdfunding platforms.
What Are Crucial Crowdfunding App Features?
1. Payment Gateway Supporting Multiple Currencies
As of 2019, the benchmark currency of the globe is still the US dollar. Crowdfunding campaigns tend to receive contributions from across the world. Most of the investors will pay in UDS, but some won't. Hence, it is beneficial to configure your crowdfunding app to accept investment in multiple currencies.
The most important advantage of having multiple currency support is that it will take you one step ahead of your competitors' crowdfunding apps. You can think about having support for the following currencies:
- Australian dollars
- Singapore dollars
- Canadian dollars
You'll gain access to a pool of investors if you support all these currencies. This will help you take your crowdfunding app on a global platform. You'll also gain public trust as you'll be accommodating investors from across the world. Also, the borrowers will be able to raise funds quickly.
2. Progress Meter
The visual representation of the progress is exceptionally powerful to motivate the borrowers as well as the investors. Yes, you can show this progress to the investors too, so that they know whether the campaign is worth investing in or not.
3. Mobile App Security
Security of every FinTech app is crucial and should be up-to-snuff. Noone would give you money if hackers and thieves can easily snatch it. However, implementing advanced security in an FinTech app isn’t that straightforward. Many times, FinTech developers face difficulties in optimizing the user experience as they have to implement KYC, multi-factor authentication, and other security procedures. The solution to this is to create a flow where the user is guided throughout their registration process. In terms of multi-factor authentication, many developers prefer to use OTP and biometric authentication.
Some questions FinTech developers should ask themselves are: Do I want my crowdfunding platform to network with other platforms and provide them with APIs? Do I want my app to send tax documents or receipts? Should I create a native app or a hybrid one? Which mobile platform should I opt for my app’s MVP?
4. Social Network Sharing
As the name suggests, the treasure of Crowdfunding lies in the Crowd itself. However, finding the relevant crowd is the biggest challenge for crowdfunding platforms. The best place to broadcast your crowdfunding platform is the social media.
GoFundMe, a small-scale fundraising platform, found that fundraising campaigns shared over the social networks are likely to raise three times more money. Hence, it is an effective idea to allow users to share the fundraiser on social networks. This way, you’ll get exposure to a vast number of audience and the fundraisers will get more funds - a win win.
I would recommend you to implement this feature for more than one social platform including Facebook, Telegram, LinkedIn, WhatsApp etc. The users would have an opportunity to tell their friends about crowdfunding campaigns on their preferred platform.
The Approach to Build A Successful Crowdfunding App
The crowdfunding app development process can be divided into eight different steps. Each step is crucial for the success of your app.
- Define Your Goals: Although It’s necessary to have an idea, it is the detailed business strategy that matters the most. Your answers to the following questions will help you form a clear business strategy for your crowdfunding app:
- What will make people use your app?
- What is the USP of your crowdfunding app?
- What problems can your crowdfunding app can solve?
- How do you distinguish from the competition?
- Conduct Market Research: The market research includes competitors’ analysis, target user base analysis, and the economic and political scenario of your target market. You should identify your top competitors, analyse what they have to offer, compare your strategy, and come up with a differentiator that can be the unique selling point for your crowdfunding app.
- Create Wireframes and UX: It is essential to create mockups for your crowdfunding app. This will help you understand the user flow and know the direction to which your app will go. The technical term for this is information architecture, a scheme that reflects all the possible user journeys. You can use Axure, Mockingbot, Sketchapp, and many other tools that are really very helpful to create user interfaces.
- Build App Architecture and Develop Backend:The architecture upon which a crowdfunding app is built, plays a significant role in security and performance of the app. The architecture includes all the aspects of your mobile app including UI, Database, Workflow, Third-party APIs, and several others. Refer to the following graphics to understand what an app architecture looks like.
After building the architecture, you’ll be developing the crowdfunding app’s backend. It is a long process that is very crucial for the optimum performance of your crowdfunding app. The developers will be developing codes using the technologies defined in the app architecture.
There are two options when it comes to developing a backend for your crowdfunding app: either use a SaaS solution (i.e. AWS Mobile Hub, Firebase, Cloudkit, etc.) or build your backend from scratch. I recommend the former one as it would save you time and money required to create common features for your crowdfunding app. The latter will allow you to customize your app with more personalized features, but this will come with greater cost.
- Testing: When all the development phases are completed, the quality analyst team tests the functionalities of the app and finds where it deviates in comparison to the detailed requirement document. To be noted that software testing is the most crucial part of a software development process.
When the crowdfunding app is successfully tested and the raised errors are ratified, by the development team, it’s time to test it again to make sure that there are no bugs. When the crowdfunding app is ready, it’s ready to be released.
Building a successful crowdfunding app is no rocket science. If done using the aforementioned process and recommendations, you can get the app rolling within a few months. If you find it hard for you to manage all the IT infrastructure required to develop your crowdfunding app, you can outsource the work to Nimble AppGenie.
We’re experienced in developing FinTech solutions and know the best practices for crowdfunding and investment software development.
Madhukar is marketing communication specialist at Nimble AppGenie. A writer by day and reader by night, he specializes in technical blogging. Throughout the time, he has been helping businesses by writing valuable business guides and articles. Nimble AppGenie is a renounced fintech and healthtech development service provider that is helping small-large scale enterprises.