Crowdfunding is the modern trend for startup funding. Platforms like Indiegogo and Kickstarter have made it convenient for startups to raise funds. The last decade was a boon for innovative startup ideas. To keep this trend going further, there will be a need for more crowdfunding app development with innovative business models.
The first recorded successful instance of crowdfunding dates back to 1997 when a British rock band funded their reunion via online donations from their fans. Later in 2020, considering the success of this innovative funding method, ArtistShare became the first crowdfunding platform.
Every new crowdfunding platform owner needs to know the cost associated with crowdfunding app development and the ideal process to develop a successful crowdfunding app. Before you dive into the process of crowdfunding app development, you should be aware of the following market trend and industry jargons:
Crowdfunding Platforms Market Trends
Statista reports that by the end of 2021, the total transaction value via crowdfunding is expected to grow to $1,053.7 million. From 2021 to 2025, the entire transaction value will reach $1,201.1 million with a CAGR (Compound Annual Growth Rate) of 3.33%.
An article in Forbes states that Chinese crowdfunding platforms are learning the global crowdfunding market, even though China has an almost-closed internet ecosystem. JD, Alibaba, and Taobao are among the leading crowdfunding platforms in the world.
Some of the popular projects funded via these crowdfunding platforms are Poweregg drone (raised $15 million through JD) and Kadas (a fingerprint smart lock inventor raised $4.5 million via Taobao).
Things You Should Know for Crowdfunding App Development
You should be aware of some industry jargon and things before you initiate your crowdfunding app development process. So, before you sail off, here are the basics:
Which mobile platform should you build your app for?
The answer to this is subjective to which mobile platform most of your target audience uses. For crowdfunding apps, you should aim to develop your app for both platforms. However, you can build your app’s MVP (Minimum Viable Product) for the iOS platform, test your app idea, and roll out the Android version globally. This will significantly reduce the investment required at the initial stage.
Is it worth going with off-the-shelf crowdfunding solutions?
Many off-the-shelf software solutions are out there. They’re accommodating in shortening the crowdfunding companies’ journey to launch their app. However, these solutions are more preferred for small crowdfunding events and communities. To compete with grander-scale crowdfunding platforms like Kickstarter, the off-the-shelf softwares will undoubtedly fail to deliver on these promises.
Built it in-house or outsource?
You’ll come across a dilemma before you initiate your crowdfunding app development. You can get your app developed by a FinTech app development company, or you can do it on your own with an in-house development team. There is also an option to outsource the work that your in-house team finds hard to execute. However, I always recommend going with complete outsourcing, as some FinTech development companies are specialized in developing solutions that are compliant with the regulations, whilst still delivering exceptional customer experience at the same time.
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, UI/UX becomes even more important. 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.
Is it worth putting effort into UI/UX?
Although it is universally advised not to judge a book by its cover, we cannot control user preferences. If your app looks lame, no one will like your crowdfunding app, and therefore they would be unlikely to maintain enough interest to access the campaigns. When there are already some giants in the market, it is essential for you to design great user interfaces and user experiences for your crowdfunding app.
Steps to Crowdfunding App Development
1. Define Your Crowdfunding Platform Concept
Considering that a few crowdfunding platform business models and concepts are out there already, it is a must for you to clearly define your crowdfunding platform. For example, Kickstarter disburses the payment only if the campaign reaches its goals. In contrast, Indiegogo allows borrowers to run campaigns where they can withdraw funds, even if they don’t meet the objectives. On the other hand, some crowdfunding platforms allow monthly investments.
You should answer the following questions in order to form a clear concept for your crowdfunding platform:
- What will make people use your app?
- What is the USP of your crowdfunding app?
- What problems can your crowdfunding app solve?
- How do you distinguish yourself from the competition?
2. Do Market Research and Know the Compliances
When you have a clear picture of your crowdfunding platform in your mind, it’s time to understand the market’s current trends. You should know exactly who your competitors are. Conducting a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is a great idea. This will help you compare your strategy against competitor strategies, and identify the weak points that you have to work upon.
Also, there has to be a unique selling point for your crowdfunding platform idea. There is no point in creating the exact same crowdfunding app as one already existing. You can quickly identify a new differentiator that you can adopt by just analyzing a few crowdfunding platforms. You can excel in terms of commissions, campaign flexibility, concept, or any other means of differentiation.
Like other FinTech businesses, crowdfunding apps also have to be compliant to specific industry-specific and general regulations. Crowdfunding platforms need to plan for compliance like KYC (Know Your Customer), AML (Anti Money Laundering), Data Security, and several other compliances before building their crowdfunding app. Among all other regulations, managing KYC and AML in a crowdfunding app is tricky.
KYC is a set of guidelines that require crowdfunding platforms to verify their user’s identity to make sure that they are who they claim to be. KYC is a part of AML standards and procedures. These guidelines help crowdfunding platforms identify whether the source of funds is legal or not.
AML regulation is aimed to prevent criminals from illegally transferring money (mostly black money transferred through international borders). AML requires crowdfunding platforms to verify the origin of funds and monitor for any suspicious activity.
In addition to AML and KYC, you should also look into how you would manage the user and financial data. Your crowdfunding campaign will deal with a loss of data related to your customer’s bank accounts and payment cards.
3. Design User Interfaces and Experience
We’ve already discussed how essential it is to put effort into creating excellent UI/UX. The first step is to design wireframes and analyze the user experience. To be noted that due to the KYC regulations, you would have to ask users to verify their identity, which can be cumbersome for some users and can result in abandonment. Hence, pay utmost attention to user experience while designing the wireframes. It would help if you either ask users to identify their identity during registration, or you can allow them to skip this process, with the identity requirement being delayed until the user is ready to invest in a crowdfunding campaign.
Some FinTech developers directly jump on creating the final UI/UX before designing mockups. Mockups help you identify the user flow. Technically, this process is called information architecture, which reflects all the possible user journeys. Many tools such as Sketchapp, Axure, and Mockingbot can help you create great user interfaces.
4. Build Technical Architecture and Develop Backend
The technical architecture upon which your crowdfunding platform will be built is significantly essential for your app’s performance and security. The technical architecture of almost all aspects of your crowdfunding platform, including Database, UI/UX, Third-party APIs, Workflow, and many others. The following illustration will help you understand technical architecture.
When you’ve built your crowdfunding app architecture, it’s time to develop the backend. Developing a backend is a lengthy process that is essential for the smooth running of your app. Using the technologies defined in the app architecture, the backend developers will develop codes, logic, and internal APIs.
Developers have two options for the backend development – use a SaaS solution such as Firebase, AWS Mobile Hub, Cloudkit or build the backend from scratch. The best choice for crowdfunding platforms is to go with the former approach to save time and money. The latter is more beneficial for those apps that require more personalized features, which often isn’t essential for the crowdfunding platforms.
5. Frontend Development
To be noted that the responsiveness of your crowdfunding app is very important to improve user experience. No user will like to interact with a slow user interface, hence you need to make sure that your app is fast and responsive.
Testing is an integral part of software development. Be it any software development methodology, testing will happen at the end of every sprint or development process. In this phase, the team of quality analysts test the app functionalities and compare them with the detailed requirement document.
After successful completion of testing, the development team works on fixing the bugs/errors identified during the testing phase. The QA team again tests the software to make sure that there aren’t any errors. The app is ready to be released after receiving a green flag from the QA team.
What Features You Should Incorporate Into Your Crowdfunding App?
Good aesthetics and information architecture won’t matter if your app can’t perform the basic crowdfunding app functionalities. Features like a smooth app interface and information architecture are indeed essential. But what’s more important is the core app features and functionalities. You should incorporate the following core features into your crowdfunding app:
Both the investors and borrowers have to track progress of their associated crowdfunding projects. Using a progress meter in your app will make it easier for investors and businesses to stay in tune with their funding. Progress meter implementation can be done quickly by representing the data with a graph. See the picture below to get an idea of how this works:
However, it would help if you think creatively on the graphical representation of the progress meter. Remember, this feature will be one of the key highlights to encourage users to frequently use your crowdfunding app.
Not all crowdfunding investors are individuals or organisations who invest professionally. Most of the investors are common individuals that have enough disposable money to help fund startups and innovative ideas growth. Considering the popularity of social networks and social media channels, crowdfunding platforms are also well placed to reap the social networking benefits.
You should allow your users to share crowdfunding campaigns over social networks to expand the campaigns’ reach to a wider audience. In a study, GoFundMe found that crowdfunding campaigns can attract more than three times the money, if the campaign funding is shared over social networks.
Social sharing will not only generate more impressions for the crowdfunding campaigns, but it will also get your crowdfunding app in more people’s attention. Hence, it’s a win-win for your fundraiser, and investors.
It is recommended that you implement this feature within your crowdfunding platform for multiple social platforms like Telegram, WhatsApp, Facebook, Linkedin, etc. Don’t forget to conduct a quick survey to identify which social platforms that your target user base use.
Yes, they also call it an ‘idea’. Crowdfunding apps mostly incorporate funding campaigns that are related to startup ideas. The investors usually go through the business idea and analyze its potential to succeed. They’re more likely to invest in ventures/ideas that generate high ROI (Return on Investment).
An explorer feature with advanced filters will allow your users to find the most suitable business idea that they can invest in. Crowdfunding app, Kickstarter has a very useful and intuitive explorer. See the screenshot below:
Most often investors are indulged with more than one crowdfunding platform at a time. Therefore investors will require some sort of dashboard, where they can see all the projects that they have invested in. In this regard, most of the already existing crowdfunding apps, including the Kickstarter app, do not give enough insights to the users. Adding analysis of their equity valuation for overall investments would help investors know their overall performance.
Although some big players like Alibaba, are already operating in the crowdfunding market, there is still room for innovative ideas. In terms of crowdfunding app development, the market is still in its infancy and with a couple of feature differentiators, any crowdfunding platform can gain a significant share of the market.