Today, many businesses and individuals are trying to learn how to set up a crowdfunding platform instead of using existing platforms. These platforms are especially popular in the real estate industry. Forbes estimates that real estate crowdfunding alone will be worth more than $300 billion by the time 2025 arrives.
Customized crowdfunding platforms can better serve the unique and detailed needs of an entrepreneur or business owner. It is important to consider functionality, payment options, business model and many other aspects to ensure an optimal outcome.
The business model attached to a crowdfunding platform may vary from one program to another. These are the main aspects to consider:
Donation-based platforms are good for charitable projects, business expansion projects and other types of projects. With a donation-based platform, donors have the assurance that they are contributing to a specific project. This may encourage higher donation amounts and often inspires more confidence in donors. They also know that they can expect updates as the project progresses.
Reward-based platforms include donations, and they provide a specific reward to donors. The reward structure may offer a single benefit or have multiple tiers. For example, a tiered structure may reward donors who contribute under $5,000 with a special recognition plaque and donors of more than $10,000 with an invitation to a private opening party. The rewards can be symbolic or tangible.
With a lending-based platform, an entrepreneur or business borrows money from a group of people instead of a bank. There may be a social lending structure, which may involve a zero-interest loan for a social project. Some platforms are designed to use P2P or P2B loans instead.
If there is a product or service, some companies choose a pre-sales crowdfunding platform. With this structure, contributors pay ahead of time for the product or service, and the business collects the money to use to execute the project or production process.
In an equity setup, investors contribute in exchange for a certain amount of equity. This may be a set percentage or in tiers that are based on contribution amounts. A custom software development company can create hybrid platforms that incorporate multiple business model types to fit the needs of a client.
P2P lending connects investors who want to lend money with entrepreneurs or entities that need money. Since this is a popular basis for a custom crowdfunding platform, more businesses and entrepreneurs are discovering the benefits of P2B and P2P lending software development. To better understand P2P lending, it helps to know the basics of it. These are some of the most important points:
P2P lending can be a lucrative investment alternative for many investors.
P2P lending gives borrowers access to loans and terms that they may not qualify for from traditional lenders.
Even if a borrower's credit is not great, a P2P lender may be willing to take risks for potential benefits or a cause.
P2P lending gives more customization options to borrowers and lenders.
Unlike traditional lending, a P2P platform lets the borrower present a detailed case as to why the funds are needed.
Interest rates are usually between 6% and 36%, and loan amounts may vary between $1,000 and $40,000. The average repayment term is about 36 months. Companies or entrepreneurs that own custom crowdfunding platforms for P2P lending make money by letting others use them. In this case, they make money by being the intermediary and charge a small percentage-based fee.
There are a few key ideas that will contribute to an efficient, reliable and effective platform. Each of the best practices are helpful in choosing the right business model or hybrid model. These are the main considerations:
Establish clear vetting processes for lenders or users.
Identify current needs and future growth.
Consider and identify potential markets.
Create a strategy to address platform security issues.
Without the help of a P2P lending software development company, these tasks can take months of research and time. A custom developer can create a secure and useful platform that fits specifications. When it comes to a company's needs, the platform should be scalable to fit future growth projections. It must also be designed to meet both current and future business model preferences.
These are some of the top payment-related concerns that companies have when developing crowdfunding platforms:
Payment data security
A custom software developer can pinpoint and address all security issues related to processing payments and protecting the data of contributors or lenders. Ethical issues may arise in several areas, and a developer can help mitigate those.
For example, on a donation-based platform, there may be the issue of what to do with funds if a project does not garner enough support by the deadline. They may need to be refunded or held for future project development, and investors or contributors need to know what to expect. The platform's features should be designed to meet such needs.
If the platform will be used by a company to provide crowdfunding connection services for a fee, there are settlement issues to consider with participants. The length of time for payouts, the fee percentage and beneficiary identification are just a few payment-related issues to consider.
Crowdfunding software development is simplified with the help of a professional development team. Chetu is a global provider of custom software development services and has been in business since 2000.
From small businesses to Fortune 500 companies, Chetu has served a wide variety of clients. Chetu can create scalable programs to fit current needs and future growth, and this provides clients with the benefit of not having to upgrade to a different type of platform in the future.
Also, with custom software development, businesses do not have to worry about extra features that are unnecessary for their unique needs. The result is an efficient and user-friendly program that meets all expectations.
Chetu, Inc. does not affect the opinion of this article. Any mention of specific names for software, companies or individuals does not constitute an endorsement from either party unless otherwise specified. All case studies and blogs are written with the full cooperation, knowledge and participation of the individuals mentioned. This blog should not be construed as legal advice.
Chetu was incorporated in 2000 and is headquartered in Florida. We deliver World-Class Software Development Solutions serving entrepreneurs to Fortune 500 clients. Our services include process and systems design, package implementation, custom development, business intelligence and reporting, systems integration, as well as testing, maintenance and support. Chetu's expertise spans across the entire IT spectrum.
- See more at: www.chetu.com/blogs