Guide to Creating a Crowdfunding Platform in 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
What is Crowdfunding?
8 Steps to Starting a Crowdfunding Business
1. Look at the Market and Competitors
Equity crowdfunding Contributors become shareholders in the business they invest in. Donation crowdfunding Money is typically given without expectation of any return. Reward-based crowdfunding Contributors receive a gift (such as the product itself) for a contribution of a certain amount. Loan crowdfunding Funds given will be paid back at an agreed-upon interest rate and payback date.
2. Formulate a Business Plan
3. Find Investments
Legal and financial professionals to advise you Market research costs Buying your domain Computer equipment Supplies Advertising and marketing costs Employee wages
Small Business Loans
4. Find Designers and Developers
5. Develop Your Site
6. Test It
7. Market Your Crowdfunding Platform
Pros and Cons of Starting a Crowdfunding Platform
Building the platform is fairly easy and once you have it, you’ll have the basics of your business in place. You don’t need to invest in a brick and mortar store and your employees can work remotely. You have an opportunity to help a large number of people. If you get significant contributions to your site, then your share of the funding dollars can also be significant.
Crowdfunding is becoming a saturated market. So, you’d have to come up with an original idea that will draw people to the site. You’ll need funds to build and market your platform. This can come from your own savings, business loans, and/or investors. If you don’t get enough participants to list projects on your site, then you could go out of business, losing the money you’ve put into the platform. If people don’t contribute to the businesses on your site, then it will become more difficult to get projects listed on your platform going forward.
Trends in Crowdfunding
Important Crowdfunding Site Features to Include
Small Business Loan Rates From Lantern
Frequently Asked Questions
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