Recently I’ve been advising a few startups in the crowdfunding space that are looking to set up their own platform like Kickstarter, GoFundMe, Lending Club or one of these.
The most frequent question I get is “Sal, how do you actually set up one of these sites?”
Great question! I’ve taken a bit of time to answer that question here. Leave a comment if you’d like to connect about your new crowdfunding venture!
1. Choose the right software
Ironically, this is the easiest part of setting up a crowdfunding website. The hard part is actually getting projects or investments on the platform and backers or investors.
There are four fundamental routes that you can go when setting up a new site.
- Custom built solution. This is going to be the most expensive and you’re going to need mockups, a features list, and a make sure that you hold the developer(s) to realistic timelines and project goals.
- Open source framework. You or a developer could customize and expand upon an existing open source framework to design a crowdfunding platform. This option will still be expensive, but more robust than the next.
- WordPress-based website. This is going to be cheapest and easiest option by far. In fact, I’ve put together a bunch of WordPress themes that you can use to get a crowdfunding platform up and running as quickly as possible. The only down side is that I wouldn’t use a wordpress driven platform as a longterm solution. It would just be used for the alpha or beta version of the website until you demonstrate demand and get investors.
- Buy a website. If you can convince the owner of an unsuccessful crowdfunding website to sell that website for you at a price that is significantly than developing your own website, then this might be a great way to get an initial prototype. Of course, there might be more design changes that need to be implemented.
If you’re going to build a custom website, I recommend using an established development firm (leave a comment if you’d like me to recommend one). If you’re customizing a framework or pre-existing code, you can find a developer on Elance, Odesk, or other contracting site.
Finally, if you’re going to go the WordPress option, I highly recommend hosting the site with Bluehost (what all my sites use) and using their one-click wordpress install feature. Then, you just need to find a theme you like with the right payment processing and user interface functionality.
2. Go after the right niche
As much as you’d like to think that your platform is going to be different from all of the others, really take a second to ask yourself the following questions:
- Why would someone choose your site over a competitor’s?
- How do you bring more value to those customers?
- What marketing channel will direct people to your site?
- Who is your ideal customer and what do they care most about?
If an existing website is already servicing a particular customer demographic very well, then it’s going to be super difficult to break into the industry, unless you are 10x better at meeting the needs of those customers.
However, on the flip side, if you’re going after a very specific niche that no one is serving, then ask yourself, “Why are there no sites targeted to this demographic?”
You could be on to something, or, the niche could be too small of a marketplace to build a sustainable business (though you could always expand).
Personally, I think there is a lot of opportunity to bring crowdfunding in a more seamless way to the mobile device. Also, it makes no sense to me why a crowdfunding platform doesn’t keep customers on their site after a successful crowdfunding experience. Indiegogo’s InDemand program is moving in this direction.
Finally, I think that platforms could help market their own projects much more effectively by taking a page from viral sites like Upworthy and Buzzfeed’s video section.
3. Get the word out!
There are lots of ways that you can get the word out about a new website, venture, or product. Here are a few options to consider:
- Advertise on CrowdCrux
- Use Google Ads
- Buy Facebook Ads
- Submit a press release
- Build your social media profiles
- Submit a guest post
- Go on podcast interviews
- Leave comments on blogs
- Interact on industry forums
- Attend local networking events
- Start your own event
- Host an informational webinar
- Hire a PR agency or marketing team
The whole goal is to have some kind of a positive presence in your target market and to enter the minds of the prospective customers who might use your platform. I think Pubslush, Deposit a Gift, and Seed & Spark do a really good job of this.
4. Be in for the long haul
As I outlined in my previous post, most platforms will take about 2-3 years before they begin to generate any kind of steam, in terms of exponential growth. That’s assuming that you’re in a good marketplace and have been hustling for those years.
If you think that a crowdfunding site can just be set up and then left alone to collect projects, think again! Only once you’ve had multiple highly successful projects that have gotten in the media will you begin to see a bit of a community forming around the site and organic growth.
5. Study where the industry is going.
This might seem like a no-brainer, but you’d be surprised by the number of basic questions that I get about the industry from an entrepreneur who wants to start a new venture.
The easiest way to get 100% up to speed on the industry is to write a full-fledged business plan. It won’t be fun and you might not ever use it, but it’s awesome practice and will force you to learn the insides and out of the crowdfunding space.
“If you don’t know everything about your industry, the customer, and your own business, then someone like me is going to come in and beat your a*s!” – Mark Cuban.
6. Never ever, ever give up, but follow the analytics.
No matter what happens, you must be fully committed to making this dream of starting a crowdfunding platform happen. That doesn’t mean that you should only be committed for the first 1-3 months, when everything is exciting and it seems like your possibilities are limitless.
That means you have to be willing to grind through years 1-2, when it gets really hard to continue to motivate yourself each day to solve difficult problems and grow the business.
But, just because you’re committed to never giving up doesn’t mean that you should ignore the website’s analytics. You never know when you may need to pivot or when that pivot could turn into a multi-billion dollar company in the same way that Groupon started out as The Point, a website that failed to get traction, but had some of the elements of what would become the daily deals website. This type of pivot also happened with Instagram, PayPal, Twitter, and more.
Your entrepreneurial path is bound to be full of ups, downs, and twists in the road, but I’m excited to be here when you started and look forward to writing about your future platform, if it’s a success!
