Creation of a crypto crowdfunding platform

Crowdfunding platforms help entrepreneurs raise funds to develop their ideas without banks, venture capital funds and exchanges. At such sites, anyone can contribute to their favorite business idea, in return for certain benefits that will go to him after the development of the project. This can be dividends, a share in a company, discounts, and more.

As a result, each side benefits. A businessman brings his idea to life, investors get the expected profit, and the crowdfunding platform itself charges a fixed percentage for the services of an intermediary, which on average in the market ranges from 5-9%. Considering that the size of attracted investments is often measured in hundreds of thousands of dollars, developing your own crowdfunding platform looks like an interesting business idea.

Crowdfunding based on investments in cryptocurrency is gaining popularity not only in the USA and China, but also in the CIS countries. Digital currencies give users the opportunity to invest in projects around the world, and entrepreneurs, in turn, get an increased likelihood that the declared amount will be collected. Consequently, the effectiveness of the platform increases, as does the interest in it from the target audience.

Benefits of cryptocurrency:

• Safety. Information about all transactions is stored on the blockchain network, which means that no information can be tampered with or altered.
• Minimum fees. Cryptocurrency payments are carried out with minimal or no costs.

• No boundaries. With the help of cryptocurrency, you can make payments from any country.
• Transaction speed. Coins are credited to the account in a matter of minutes, regardless of which country and at what time of day the payment was sent.
• Return guarantees. All processes in the cryptocurrency crowdfunding platform are controlled by smart contracts. They are incorruptible and unchanging. With their help, you can guarantee the return of funds to investors, if any conditions are met or not. For example, in cases where a sufficient amount of investment has not been raised by a startup within the stated period of time.

First of all, you need to decide on a niche – which projects can be placed and look for investments on your site. For example, the purpose of fundraising can be charity, the development of IT products or video games, filming, etc.

The niche defines the target audience, design and technology stack that will be used in the development process.

The next step is to choose the optimal business model. That is, how exactly investors will invest in projects that interest them. There are 4 main options in crowdfunding:

1. Donations. In this model, people make voluntary contributions to projects that interest them, without any return.
2. Rewards. A model in which investors are rewarded for an investment in the form of a service or access to a product. Often, additional incentives are provided for large investments.
3. Sale of shares. A model where an entrepreneur sells a share of ownership of a startup to attract investment for its development. Shares can be digital, in the form of tokens.
4. ICO. A method of attracting investment, when a startup creates its own cryptocurrency and exchanges it for donations that investors can make using more popular digital currencies: BTC, ETH, etc. At the same time, tokens play the role of digital shares of a project, its internal currency or a tokenized asset.

You also need to decide on the terms of financing. For example, the popular Kickstarter platform does not give funds to any project if it has not collected enough investment. But, not everyone is so critical. There are platforms that work in the format of partial financing, when the entire amount collected by investors is given to a startup.

Monetization options

The crowdfunding platform has several monetization formats. Consider the popular ones:

• Fixed fee. The platform charges a specific percentage for the intermediary’s services. Most often it is 5% of the amount if the goal has been achieved and 9% if the fundraising has failed.
• Payment for listing. Some platforms charge a one-time listing fee. Most often this applies to projects that sell part of their shares to investors.
• Payment for advertising. Platforms may charge fees for providing additional services, such as showing a project at the top of a listing, etc.
• Payment for subscription. The initiators of the fees pay for the placement of projects. For example, you will have to pay $ 50 for a package of 5 placements per month.

To achieve its own financial goals, the platform can use several types of monetization at once.

For a platform to attract the attention of investors and startups, it must be user-friendly and functional. Let’s take a look at the basic set of tools that it should contain.

Quick registration

The user should not spend more than 2-3 minutes to start working with the platform. Therefore, the registration form should be as simple and intuitive as possible. It should be borne in mind that cryptocurrency users prefer to remain anonymous. Therefore, authorization using social networks or email will not be the best option.

Personal Area

Both parties must clearly understand how the crowdfunding campaign is going on, how much money was raised, when the investments were made, how much time is left until the project is closed, etc. Therefore, the account needs to be “equipped” with all the necessary statistics and tools to track it.

Listing projects

It is better to categorize initiatives and add filtering for easy listing. Investors should be able to study all the information about the project and contact its author.

The activities of the cryptocurrency crowdfunding platform are directly related to financial transactions. Therefore, when creating it, special attention is paid to ensuring the security of the system. AVADA MEDIA has practical experience in implementing such projects and will help you build a reliable digital business.