There are many entrepreneurs with good ideas but still lacking cash to put these ideas to life. They know what to do and how to do it, what they need is an investment to make the first step. That’s where crowdfunding may come in handy. It is a practice of generating investments for a project through many individuals.
Crowdfunding created a world of opportunities for the crowdfunding app development. Many applications were built and successfully used to start companies that later become huge. Of course, there are banks that are good for loans, but the conditions are often too strict for new businessmen who believe in their ideas but have nothing to put on the scales. More to that, visiting a bank takes time for both parties, requires paperwork and often takes loads of time.
In the meantime, crowdfunding allows to lend money without leaving a favorite sofa. At first, it grew very popular in fintech world, then spread around to other industries. Platforms created for such purposes are already known and trusted, and there is a big demand for convenient applications of this sort. So, now might be the perfect time to make your own a crowd-investing app.
There are several models of crowdfunding such as equity investment, donations, reward-based, royalty-based, and peer-to-peer(P2P) lending. The last one mentioned is one of the most popular options. The global market for P2P lendings is foreseen to reach higher than $150 billion before 2025. That is a reason enough to start asking how to create a p2p lending app. Let us tell you more about the way it works, its advantages and disadvantages, cost of development and other details.
So, what is P2P lending?
The term “peer-to-peer” (or “person-to-person”) means that loans can be given or received directly to and from people without the intermediary of a bank or any other financial institution. Thus, people can become lenders and borrowers at the same time with the help of special P2P lending sites. Basically, this sites can be seen as intermediaries; however the technology here is quite different.
Not only individuals can participate in performing such loans, in some cases, companies can join in, too. It might be a great idea for a startup that wants to both get money and make a difference as well. There are different modes of loan rates that can be either fixed or assigned through a reverse auction. The auction works in such way: the borrower assigns the max rate level to take a loan at while creditors offer funds at lower rates and bargain with each other.
There are also companies that create software for such deals. They usually have fixed payments, get paid by borrowers or get some money from the general sum of the loan. In any case, crowd-investing is usually beneficial for all parties. That is why it is so popular nowadays.
Advantages and disadvantages of P2P lending
Of course, even though the solution is popular and used and liked by many people, there should be both pros and cons. Before getting into something, it never harms to consider both sides. First of all, here are the advantages that are quite obvious but are worth mentioning anyway:
- Conditions are determined by borrowers and creditors;
- No intermediary with high financial expectations;
- Careful inspection for a high level of trust.
Generally, the system works in such a way that it becomes much easier to both invest and start new business. For many people, it opened new horizons that would never be opened if those people had to overcome the traditional procedure of getting a loan from the bank. However, there are also some downsides that must be mentioned if we claim to be truthful. Here they are:
- Amounts of loans may not be high enough;
- There are debt collectors as well as in conventional banking;
- Sometimes impossible to get to know a borrower.
Every mobile peer-to-peer lending platform has its own traits and conditions. Before starting to develop a new one, it’s better to learn all about this technology to be ready for different scenarios.
The basics of work of a crowdfunding app or P2P lending
Basically, the general idea of such platforms is to become a matchmaker between somebody who needs money and somebody who looks where to lend or invest. No need to put any personal assets at stake, which makes such apps great for startups. Without big risk, the developer might generate significant income through operational and other fees charged to both parties.
The idea of P2P lending platforms for mobile crowdfunding applications is pretty much the same. Both of them serve to attract more investors of different sorts to catalyze businesses and startups. For example, more informal investors might be interested in a convenient and trustful mobile crowd-investing application while they might never even see the opportunity elsewhere.
There is no need to make separate custom applications investors and borrowers. It is enough to create separate registration and login processes for different categories of users to provide them with according actual features. For a P2P lending app, users are likely to log in occasionally to create a campaign or check payments. It means that an investor-facing app is often the first to be developed.
The crowdfunding app may require a web interface to make it easier and more convenient to fill in all the details about the campaign. It is a good idea to fill in the info from the laptop and then switch to a mobile app for further procedures such as monitoring of promotion.
What to start with when building a mobile app for crowdfunding
So, you decided to develop a crowdfunding app on Android or iOS. What are the first steps, you will ask. Here are the necessary steps in the way that you would like to consider at the beginning of the process. It won’t be simple, of course, but with good planning and careful work, the result will be well worth it.
First of all, you need to choose a business name and register it officially. You want this name to be unique and memorable. Along with this first step you need to become familiar with all the regulations to not break any laws.
Then, analyze your initial capital possibilities. App development has never been cheap, and you don’t want to make it with somebody who knows little about the tech-specs and, most of all, security requirements. It is also a good idea to lend some of your funds to the first borrowers that come to your app. It might help potential investors to join in if they see somebody is already there. Also, don’t forget about the bank fees as you will need to keep your money for P2P lending loans somewhere.
Now it’s time to get to the software development itself. You can consider software development, however, modern world is full of mobile devices, so maybe it’s better to consider mobile app development right away. Here are the most important parts of the process to begin with.
- Android or iOS. Choose what operating systems you want your app to work on. There are many different statistics for this question, but mostly it is just a matter of a company strategy and choice.
- Ready scripts and API’s. There is variety of them on the market, you just need to decide whether you want to use them in your own software.
- Turnkey or outsource. You can hire different developers for different parts of the process or hire one agency to do everything from prototype to promotion.
- Signature and encryption technologies. Your app will deal with different personal data of users that is why security is to be your priority issue from the very beginning.
- UX/UI design. Design planning is a very important part of the process. Make sure it will be easy to use and pleasant to see for your target audience. With all the competition, you’d want to grab users’ attention right from the start.
It might be a good idea to create an MVP to start with something, and then move forward and add more features. Sometimes it’s even easier to see what’s lacking or what’s redundant when people start to actually use the app.
The cost of development
There is no way to say exactly how much money it will cost you to create a crowdfunding app for IOS or Android. It will depend on many different factors such as number and complexity of features, country where the developers are based, and many other. We advise to really pay attention to the security requirements and the way the development of your choice can handle them. On crowdfunding, security means a lot.
To begin with, you need to realize what is the size of your project and shape all the requirements in a form that can be shared with a developer or an agency. The better you understand what you need, the easier it is for a developer to start off on the right foot and fewer hours will be needed to actually complete the technical task.
Remember that there are often minimum project size requirements for different development companies. The average minimum size is $5,000 – $10,000 in 2017. However, as we mentioned the cost is based on many different factors. The more work it requires, the more money it will take from your bank account.
The secrets of promoting a P2P lending or crowdfunding app
Let’s imagine that the app is ready. How will your potential users learn about it? There’s no way they will just run around and wait for you to launch. It means that the promotion process is no less important than even the development. Let us suggest a couple of strategies that might be handy for such a project.
Advertise on and on
Spread the word through any channel you can think of. Create good copy to tell people about the app and describe its advantages and benefits. Portray your target audience and aim at getting these people on the websites they use or through the channels that are relevant to them. It should probably be a financial world, but think about it and announce new possibilities to whomever it may concern.
Be original to sell better
The number of P2P mobile apps is growing, but it doesn’t mean that all the features are already taken and used. Be brave and try to concentrate on something new. For example, try addressing one particular issue paying close attention to all the specifics. Or make it work for businesses instead of individuals. It might be hard to implement, but quite beneficial for you in the end.
Pursuit social evidence and work with press
The world of investors relies on trust and testimonials. In order to be used, the new product needs to be mentioned and mentioned a lot. If you find a way to cooperate with press, it will bring you some of the much-needed trust in the financial industry. To add more, make people talk about your app. The same as for the other industries, hype is helpful.
If you decide to build a p2p mobile app, it might become an interesting business journey. The task is not simple as good crowdfunding platform should be easy to use, reliable, secure and well-promoted. There are many sides of the project that require full concentration.
Don’t forget to find a lawyer and hire financial specialists. Lending business is full of legal issues on peep-to-peer investment, and only lawyer is qualified to answer all the questions and save your business from unforeseen legal troubles. Financial specialists are also very important for your P2P app team. There are policies and regulations that change fast, and that are difficult to deal with for the team of developers. Skilled financial specialists have enough experience to consult and decrease risks in P2P lending.
Before starting to work on a crowdfunding app, create a business plan that will prevent you from any rash decisions. The development cost should be considered as well as the cost of all the loan agreements and bank fees. Creation of such an app is not simple at all, but in case of a success it might be as rewarding as it gets.
In LunApps, we are always ready to work with your ideas and help you take them to the market successfully. Our experienced team is excited to work on crowdfunding app development and we’ll be glad to hear from you!