Crowdfunding has emerged as a popular funding model for businesses and startups. It provides an avenue to raise capital through small contributions from many individuals. However, building a crowdfunding platform can be a daunting task. When considering this strategy, startups and entrepreneurs face the challenge of deciding whether to bootstrap the platform or outsource the development process. In this article, we’ll examine the benefits and risks of both approaches to help you make an informed decision.
Let’s first discuss bootstrapping. In general, bootstrapping usually refers to starting and growing a business with little to no external input. In this context, it refers to the practice of developing a crowdfunding platform in-house without the assistance of external development teams or vendors.
On the other hand, outsourcing involves contracting a third-party provider to develop and manage the crowdfunding platform. These can also include several tasks, such as marketing, video production, and social media optimization.
Bootstrapping is a compelling option for many companies, yet there are also risks. Let’s first explore the plusses:
Check out the following merits of bootstrapping:
Creating a crowdfunding platform using your existing resources, including your in-house developers, can potentially save. The company has direct control over the budget and can allocate resources according to the priorities.
It gives entrepreneurs total control over the development process, ensuring that the platform is built to their exact specifications. It may also be more efficient since any customizations or tweaks can be made quickly by the development team rather than relying on external help.
Additionally, in-house developers have a deeper understanding of the company’s culture, vision, and business goals compared to third-party providers. All these can significantly contribute to the platform’s success.
Bootstrapping empowers companies to design a crowdfunding platform that aligns with their vision for the company. The development process gives entrepreneurs complete control over the platform’s structure, design, features, and user experiences so that it aligns perfectly with the brand and target audience.
Next, let’s unpack some of the strategy’s primary drawbacks:
Building a crowdfunding platform from scratch requires significant time, effort, and resources. . As a result, the development process may take longer and have more limitations than outsourcing. If the company runs out of resources or expertise, the crowdfunding platform development process may come to a halt.
It might also divert focus and resources from other core business activities.
It’s great if the company’s in-house developers are flush with the talent and skills to churn out a successful crowdfunding platform. However, it’s also possible for creators to face skillset limitations. Developing a robust and user-friendly platform requires expertise in crowdfunding dynamics, industry best practices, and technical skills, which may not be readily available in-house.
Once developed, you are responsible for the ongoing maintenance, updates and technical support, which requires continuous investment.
While outsourcing can provide significant benefits, it also presents risks and challenges. Let’s start with the former.
Outsourcing the crowdfunding development process provides unparalleled access to a deep pool of specialised expertise, spanning software engineering, user experience design, and more. With third-party partners, entrepreneurs can work closely with a team with a broad range of skills and experience, as well as the latest tech tools and resources, without hiring them full-time. And this can be a strategic advantage in streamlining the crowdfunding platform and making it more scalable.
Although bootstrapping can be more cost-effective for enterprises with limited funding, it may take longer to develop the platform. And time is money.
With outsourcing, though, you may have faster processing times by levering on the provider’s existing structure. So, depending on the specific circumstances of the business, outsourcing can actually be the more cost-efficient option for development over the long term.
As mentioned earlier, outsourcing crowdfunding platform development may be the more economical and productive strategy. A dedicated team of highly skilled developers can complete the platform in a shorter time frame, allowing entrepreneurs to launch the campaign faster.
A professional provider can deliver a scalable platform, capable of accommodating growth and evolving user demands. They can also offer additional features and integrations to enhance your platform’s functionality.
Now, let’s discuss possible hurdles in the outsourcing process.
Working with an external team may result in communication difficulties, such as language barriers, time zone differences, and cultural differences.
Outsourcing may also present project management challenges. Entrepreneurs may not have as much control over the development process as they would with an in-house team. In addition, without a physical presence, entrepreneurs must rely on remote developers to maintain high development standards.
Relying on an external provider means that the platform’s success is partially dependent on the supplier’s performance and reliability.
To bootstrap or outsource? This is a crucial decision that entrepreneurs must make based on their respective situations. Each strategy has critical advantages, which can launch success, as well as disadvantages, which could hinder the development process. As such, businesses should carefully evaluate their goals, needs, and resources to determine the best approach. Then, with careful consideration and planning, they can make it happen.
Looking for a way to engage and empower your crowd? Your search ends with Smallbrooks, a crowdfunding platform tailored to the exact needs of your business or organisation. Get in touch with us today!