As a software company, we focus on the development of custom solutions whenever possible.
In this post, we’d like to give an honest overview of your options with white-label crowdfunding platforms and highlight cases when a custom solution, in our opinion, would be more reasonable.
White-label or off-the-shelf solutions are the easiest way to build a crowdfunding website. Here’s a list of the most interesting white-label and SaaS platforms in our opinion:
- Particeep
- Katipult
- Difitek
- Thrinacia Atlas
- Sharein
The list is much longer, though we decided to disregard companies that offer WordPress based crowdfunding platforms, even though we develop WordPress website for other clients – this engine is not right for businesses with high requirements for stability and security.
The companies above have put much effort into developing their products. Features they offer and the knowledge they share with the community shows that they are well-versed in both programming and industry specifics. Some of them even provide umbrella licensing with regulatory bodies.
Advantages of white-label crowdfunding platforms
I think that the best use case of a white-label solution is a startup at a proof of concept stage.
The budget at the early steps is limited, and there’s always a risk that either your investors won’t be smitten with what you show them, or the product won’t live up to your initial expectations.
1. Reduced time to market
The early bird gets the worm.
Even though crowdfunding and online investment businesses are not new in 2019, they are still distinguished by certain aspects: business models, types of investment opportunities they offer, types of clients they target, markets, and so on.
If you’re building an investment business that has a unique selling proposition (and I hope you’ve already defined it), you’d be interested in getting a first-mover advantage as it allows you to capture consumer attention and establish brand recognition before the successors follow.
White-label crowdfunding platforms give you that head start for they have much pre-built functionality which you would have to develop otherwise.
2. Lower cost
This advantage results from the previous one since time is money.
The price you’ll pay for a ready-made solution is always lower than what you’ll spend getting a bespoke solution, be it sophisticated software or a suit.
In this case, you’ll be able to test your business with lower financial risk and show your investors an MVP faster.
Alternatively, you can invest money into creating a top-notch marketing campaign for your business.
3. Registration and regulatory compliance
Platforms like Sharein offer fully authorised financial regulation services in the UK if you go with their solution.
It means that you can have a bit less headache with FCA and get your online investment or crowdfunding platform legally live way faster.
4. More focus on the actual business
Although any fintech business is a marriage of finance and technology, you as a crowdfunding business owner will have to deal with real finance and business-related issues more than with the tech side.
A white-label crowdfunding platform, preferably with a tech support package, will allow you to concentrate on marketing activities like building brand awareness, attracting clients, and creating strategic partnerships.
Disadvantages of white-label crowdfunding platforms
So, white-labelling your crowdfunding business sounds like no sweat, but let me rain on your parade a little.
1. Too. Many. Features
Remember Ockham’s razor principle? Entities must not be multiplied beyond necessity.
The purpose of white-label solutions is to provide versatile tools for crowdfunding businesses, so they try to stuff the platform with all features a platform owner could think of and even more.
Even though it’s great that white-label software is so powerful, you may end up paying for the things you don’t need and never required. Then you may find out that you need a little customisation to a feature that already exists in this elephantware that you purchased, and you never know where that customisation would take you.
One beautiful day you could realise that you did a complete makeover of most of the functionality you signed up for.
2. Limited flexibility
White-label services offer customisation of the default features and personalise the look and feel for each specific company.
However, we’ve noticed that crowdfunding websites powered by the same white-label solution pretty much resemble each other in terms of the overall layout.
What’s more, if you decide to integrate some unpopular service—for example, a local payment gateway—customisation charges can inflate, and so will the turnaround time.
3. No full ownership
Most white-label crowdfunding solutions are hosted on servers you cannot access if you decided to make any changes. If you chose not to continue working with the programmers from the white-label provider, you’d get yourself in an even more difficult position.
No matter how many guarantees a white-label crowdfunding provider gives you, it feels quite uneasy to know you don’t have 100% control over the platform that makes your online investment business possible.
This brings us to the last point.
4. Higher risks, lower attractiveness
On the one hand, a white-label platform can get you through the proof of concept stage faster as opposed to a solution from scratch. On the other hand, your hands get tied by the core platform limitations.
When you decide to scale your business and raise funds from investors, you may face a harsher response because of the tight connection with the white-label solution provider.
Dependance on a third party lessens your chances for successful growth and expansion. Most probably you’ll need to build new operational modules and procedures, and there’s no guarantee that whatever you get with the white-label solution will allow you to support your future operations.
Investors will carefully assess the possibility of any loss, and depending on a third party won’t play into your hands here.
Most businesses, especially if it’s a startup, will benefit from choosing white-label or SaaS solutions with the features they need.
In some cases, customised software works better, but it requires a hefty investment and long implementation time.
So how can you tell that you’ve outgrown your white-label crowdfunding platform?
1. Too much data stored or shared externally
When your crowdfunding business has grown enough to have tangible turnover, you may be interested in limiting access to your financial transactions.
The fewer people know how much money your platform operates, the better you sleep at night.
Some white-label platforms can deploy the system on your servers, which is good. However, most of them offer cloud solutions, and you can’t tell who else can view the information about your business which you’d rather not disclose.
2. Your business needs hit a ceiling of what your white-label platform can offer
Modern white-label services, crowdfunding or anything else for that matter, continuously evolve by interviewing customers, collecting feedback and implementing the features that their clients desire.
White-label or SaaS crowdfunding platforms meet the needs of most companies. However, they may not necessarily meet your needs when you decide to build an extraordinary feature.
Even though white-label platforms claim to be flexible, their ability for customisation is often overrated.
Usually, the cost to expand a built-in feature is quite high. Of course, the support team can build a hotfix to accommodate your request, but it’s not how things should be done in the industry that deals with money and treats security as the number one priority.
Been there done that. I won’t disclose any names, but we’ve helped one of our clients customise one of the features that the white-label crowdfunding platform offered. Although we won the battle, I have to admit we created quite a monster because of the platform’s limitations. Had it been a bespoke platform, we could have come up with a much more elegant and way cheaper implementation.
3. The list of changes grows too long
If your crowdfunding business is doing great, I bet there’s always something you’d like to add or adjust in your crowdfunding platform.
For example, regulations change and require specific updates in your flow; payment providers introduce new features that would be great to include; or maybe you came up with some revolutionary feature that none of your competitors has.
Before developing any feature, a product manager evaluates the impact that a new feature may have on your crowdfunding business. The focus should always lie on maximising ROI but keep in mind that any change will cost you money.
When you’ve gathered a backlog of features that could hypothetically bring real value to your clients and your business, get a cost estimation from your white-label provider.
If the cost is enormous, most probably implementing any subsequent change requests will cost you an arm and a leg, too. As I explained previously, white-label crowdfunding platforms are relatively limited in terms of customisation, that’s why building new complex functionality on top of them may require various workarounds which take a lot of time and money.
Carefully evaluate the development costs of your current change requests and project them on any future updates.
It may turn out that you can safely stay with your white-label platform and there’s no need for extreme action. However, if you’re already experiencing difficulties with the customisation and they inflate your budget too much, it might make sense to think about moving to a custom platform.
Yes, building a custom platform will be no cheaper, but you’ll have much more freedom in what you can do with it and what you can control.
4. Your competitors have already built what you’re struggling to make with your white-label provider
Although crowdfunding and online investment services struggle for their clients a bit less than, say, e-commerce businesses, competition is always there.
The competition encourages positive changes in the quality of service. On the other hand, if your competitors have already launched the secondary market feature which you’re negotiating it with your white-label platform, it’s one more reason to consider a custom solution where you’ll be able to prioritise things you want to build in your way.
5. You never know if a white-label crowdfunding platform will exist tomorrow
I hate to say it, but startups fail. They can successfully live for several years and bring value to their customers, but we don’t know what can happen to the owners or how the economic or political situation can change their performance and integrity.
It’s one of those risks that will be there if you deal with any white-label software or SaaS.
It doesn’t mean that you need to substitute all your payment gateways or CRMs with something you’ve built from the ground up. Just remember that the core of your business depends on another company and you need to factor this considerable risk into your risk mitigation plan.
A custom solution lowers the chance of your business failure.
The takeaway
Starting your crowdfunding business with a white-label crowdfunding platform is a great idea that allows you to save on costs, reduce time to market, and validate your concept.
Once you’ve established the need for growth, there are two scenarios:
- continue with your white-label platform and keep on building add-ons;
- build a custom stand-alone platform to fit your needs precisely.
This calls for a proper discussion with all of your stakeholders because the decision you make will impact how fast and how quickly your business will evolve.
Here’s what I’d suggest considering:
- Assess your business needs against what your white-label crowdfunding platform can offer off-the-shelf.
- Calculate ROI before customising your white-label solution (in fact, any solution).
- Evaluate the development costs of new features in the long run.
- Realise the additional risks for your business and for potential business angels who consider investing in it.
- Consider security issues related to your business: who can have access to information about transactions and whether you’re okay with too many people knowing these sensitive details.
If you’re inclined to build a custom crowdfunding platform, remember that you’ll need a product manager on your end who’ll work with the development team—in-house or outsourced—and will need to understand both tech and business nuances.
We have a few cases where we’ve helped our partners move away from a white-label crowdfunding platform towards a custom solution.
Reach out to us if you’re interested to know how to do it and what the whole process will look like. We’ll be glad to answer your questions and describe an approximate roadmap.
