Build vs Buy: Crowdfunding Portals
Should I Build or Should I Buy?
The decision to start a crowdfunding portal project can be difficult. Most organizations who want to establish access to new capital via the web, showcase their deal flow, and streamline the investment process, also wish to avoid becoming a technology company in the process. Furthermore, portal owners want the ability to maintain control over their own investor experience, promote their brand, oversee the accreditation process, limit investor data access, and manage their own specific compliance standards and guidelines.
With such a comprehensive list of requirements, many believe that building their own technology platform to be the only viable solution to solve the requirements above. However, a rare few come to terms with the reality of their technical limitations before it’s too late. This article explores the costs and options of building your own solution, and why CrowdEngine is the ideal alternative.
CrowdEngine was architected and developed specifically to solve all these requirements while remaining an easy to use, out-of-the-box robust enterprise crowdfunding solution. Now portal owners can keep control of all the key aspects of their business, while still differentiating themselves in the marketplace.
With CrowdEngine’s creative flexibility, nearly any brand and site can be effectively represented on a portal. Portal owners no longer have to become technology experts to showcase their deals and provide their investors with a premier user experience. Because each portal owner can manage their compliance and accreditation standards, they need not worry about varying legal opinions different from their own in their chosen jurisdiction(s). Portal owners are not subject to different legal opinions counter to their specific offering type or business model.
For the skeptics who still remain curious whether building is better than buying, let’s dig deeper. Any crowdfunding real estate and private equity groups who choose to build their own technology will need to accomplish all the aforementioned technical requirements while controlling their operational costs. Further consideration should be made for the opportunity cost caused by the delay of entering the market to establish market share. The longer the delay, the greater the cost.
Those who “buy” with the intent to win the race for a market position will enjoy a noticeable competitive edge, while those who “build” will be halted in their path by the often overwhelming task of managing both a tech startup and an investment firm. Moreover, the cost to maintain what is eventually built must be accurately projected. Companies that are budget conscious must control their build expense in addition to the operational costs once the solution is live. Given that typical equity groups are not familiar with technological development, they stand at an extreme disadvantage in accurately projecting development and maintenance costs.
If costs are absent from the decision-making process, one should also consider their ability and experience for managing technical resources. Technical teams, including developers, engineers, and support technicians, are dynamically different from deal makers. Their workflow, thought process, and attitudes are unique. Without the experience or knowledge to properly hire or manage said expertise, nor the insight to properly spec. the required solution after the hire is made, the project becomes cripplingly expensive. As mentioned above, the time lost during this process can make the difference between a successful venture and a failed experiment. Often, equity groups will hear quotes ranging from $100k+. Unfortunately, this often pales in comparison to the real cost of discovering the actual requirements, architecture, time, and revised costs required to finish and then maintain your portal. (Ever heard of the expression, 3x the time, 3x the money?) Unsurprisingly, these expensive portals often launch lacking any technological advantage or value add.
Solution
Deal flow and the investor/donor process are the core of every successful real estate or private equity organization. Finding the right solution that is architected to best support your core business and match your own standards and methodologies can be a challenge; especially when there is little crowdfunding experience or expertise to draw upon from within your organization. To make matters more challenging, among the several solution providers that claim viability, few are large enough or boast a stable enough platform history to be able to trust with your organization’s most business-critical activities.
CrowdEngine entered the market in 2012 as a premier white-label platform provider. Since then, we have helped hundreds of companies launch their own branded crowdfunding portals. (Equity, Debt, Cause, and Rewards)
We differentiate ourselves by providing our clients best in class crowdfunding solutions for a reasonable and predictable cost. While many of our competitors measure their transaction success in millions, CrowdEngine measures in the billions.
The increasing complexity that results from the growth of crowdfunding has sparked the rise of portal solution providers that solve the challenges faced by capital equity and real estate firms charged with raising capital in this new environment while managing the associated costs of raising capital. CrowdEngine is uniquely positioned to meet the needs of these groups, and provide a complete state-of-the-art crowdfunding investor experience while maintaining the appropriate budget.
CrowdEngine even provides its users with strategic technical advantages by facilitating multiple offering types and jurisdictions on the same portal!
Bottom Line
CrowdEngine can provide you with the state-of-the-art solution, launched and raising capital within weeks, from nearly anywhere in the world.
If your technology concept is so unique as to be patentable, and you have the budget and experience to execute the development and maintenance of the said solution, then you might consider building your own portal solution. However, simply knowing a developer or designer, who then promises you the world so you can “save money” typically translates to a very expensive “paid training” while your team discovers what it really takes to build an equity platform. (Hint: crowdfunding is uniquely different than an e-commerce site. Competence in developing e-commerce sites do not usually translate to building a compliant securities crowdfunding platform.)
Not convinced? Still think you can do it for less? Here is a small list of required resources and the associated costs necessary to build and support a full-featured compliant equity portal. The table below provides: titles, job descriptions, limitations of those who possess those skills, and the salary ranges for those skill sets. Once you add the required salaries and infrastructure, saving money by building your own solution becomes all but impossible.
*All salaries based on the Intermountain West