Online Platform Financing: 10 Tips for the Successful Financing of an Online Platform

The internet is booming and enables us to carry out more and more tasks and activities online. Online platforms from schools and universities offer insight into records and certificates as well as personal data. Companies use online platforms to sell products and services, to showcase videos, etc. However, an online platform is a complex project. The costs for programming and development are not to be underestimated and often exceed the available capital. In this article, we present you with ten tips that will help you successfully finance an online platform despite the high costs.

Development of an Online Video Platform

What Exactly is an Online Platform?

It is impossible to precisely define what an online platform is in general. Basically, there are many possibilities and options. For example, the job board of the large international corporation you are applying to is a platform. But also the dating portal, on which you may have met your partner, is an online platform.

In a broader sense, an online platform or web app is understood as a very complex application with many functions and possibilities. They have database connectivity and are often connected via an API to payment service providers or other programs.

10 Tips for Financing an Online Platform

Now that you know what an online platform is, what advantages it offers, and what it is used for, it is now time for you to learn how to successfully finance and implement such a complex project. In this section, we present you with ten expert tips that will help ensure that the financing of your project becomes a success.

Tip 1: Thorough Planning and Preparation

The first and most important step is the thorough planning and preparation of your project. An online platform is a very complex undertaking, and thorough planning and preparation is essential—not only to understand the workflows but also to accurately calculate the costs. The information and data from the planning and preparation are very important later on in other steps for the financing.

Tip 2: Create a Business Plan

Whenever you start a new business or project that relies on external financing, you must create a business plan. The development of an online platform is, of course, no exception. The business plan must contain information about your project, its forecasts, competition, etc. The business plan alone is a very important and comprehensive undertaking. We recommend that you thoroughly inform yourself about its creation and, if necessary, seek advice from a specialist.

Tip 3: Hire an Agency

An online portal is a complex and elaborate project. It requires solid expertise, the necessary tools, and the appropriate software for programming and development. Therefore, if you do not have a professional and experienced IT team, you should entrust the development to a professional agency. Although this increases the costs, it demonstrates your commitment and significantly improves the chances of success for your project and its financing. It is important that you compare various agency offers. This way, you can learn about different services and prices and make a choice. You can include the various offers in your financing application as further evidence that you have been actively involved and have addressed the subject.

Tip 4: Inform Yourself About Financing Options

Before deciding on a loan, for example with your primary bank, you should familiarize yourself with the various options and possibilities. There is a multitude of loans and grants, each with different terms and conditions. While, for instance, a loan from your primary bank is one option, a startup founder loan—whose terms are generally better than those of traditional banks—might be more suitable for your online portal. A detailed and thorough comparison is advisable, particularly since you might not qualify for a traditional loan with your project, but could very well be eligible for a founder loan, among other options.

Tip 5: Research the Competition, Find a Niche

There are online platforms as numerous as grains of sand. If, for example, you want to create a video platform, then there are well-established competitors like Vimeo, YouTube, or Dailymotion. They all offer more or less the same services and share the majority of the market among themselves. You must therefore carve out a niche for your video platform that these competitors do not provide and with which you can be successful. Otherwise, no one will grant you a loan for financing. For example, Dailymotion is known for allowing users to watch entire movies and series, as there are no restrictions on the length of videos or material. Vimeo, on the other hand, is a platform primarily used for professional videos and courses, while YouTube serves as a platform for many creators to earn money.

Tip 6: Marketing and PR are Important Factors

When financing your project, keep marketing and PR in mind. These incur costs that you may have to cover yourself before securing financing. However, marketing increases your project’s visibility, thereby enhancing the chances of successful financing. After all, if people already know you and are aware of your project, they are more likely to finance it.

Tip 7: Contribute Your Own Capital

In every loan, in every financing, equity plays an important role. It shows banks that you are willing to get involved and invest in your project—a sign that you believe in its success. For this reason, you should also contribute your own capital when financing an online platform. And: equity does not always have to be in the form of cash in the bank. Pre-expenses for marketing, servers, etc., can also be counted. What matters is that the bank sees it is not shouldering the responsibility and risk alone, but that you are contributing your share as well.

Tip 8: Do Not Submit the Financing Application Alone

In many cases, the chances of obtaining a loan are better if there is a co-applicant. This person brings their own capital and securities into the loan. When financing an online portal, it is no different. In such cases, it may also be wise to submit the financing application together with a partner. The prospects for success become significantly greater.

Tip 9: Look for Investors and Partners

In addition to financing through banks, it is also wise to look for investors and partners. While investors primarily support your project financially and enhance your available capital, partners can contribute in many areas. For example, partners may be companies that provide you with a server, or firms that commit to hosting your internal courses and training videos on your platform. Partners and investors show that people are interested in your project, which in turn increases the interest in potential financing.

Tip 10: Inform Yourself About Discounts and Reimbursements

In Germany, there are many tax advantages for startups and new projects. Additionally, there are various opportunities to have costs reimbursed. For example, office supplies, server costs, etc., are tax-deductible. This involves money that you do not receive back immediately and cannot use directly. However, over the course of the fiscal year, significant sums can accumulate that are certainly worthwhile. If in doubt, you should seek comprehensive advice from a tax consultant.

Conclusion and Summary