What is crowdinvesting? If you want to learn more about this form of financing and its opportunities for sustainable coexistence, you've come to the right place! Change can be achieved not only through a sustainable lifestyle in their own bubble, but also for society as a whole. Crowdinvesting is a great way to seize big opportunities with small resources.
In this article, I would like to give you all the information you need to know about so-called crowd funding. Let's go!
In advance you can find here already a short Table of contents about the contribution:
Definition - What is Crowdinvesting?
Crowdinvesting is understood to be a Form of financingCrowd financing is a form of financing in which many private investors (crowd) financially support a company or a business project and, in return, usually receive a return on their investment or otherwise participate in the success of the project. Such crowd funding usually enables the establishment or implementation of certain projects.
Difference from crowdfunding? Crowdinvesting is an extended form of crowdfunding in which the investor receives a financial stake in the economic success of the company in the form of interest, debt instruments or shares. Crowdfunding, on the other hand, is not fundamentally tied to a monetary consideration.
Characteristics - What makes crowdinvesting?
Is the term still not tangible enough for you? Then I would like to give you a few more, very decisive characteristics of crowdinvesting, which will paint a clearer picture of this future-oriented form of investment.
Procedure
First of all, founders and entrepreneurs look for a suitable platform on which they would like to launch their crowdfunding campaign. They then create a short description of the project, which should ideally be captivating. Then the platform checks the investment project and starts the crowdfunding in consultation with the company. Now investors can invest. After successful completion of the campaign, the companies receive the collected capital. The investors are kept informed about their investment - for example, through detailed updates and information about the progress of the project.
Here the Procedure at a glance:
- Search crowdfunding platform
- Provide personal data / project description
- Examination of the project is carried out (plausibility, financial plans, etc.)
- Launch of the campaign via the crowdinvesting platform
- Transfer of capital after successful investment phase
- Regular status reports for investors
Form of participation
As a rule, these are subordinated loansIn the event of the company's insolvency, other investors are given priority over the crowd investors. The capital is so-called mezzanine capital, in which both equity and debt capital are used. The issue volume to a total volume of up to 6 million euros is limited. This threshold is calculated for 12 months at a time.
Industries
Basically use both small startups as well as medium-sized companies from a wide range of industries are taking advantage of the opportunities offered by crowdinvesting. However, the alternative financing instrument is particularly popular in the field of Real Estate, the renewable energies.
Notice: Ecologically sustainable crowdfunding campaigns are primarily oriented towards solving the biggest environmental problems of our time.
Duration
Depending on the platform and the industry of the investment project, the term of the loans differs greatly. For example, the investment term is real estate projects on average at 2-3 years, while at StartUps about 5-8 years takes up. Investors usually do not have the possibility to terminate their investment, which makes it all the more important to absolutely deal with the favored crowdfunding campaign.
Taxes
As you may know from stocks, the returns from investments in crowdfunding projects are also subject to the Settlement tax, which is why they are taxed at 25 percent, church tax and the solidarity surcharge.
Advantages - Why is crowdinvesting worthwhile?
Now you already know what crowdinvesting means and what it's all about. But why should you actually start a campaign or support crowdfunding projects and ideas with your own money? Here I would like to give you a brief overview of the most important advantages.
Advantages for companies
- Refinancing: Freed-up equity can be used for the realization of further projects.
- Supporters: Campaigns with socially or ecologically valuable ideas find many supporters among the broad mass of the population.
- Identification: As a rule, the first investors are also the first customers, and they identify strongly with the project, which often leads to suggestions for optimization.
- Decision-making power: With crowdfunding, companies retain full control over their visions and plans.
- Pre-financing: Often difficulty in obtaining bank loans in advance. Campaign enables the start, which makes long-term financing more interesting for banks.
- Viral effect: Meaningful crowdfunding campaigns are readily shared on the Internet, so the amount of time and money spent on advertising to attract new supporters is usually low.
- StartUps: Financing from banks usually not possible and business angels often demand a say. The campaign helps to fully realize one's own vision.
Advantages for investors
- Refinancing: You can invest in projects that are more advanced to minimize your risk.
- Small amounts: Crowdfunding campaigns can be supported even with small, three-digit investment sums, and thus for the mass of the population.
- Wealth building: Compared to traditional investment products, the higher risk associated with crowdfunding is also accompanied by significantly increased opportunities for high returns in times of low interest rates.
- Selection: As an investor, you can choose from a variety of interesting and promising campaigns on different crowdfunding platforms.
- StartUps: As an investor, you receive a share in the success of future-oriented companies with which you can fully identify.
- Transparency: Decision-making is easier because the project company, project, project status, financing plan and other information are clearly communicated for individual projects. With an investment in shares, on the other hand, it is difficult to follow how the money invested is used.
And the disadvantages? As a rule, these are high-opportunity but also high-risk projects with mostly long terms, which can of course also mean a partial or total loss of the investment sum.
Examples of an ongoing crowdfunding investment from the field of sustainability
Still not tangible enough? Then here is a detailed, practical example of meaningful and well-planned crowdinvesting for you, which I support myself. Lemonaid, the once small "juice store" on St. Pauli, has since its founding developed into a large social drinking plant that stands for fair trade and 100 percent organic. The proceeds from the sales of lemonades and teas are also used to support completely transparent charitable projects.
Important key facts of this sample campaign for investors:
- Start: 02.11.2020 at 12.00 o'clock
- Interest: 5% p.a.
- plus bonus interest (pro rata 1% of earnings before interest and taxes)
- Duration: Until 31.12.2026
- Repayment at maturity (subject to early termination)
- Investment amount: from 250 Euro
- Product type: Digital security
You can find more info at the Crowdinvesting campaign for Lemonaid #sozialveranlagt on WIWIN, the platform for sustainable investing.
Warning: The acquisition of this security is associated with considerable risks and may lead to the complete loss of the invested assets. A basic information sheet has been published. This should be read by investors before making an investment decision and can be accessed without access restrictions on https://crowdinvesting.lemon-aid.de/ can be retrieved.
More examples
There are countless other great sustainable crowdinvesting campaigns on WIWIN, but also other platforms like Klimaschwarm, bettervest, Ecozins or GLS Crowd that are guaranteed to interest you. For example for sustainable banking, energy efficient living, solar project development or E-mobility. Just take a look around and search specifically for the companies and ideas that excite you.
Crowdinvesting - An opportunity for sustainable, future-oriented ideas
Ecologically minded companies and sustainable founders benefit above all from the opportunities offered by the Additional available capitalof the virality of the form of financing and the high level of identification of the financiers.
The Opportunity to participate in future-oriented projectsThe opportunity for investors to help shape the future and at the same time build their personal wealth is nowhere greater than with crowdinvesting. It is important that you fully understand your investment, the project and possible risks before crowdfunding a project with your money.
I hope that with this post I could bring you closer to the concept of crowdfunding. Do you have any questions, tips or your own experiences that you would like to share? Then feel free to write me a comment.
Stay sustainable,
PS.: Change can also be achieved through the Support or launch online petitions effect. You can find out exactly how this works in the linked article. Have fun!
