Types of crowdfunding and crowd investing

Crowdfunding: a global trend

What is crowdfunding

As you know, crowdfunding is an alternative way to raise capital, which uses online platforms.

The funds can be used in a wide range of projects: consumer loans, loans to small and medium-sized businesses, participation in a business startup, acquisition of property. A distinctive feature of this method is the collective fundraising for the implementation of the project. This mechanism allows you to receive financing outside banks, exchanges, funds.

Why crowdfunding is attractive:

  • Allows you to appeal to those people who want to become part of a project / group
  • Allows people to invest small amounts of money
  • Enables companies to pre-sell a product to test the market and helps them develop a network of followers
  • Exclusivity and exclusive rewards to first sponsors
  • Transparency
  • Advantages / Disadvantages

Crowdfunding projects have financial and non-financial benefits for project proponents.

Crowdfunding in the world. Statistics

Switzerland. At the end of 2015 30 crowdfunding platforms functioned. Their number increased to 40 in April 2016. and up to 50 in April 2017. Since 2015 until 2016 Different types of crowdfunding showed the following results:

Crowdfunding showed the most significant growth (+ 597% to 55.1 million Swiss francs),
Crowdinvesting (+ 453% to 39.2 million Swiss francs),
Gratuitous and reward-based types (+ 37% up to 17 million Swiss francs)
In just 7 years, 193.8 million Swiss francs were raised through crowdfunding in Switzerland. In 2016 More than 100,000 people supported crowdfunding projects. In the reward-based segment, 1338 campaigns from 2042 launched (65.5%) were funded.

Austria. In 2015, 6 Austrian crowdfunding platforms raised 8.1 million euros, considering that since 2013 70 Austrian projects in total raised 11.1 million euros.

For April 2017 in Austria along with international Kickstarter, IngieGoGo, etc. 20 crowdfunding platforms registered. Of these: 10 crowdfunding, 5 – crowdinvesting, 4 – based on non-financial remuneration, 4 – charity.

Some of the platforms operate exclusively within the borders of Austria (1000 × 1000, Dagobertinvest, Fundraizer), while others try to enter the market in Germany and Switzerland (HomeRocket, primeCrowd).

Some Austrian banks have their own crowdfunding platforms. Bank BAWAG P.S.K. Es geht! platform, at Raiffeisenlandesbank Vorarlberg Mit einander Vorarlberg platform).

Great Britain. December 2017 There were 65 platforms in the UK. 40% of platforms are multivariate and represent different types of crowdfunding. Crowdinvesting is available on 31% of platforms.

The largest number of platforms are focused on business financing (60% of sites). In 2017 the most significant success was achieved by Monzo Digital Bank, which raised £ 2.5 million from 6,500 investors through a crowdfunding campaign. The second most popular sector is public goods (37% of platforms). They solve a number of problems from restoration of buildings to political campaigns. This is followed by the sector of art and creativity (22% of platforms). 15% of the platforms are supported by other sectors – housing mortgage financing, the real estate sector as a whole.

Types of crowdfunding

Among the types of crowdfunding are the following:

Gratuitous (donation-based /, charity). The type of crowdfunding, which involves simple donations, fundraising for non-profit projects, no remuneration. This type is widespread, as a rule, among social, charitable, and cultural projects. It can be used in political campaigns. Donors do not receive remuneration.
Lending (loan-based, P2P). Funds are collected to finance individuals, consumers, and legal, business. This type of crowdfunding is an online financial transaction process in which borrowers and lenders communicate with each other without the participation of the banking system. Often represents P2P lending, divided into lending to enterprises and individual consumers. Interest rates are usually lower, and the investor can choose the degree of risk that he is ready to take on. Platform sites may offer a rating system similar to a credit rating. Crowdfunding is the fastest growing type of crowdfunding. The dominant role is given to personal loans.
Remuneration (reward-based). It implies a fundraiser with the subsequent receipt of a non-financial fee. Used in fundraising in creative, cultural, sports projects. Donors receive remuneration in the form of products, works and work

Most popular crowd investment platforms: