What is crowd investing?
Crowdinvesting is a special form of crowdfunding in which the so-called crowd, which is in a Invested in the project not only receives interest, but also shares in the company's success becomes. But how exactly does it work?
Crowd investing with a return goal
Returns play a big role in crowd investing, as it's not just borrowed capital interest is paid, but investors also benefit from the positive development of a company benefit. This form of investment is particularly popular today financing of startups and small and medium-sized companies. But she will also be with property used.
The crowd's invested capital is usually a mixed form of equity and debt capital, which is also called mezzanine capital. It is often regulated as a participation in the form of a subordinated loan. These investments are brokered via well-known crowdfunding platforms and are accessible to a wide range of investors. Investors can often participate with small amounts, which can start as low as €10, but are usually around €10. Start at €250 or €500.
Duration of participation
The duration of participation depends on the terms on the respective platforms and they also vary in length in different industries. When investing in startups, they are usually between 5 and 8 years, while in real estate they are often only between 2 and 3 years. However, there is usually no possibility of termination during the term.
Advantages of crowd investing for companies and investors
For companies, crowdinvesting not only offers an opportunity to raise bank-independent capital. Due to the large number of crowd investors, they can also become important feedback providers and can help the company expand its reach. In addition, new customers may be acquired or relationships with existing customers, business partners or even employees may be strengthened.
Investing means using capital or valuables to generate new profits. The …
Participation will not be of interest to crowd investors because they can participate in the economic success of a company with relatively small amounts. In most projects there is also the opportunity to exchange ideas with the companies. In many cases, the companies grant their crowd investors additional benefits or compensation from the project. Although the return goal is also the focus of crowdinvesting, individual interests in certain projects often play an important role for investors.
Risks of crowd investing
The risks for investors in crowd investing depend heavily on the individual concept of a project. However, particularly when investing in startups, the risk of the investment defaulting is naturally high, and is therefore lower for already established companies. That's why it's always important to look closely at a project before investing and to weigh up the opportunities and risks.
Crowdinvesting offers a number of good opportunities for both companies and investors to raise capital without Banks and to bind a large number of investors to the company with relatively small amounts. For investors, good projects also offer very good return opportunities.