Crowdinvesting in General
Crowdinvesting is a sub-form of crowdfunding. Whereas reward-based crowdfunding seeks to support and finance creative projects mainly via small amounts contributed by supporters, crowdinvesting involves an investment in a startup or company. In other words, crowdinvesting turns supporters into investors. For example, individuals who support a crowdfunding project by pledging a sum of money usually receive some sort of return service, i.e. a CD or a photo: however, investors who invest in a startup as a part of crowdinvesting project are looking for a return on their investment, i.e. to receive any gains or exit proceeds generated by that company.
The concept of "crowdinvesting" arose in 2011 as a sub-concept for crowdfunding projects. In the English-speaking world, the term "equity-based crowdfunding" is also often used to refer to crowdinvesting.
Most crowdinvesting projects are not older than two years. Crowdinvesting is an especially interesting form of financing for startups and young companies, in particular as a way of testing a product or market model. If the crowdinvesting process is successful and the project is accepted by the "crowd," it's already seen as having a good chance of success on the market afterwards (if that's where it's headed). In the startup phase, crowdinvesting can also be helpful in further establishing that particular business concept on the market or in stabilizing the company and allowing it to take key development steps.
In all cases, the following questions should be answered in advance: What happens after the crowdinvesting campaign? Is my business model sustainable and can it survive on the market? Will I need additional capital after the campaign ends? If so, how much will I need? How will I generate that capital? etc.
At the moment, crowdinvesting in Germany involves primarily the following contract models:
- Shareholder loan
- Co-operative shares ("Genossenschaftsanteile") are bought by a co-op via a platform. Currently, Startnext is the only site where this is possible, and please note that this model is provided by Startnext Network GmbH and not by Startnext gUG.
- Atypical silent participation
- Profit-sharing rights
- Shares ("Aktien")
- Lending of Credit (“Kreditvergabe”)
In contrast to crowdfunding, such sites don't exist yet in the world of crowdinvesting. For example, there is no crowdinvesting platform devoted entirely to the field of music.
Individual crowdinvesting portals differ from one another in the type of financing and participation models they offer as well as in the general procedures involved in each crowdinvesting campaign.
Click HERE for an overview comparing all crowdinvesting portals:
To make sure you have the most up-to-date information possible, always consult the individual platforms to find out more about the types of financing and crowdinvesting procedures.