More widespread use of crowdinvesting
For a good 10 years now, I have been observing the first manifestations of the crowdfunding phenomenon during my time as a trend researcher at the Zukunftsinstitut in Frankfurt. Tribe wanted (= off-grid community tourism experiences) collected money online from 5,000 people for the lease of a South Sea island in 2006. Since then, the basic principle has evolved across countries and industries, resulting in a total collected volume of over $30 billion last year.
The models that have spread fastest globally, because they are the simplest from a regulatory point of view, are those in which the crowd (investors) only receive non-cash or virtual benefits (known as rewards) in return for their financial contribution. Since its inception, the US platform Kickstarter has supported around 100,000 projects to the tune of over 2 billion dollars. A wide variety of investment models have become established worldwide, including in Germany, in which the crowd receives real or virtual stakes in companies or interest payments, depending on the legal framework. In addition to traditional startup financing, there is now a diverse range of services from financing patent applications, educational careers and real estate to energy and infrastructure projects in the municipal sector. What they all have in common is that traditional financial intermediaries such as banks and venture capital funds play no or only a subordinate role in the models and are being replaced by completely digitized processes from the “little man in the street”. The large, mostly social media-supported public that accompanies each project brings additional communications benefits in attracting customers and engaging other stakeholders for project owners.
Crowdinvesting is about more than purely financial participation for most investors and supporters. Accordingly, it is also important to tell the story behind the projects, introduce those involved and unite the crowd behind a common vision. High communication readiness and flawless transparency are thus two of the most important success factors of any campaign. Depending on the platform, projects in the investment area are possible from approx. 50,000 €, but usually orders of magnitude of 200,000–500,000 € are required.
Before the market was regulated, the record value of a single project in Germany was EUR 7.5 million. The new legal limit, which is set by the so-called Small Investor Protection Act, is currently 2.5 million euros, which is the maximum amount that can be collected by an issuer until the capital is repaid in full.
Largest project in Germany: Hotel Weissenhaus collected € 7.5 million
Curiousest Project International: $55492 for potato salad (private person)
Fastest project at bettervest: 107,700 € in 4 days for Mobile Solarkraftwerke Afrika GmbH & Co. KG
Satire project: the cinema film Stromberg was endowed with € 1 million by more than 3000 people; the investors participated in the box-office takings of the film.
By 2020, crowdfunding will be a fully established financial instrument used to finance projects of all kinds as an alternative or supplement to the house bank and other traditional financiers. In addition to a few large providers, who will account for a large part of the total invested volume in the various investment categories, there will be a considerable “long tail” of niche and regional platforms, which are characterized by their target group and topic specialization. Within Europe, harmonized legislation will be introduced that will make fundings across national borders easily possible and thus, in principle, over 500 million Europeans can be addressed.
Invest smartly. Saving the world.
The first crowdinvesting platform where you can invest in energy efficiency projects of companies, social institutions, associations and municipalities and get a share of the savings achieved in return.
Patrick Mijnals (35) studied cognitive science and artificial intelligence in the Netherlands (degree Drs./ MSc). Since 2006, he has worked as a trend and futurologist for the Zukunftsinstitut in Frankfurt, where he focuses on changes in lifestyle and consumption patterns as well as trend-based innovation management. He is also the founder and managing director of bettervest.com, the first crowdfunding platform through which citizens finance energy efficiency projects of companies, associations and municipalities and in return receive a share of the savings. bettervest is under the patronage of Prof. Ernst Ulrich von Weizsäcker, has been awarded the Werkstatt N seal by the German Council for Sustainable Development, and is a distinguished “Landmark in the Land of Ideas”.