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.

Bettervest.com

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”.