Crowdfunding Platforms

Crowdfunding can be grouped into four types! According to the type of Crowdfunding platforms deal with – Donation-based, Reward-based, Lending-based and Equity-based Crowdfunding. Many platforms perform operations belonging to more than one Crowdfunding type and those are counted more than once and thus the number of platforms by types is higher (284) that absolute number displayed (263). Because there are considerable differences between old and new EU member countries the tables are separated.

Old EU members

(Austria, Germany & Italy)

Crowdfunding type Number of platforms Percentage
Donation-based 35 15.8%
Lending-based 15 6.8%
Reward-based 95 43.0%
Equity-based 76 34.4%

New EU members

(Poland, Czech Republic, Slovakia, Croatia, Hungary, Slovenia)

Crowdfunding type Number of platforms Percentage
Donation-based 15 23.8%
Lending-based 3 4.8%
Reward-based 28 44.4%
Equity-based 17 27.0%

All Partner Countries Combined

Crowdfunding type Number of platforms Percentage
Donation-based 50 17.6%
Lending-based 18 6.4%
Reward-based 123 43.3%
Equity-based 93 32.7%
The Crowdfunding literature speaks of four Crowdfunding types. These are the types:

  • Donation-based Crowdfunding
  • Reward-based Crowdfunding
  • Equity-based Crowdfunding
  • Lending-based Crowdfunding

(Detailed description when clicking on the blue bars)

(Also called Gift-oriented Crowdfunding)

Money is obtained on a donation basis from several individuals and businesses but nothing is returned to those who give the money. The big difference to conventional donations, however, is that the donor (here called backer) is informed in detail about the project and the use of the funds. Often donation Crowdfunding is most successful among charities and non-profits. Some services invite people to donate to projects for the pleasure of giving.

Philanthropy based services usually have other benefits such as tax credits or rebates. As this sort of Crowdfunding is predicated on donations, funders do not obtain any ownership or rights to the project, nor do they become creditors to the project. Typically the online service providers take a 5 %-10 % fee of all donations.

(Remuneration-based crowdfunding)Rewards-based Crowdfunding is where individuals donate to a project or business with the expectation of receiving a non-financial reward in return, such as goods or services at a later stage. A common example is a project or business offering a unique service (rewards) or a new product (pre-selling) in return for investment.

This form of Crowdfunding allows companies to launch with orders already on the books and cash-flow secured (a major issue for new business) and gathers an audience before a product launch.

Key features:

  • No Funds have to be repaid
  • Just deliver the service or the goods promised
  • Orders are secured before the launch of a new product
  • Allows you to build your customer base as you raise funds
  • Obligation to deliver on your promises on schedule.
  • Popular option for start-ups and entrepreneurs
  • Provides a way to fund the launch of new companies or products

There are two types of terminology general identified:

  • “Keep-it-All” (KIA) (also called flexible funding) where the firm sets a fundraising goal and keeps the entire amount raised regardless of whether or not they meet their goal. The target sum has to be reached in order to distribute the funds to the project
  • “All-or-Nothing” (AON) (also called fixed funding) where the entrepreneurial firm sets a fundraising goal and keeps nothing unless the goal is achieved. The target sum has to be reached in order to distribute the funds to the project

It is particularly suitable for products and services that or is innovative or garners high levels of consumer attention.

(Crowdinvesting, investment Crowdfunding, crowd equity)

This Crowdfunding type is an investment with financial consideration. A large number of people invest in a company and are thereby involved in the success of the company.
Investors usually acquire equity interests in companies in which profit from the annual profit and the increase in the company’s value. This new and alternative form of corporate finance combines the benefits of Crowdfunding with those of equity capital.

Most equity-based Crowdfunding uses shares or stocks, however the using of mezzanine instruments such as profit-participating subordinated loans, which are structured like equity is possible in Austria and Germany.

For the investment in the form of a subordinated loan, equity-based Crowdfunding is a part of mezzanine capital; the crowd gets an annual fixed interest rate. The investor’s claim for repayment of the loan is subordinated to other creditors of the company: in the event of insolvency or liquidation of the borrower, the loan falls behind the other claims of the respective company.

This form allows participation financing for the early-stage financing of start-ups or for innovation projects in small and medium-sized enterprises (usually starting at around 100 €). Young companies in particular are often faced with difficulties in getting capital to finance their business adequately. A Crowdinvesting campaign can be used to raise the necessary capital, which in turn facilitates follow-up financing by banks or funding agencies.

On the other hand, entrepreneurs have a significant added value through the great attention and reach through campaign. Because equity Crowdfunding involves investment into a commercial enterprise, it is often subject to securities and financial regulation.

This is a kind of a private microcredit for projects and companies. Several private sponsors (the crowd) lend their money through a platform to a borrower: a person or company of their choice. The platform Intermediaries serve as online credit marketplaces, which usually receive a fee for their mediation activities.

The crowd lending is primarily based on the idea of allowing people and companies to borrow that do not see any or little chance of obtaining a bank loan. Crowdlending can be divided as follows:

  • Person-to-person lending (Peer-to-peer lending, P2P lending). Both the lenders and the borrowers are individuals.
  • Person-to-business lending (peer-to-business credit, P2B lending): In this case the lenders are peers to companies.

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