Crowdfunding. Solution or symptom

Crowdfunding has boomed in recent years. But is it all gold that shines or are there also major pitfalls.


The figures on the development of crowdfunding are impressive. In 2012, the market still accounted for 14 million. In 2013 that was already 32 million. the largest share is used for companies, the average value of which in 2013 was already 75,000.

On the other hand, there is a continuing contraction of credit granted to SMEs by banks. In particular, the smaller loans, up to 250,000, had to suffer. with an average shrinkage of 1.6% over the last quarters.

Although the correlation between the two has not yet been clearly demonstrated, it is generally accepted that entrepreneurs, partly due to the shrinking lending, resort to crowdfunding. It is therefore hip and modern.

Types of crowdfunding.

Crowdfunding can be distinguished according to three types of funding.
Donation. The investor provides financing without requiring any further consideration. Charities in particular make use of this.
Loans. The funder receives its loan back over time, but often depends on the duration that can be long and an interest that is usually low.
Shares. The investor takes shares in the project with no promise of repayment. The investor expects or hopes that the project will pay off and on that basis earn back his investment.


Crowdfunding can be very lucrative for investors through equity participation. Because there is no further expensive overhead, high returns are promised that can reach up to 12%.
Another advantage is that the investor can invest specifically in those things that he finds important or that he is interested in. That is quite different from participating in investment funds that are often very opaque.
As a result, projects that are not funded by the regular market still have a chance.
The major advantage for the project provider is the high involvement and feedback from its investors, which allows it to use its investors as a marketing tool and to have direct feedback on its project. This can improve the chance of success.
Because high-risk projects can still receive funding, it offers more scope for innovations that would otherwise never have been born.


For the investor, there are still some risks involved. For example, there are no guarantees. The investor bears the full risk.
Claiming it back is a tricky business. Each investor must separately try to get his money back from the project provider who is often not financially wealthy through a legal procedure. [the bald chicken]
Assessing the risks is very difficult unless you are completely at home in the market where the project provider is active. Nor can the investor get a picture of the private situation of the project provider. So the provider has all his things in order.

Crowdfunding is a floor drain. Banks do not usually lend to projects for very good reasons. They have extensive risk models for this. The project provider can still collect money through crowdfunding, but that means that there is a high risk to the project. Something that is often overshadowed by the fact that crowdfunding is hyped via social media.


Don’t be blind to returns or hypes. Unless it concerns marginal amounts for you and you mainly invest from a social commitment. Shield your risks.
Information is always important. Crowdfunding platforms often provide some information, but it is recommended that you also conduct specific research yourself into the project, the market and the provider. Has this done projects more often? What was the result?
Ask if there has also been a credit application with a bank and why it has been rejected.
Don’t invest in things you don’t understand or know. Certainly not if you are going to invest significant amounts.

Solution or symptom?

Is crowdfunding a solution or a symptom? Actually both. Crowdfunding has grown from charitable and social views, with the poor reputation and performance of banks having triggered many people to take the plunge. Both from the supplier and the investor side.

The crowdfunding entrepreneurial market will continue to grow and as such will become a serious competitor for banks, especially when it comes to small credit. It will not be able to become a full-fledged replacement because, on the one hand, it will continue to involve smaller amounts and, on the other hand, because the risk profile is high and it has no guarantees. The market can still professionalise further, especially if the platforms provide more information and ensure better screenings of projects and providers. In doing so, they reduce the risks for investors.

For small private projects, such as in care, people will continue to depend on the social attitude of the environment. This will always involve voluntary donations. This market offers only very limited prospects because the growth in the number of mini-projects means that the willingness and ability of citizens to invest in them is limited. It will then remain with incidental actions that are accidentally hyped, but will not be a solid basis for financing.