Crowdinvesting
What is it?
Crowdinvesting is an umbrella term that encompasses different models of collective investment, including crowdfunding. It involves several people investing their money in a project, company, or asset with the goal of earning a financial return. This model, usually managed through online platforms, makes it easier to participate in initiatives that would otherwise be out of reach for small investors.
Unlike donation- or reward-based models, crowdinvesting focuses strictly on profit-generating investments, such as equity stakes, interest-bearing loans, or future economic rights.
Key aspects to consider
Crowdinvesting is used across various sectors, distinguishing it from more specific models like real estate crowdfunding. Notable applications include:
- Startups and early-stage companies: Investments in tech, biotech, or sustainable energy ventures.
- Social impact projects: Initiatives that combine profitability with environmental or social benefits.
- Development of financial products: Creation of investment vehicles like bonds or funds accessible to retail investors.
Key advantages include the democratization of investment, access to innovative projects, and portfolio diversification across sectors However, it also comes with inherent risks such as project failure, return volatility, and illiquidity.
Crowdinvesting has reshaped how projects are financed, providing retail investors with new opportunities and allowing project sponsors to diversify funding sources beyond traditional channels. This model is becoming a key tool for promoting innovation and economic growth.