It doesn’t always have to be a bank where you can borrow money. Not even the best friend or parent. If you are innovative and full of ideas, you can try crowdfunding to get your money. And so much can already be revealed: crowdfunding is a real alternative to bank loans – but not for everyone.
Crowdfunding: what’s behind it
Generally speaking, crowdfunding is a form of financing, especially for startups and founders. And of course, seen from the other side, it is an opportunity to invest the money in the projects. In 2017 alone, over 200 million were invested in crowdfunding projects. A huge sum, the tendency is increasing.
Since the idea must be presented to investors on the platform in order to arouse interest and trigger investment requests, crowdfunding is best suited for people with easily understandable ideas. If the idea of getting the attention of a wide audience is enough, you have almost won. People like to invest, usually not too high contributions, but they add up to a nice sum.
Advantages and disadvantages of crowdfunding
The number of supporters can definitely be an advantage. There are several people who invest their money in various business ideas / projects – so you are not dependent on the decision of an individual. Investors often also become the first customers, so that you benefit almost twice: you get not only the money, but also the first customers through crowdfunding.
The biggest disadvantage is a risk of total loss – but this is particularly relevant for investors. But you have to say that hardly any investor invests all of his money in just one project, so that it hardly ever happens that someone loses all of his money. The risk is minimized by spreading investments over several projects.
What speaks against the good old bank loan?
If crowdfunding has so many advantages, do you even need to think about a bank when you need financial resources? Especially nowadays banks offer very cheap loans, so that a bank loan can be cheaper than being financed by crowdfunding. And yet: banks do not finance every project, and especially founders and startups have a hard time with them, not least because of Basel III. But banks offer more security and more expertise, as well as advice – when crowdfunding, you are often on your own.
Conclusion: crowdfunding is booming. More and more people are turning to the platform. You read more and more of various success stories. Banks now see crowdfunding as competitors. Crowdfunding can be described as a real alternative to bank loans, but more for startups and company founders. Crowdfunding is also increasingly used in the real estate industry. All other customers are currently in better hands with the banks – mainly because of low interest rates.