Crowdfunding, which means crowd financing or group financing in German , is a financing method in which projects are implemented by a large number of donors. Participation in the project through financial support is comparable to a donation. In this article we will explain the most important aspects of crowdfunding to you in more detail.
Crowdfunding - what is it anyway?
Crowdfunding is basically a method of collecting money, in which a project is presented on a suitable platform in order to then collect financial support from people who are interested in this project. A distinction is made between four variants of crowdfunding.
- Donation-based crowdfunding : The donations are made as a pure donation, i.e. without financial support, to the project initiators; the money is repaid after the end of the project.
- Classic crowdfunding or reward-based crowdfunding: The supporters receive a non-financial thank you. This can be a copy of the project result, for example. For music or film projects, for example, the supporters often receive a CD or DVD from the production as a "reward".
- Lending crowdfunding or lending-based crowdfunding : The "crowd" gives financial support to the project initiators, the money is repaid after the end of the project.
- Investing crowdfunding or crowdinvesting : The supporters invest in the project, i.e. receive shares in the company. This creates a win-win situation.
Crowdfunding projects
Crowdfunding is not an invention of the internet age. As early as the 19th century, for example, the base for the erection of the Statue of Liberty was financed by 160,000 individual donations. In the vast majority of cases, however, modern crowdfunding is operated via the Internet. The crowdfunding campaigns are presented here on suitable crowdfunding platforms. The most successful German crowdfunding project was initiated by the Munich headphone start-up "Bragi" and was able to collect a total of 2.5 million euros. Another large crowdfunding project is the Olympia project, which was started in 2020 via Startnext. Among the starters were various organizations such as Scientists for Future, Fridays for Future Berlin etc. The project had over 28,000 supporters and was able to collect a total of over 2 million euros.But also smaller projects can be realized via crowdfunding. Smaller, independent film or music producers can also present their ideas on crowdfunding platforms. Your supporters are then usually rewarded by receiving a CD or DVD of the film or music product..
Crowdfunding platforms
Start-ups can present their projects on internet platforms such as "Kickstarter" and collect money through crowdfunding. The prerequisite for this is, among other things, that the financing target, i.e. the amount that is necessary for the realization of the project, is fixed. In addition, the project to be financed must fit into one of the specified categories. If the project has been successfully financed, the crowdfunding platform charges a fee in the form of a percentage of the total amount. There are also fees for financial transactions within the project, which vary from platform to platform. Find out which crowdfunding platforms are available here.