Since its beginnings in the United States and subsequent arrival in our country, crowdfunding has changed the forms of financing we previously knew. But what kinds exist and what does each one consist of?
This is the market leader in terms of the volume of funds attracted. It offers a reward as consideration for the contributions made by the funders or patrons. The rewards are products or services, normally artistic and/or cultural, though experiences are also offered, which collaborating patrons can enjoy when the project is financed.
As the name suggests, there is no consideration for the people financing the project. Donors do it because they support the cause and want to be charitable or are interested in seeing the final project. In Spain, one of the most famous is migranodearena, a platform that raised more than a million euros in 2015 for more than 1,200 causes.
There is also another type, a mixture between donation and reward. There are projects in which rewards are offered in exchange for funds that will be donated to a humanitarian cause, instead of being used to produce rewards themselves.
This is crowdfunding in which the consideration for the contributions is given in the form of interest based on the money provided. In this type of crowdfunding, the recipient of the financing must repay the money received plus a set rate of interest. Normally, on these platforms, each lender (who is seeking funding for this kind of crowdfunding project) can set the interest rate at which it lends the money.
Investment crowdfunding (equity)
This is crowdfunding in which shares in a company, as well as undertakings concerning profits, are offered in exchange for the contributions given. People who take part in this type of crowdfunding are called investors or micro-investors. These participants become shareholders of the company financed in one way or another.
Real estate crowdfunding
Last but not least, there is real estate crowdfunding. Through platforms authorised by the Spanish Securities and Exchange Commission (CNMV), with investments starting at €100, a group of people finance the purchase of a property that will be renovated and then sold. Investors recoup their investment plus a percentage yield as profit. This is a growing trend in Spain due to the guarantees it offers. The risks borne by the investor are minimal, as there are many formulas to guarantee payment of the return.
Now that you know about all the types of crowdfunding, what are you waiting for to take the leap and get started? Propcrowd makes it easy for you. Come on and invest!