Berlin – New companies are increasingly using crowdinvesting to finance their business ideas. Investors have high return opportunities, but also risks. Film projects, windmills or eco-friendly bamboo straws – the range of crowdinvesting projects is huge. In contrast to crowdfunding, this is more than a good idea. The money lenders can not only support young companies, they also hope for a high return.
“In the meantime, the largest share is equity interests in the form of a so-called shareholder subordinated loan,” says Volker Schmidtke of the Verbraucherzentrale Berlin. “The investor gives money to a company, so grants him a loan and in return receives a share in the profits or value of the company.”
Websites such as bankless24, Bergfürst, Companisto or Seedmatch present companies that want to raise money for their business idea. “The exact return opportunities will be seen only from 2016, when the first projects have reached their minimum term,” says Ralf Beck, a professor at the University of Applied Sciences Dortmund. Nevertheless, he is convinced that this form of investment opportunity is attractive because you can participate in the growth of new companies at a very early stage. As a result, the return opportunities are high, but also the risk.
Whether an idea prevails is not guaranteed. “Especially newly founded companies hope to have a chance on the market with their products and to establish themselves, which can, but does not have to, work,” says Thomas Pfister from the Verbraucherzentrale NRW. “In case of insolvency of the company or failure of the project there is a risk of total loss.”
Not all startups establish themselves. “Experience has shown that about 50 percent of startups fail to survive the market in the long term,” says Beck. Most platforms, however, would pre-select the projects carefully. “More than 90 percent of startup applicants drop out at this point,” says Beck, who relies on discussions with platform operators.
This form of investment is suitable for people who have money left over. “Anyone who believes in an idea and is willing to take risks, who has already secured solid retirement provision, a liquidity reserve and important risks, such as liability, can think about whether he or she wants to venture such a risky investment,” says Pfister. Since an early exit is usually difficult, investors should set aside at least three net monthly salaries before they even invest money. “Then there are enough reserves to pay for unexpected expenses.”
Consumer advocate Schmidtke advises: “Before you decide on an investment, you have to check the whole thing on two levels: Is the platform serious and is the project promising?” The business plan and financing concept should be clear and convincing. For a better risk assessment, he recommends asking the vendor about the dialog function that exists on many platforms. That may be instructive.
Consumer advocate Pfister warns: “Even reviews in forums do not protect against a possible total loss, for example, if the project fails.” Therefore, he advises consumers to pay attention to whether on the platforms cost, participation and return opportunities are presented, and if there is information about what happens if the project fails, the company goes bankrupt or does not get the necessary start-up sum ,
The risks of the investment should be clearly stated. According to findings of the consumer center Berlin, there were shortcomings in the past. Therefore, the consumer advocates warned five platforms. They had not sufficiently pointed out the risk of total loss, or the information was only hidden on the page. In some cases, according to Schmidkte, it has not been pointed out that the company valuations given are notionally calculated values that have nothing to do with balance sheet values. A platform had also specified maximum values for the acquisition of funds, which then increased again and again.
In the meantime, the platforms bankless24, Bergfürst, Companisto, Crowdrange and Seedmatch have responded: “They have partly quite satisfactorily changed the pages, but only two of them have warranted by cease and desist that they will not go back to their old state,” says Schmidtke. Beck also recommends that interested investors invest in different platforms and projects and not just put everything on one project. “Scattering greatly reduces the likelihood of losing the entire stake,” explains Beck.