21 February 2017

Raising Funds through Crowdfunding and Crowdlending

Crowdfunding and Crowdlending are two new means of financing of Anglo-Saxon origin, they are intimately linked to the massive use of the Internet throughout the world. While Crowdfunding can be assimilated to a donation, without reimbursement, or to an investment in company capital, Crowdlending allows investors to earn interest.

Both of these financial tools can be used by individuals, start-ups or commercial and industrial companies. They can be accessed through specialized sites that are backed by private companies and even financial institutions.

Crowdfunding and Crowdlending are widely used by Internet users to develop technological and innovative products and services. They are also used to carry out associative or development projects.

The birth of the participative economy

The easiest way to find funds via the Crowdfunding and Crowdlending sites is to do a simple search from a generalist engine. Blogs are also an excellent source of information because they integrate user feedback. As competition rages in the world of participatory financing, the experience of others helps avoid many disappointments.

After all, the sites that offer fundraising services are paid according to the amount of money raised. They are the answer to a real need for funding and their use is increasingly regulated by the states. When you are looking for funds via the Crowdfunding and Crowdlending sites, you must of course build a solid file, constantly develop your project, but above all you must contact the most appropriate platform to ensure its success.

The development of the project to be financed therefore begins with the search for a specialized funding company or association. As there are three main types of funding, the needs of the project must be precisely determined and the platform that will allow it to be met.

A real new online finance

Participatory financing substitutes personal and corporate financial contributions for those of traditional financial institutions. However, the latter are looking with attention in the direction of a growing market. A Crowdfunding or/and Crowdlending company operates in three modalities. It can connect an entrepreneur with generous donors who are interested in his or her project. In this case donations are not refunded.

However, it is a good idea to offer some sort of compensation to the contributors. Equity Crowdfunding is rather the result of investors entering a company’s capital. These funds, often lent to start-ups, make the investors own part of the company financed.

Finally, Crowdlending consists rather in lending money to companies or individuals whose financial and operational situations allow them to borrow without going through the banking system. The companies or individuals who make the loan then receive the interest. Each project has its own needs and, above all, its own repayment capacity.

These must be carefully studied and the same applies to the partner site of Crowdfunding and/or Crowdlending. Its role is not only to mobilize investors but also to contribute to the success of the projects.

Some examples of platforms

You will find Crowdfunding platforms such as Ulule, KissKissBankBank for artistic, cultural and design projects. Or Wiseed and Anaxago for bigger projects like real estate projects or biotech startups.

Also, regarding the most performing Crowdlending platforms, we can easily mention Lendix, Unilend or Credit. These platforms are very demanding and will ask you for a maximum of information about the financial situation of your company.

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