Crowdfunding lets a project raise money by gathering small contributions from a large number of people, rather than relying on one or a few large investors, channeled through specialized platforms.
Main types
- Crowdlending: you lend money to a company or individual in exchange for interest (debt).
- Crowdequity: you invest in exchange for shares or equity in the company (capital).
- Real estate crowdfunding: you contribute capital (or lend money) to finance the purchase, development, or renovation of a property, with a return tied to rental income or the project's appreciation.
- Reward/donation-based: there's no financial return, just a product, a service, or simply the satisfaction of supporting the project (common on Kickstarter and similar platforms).
Risks to keep in mind
These are generally lower-liquidity investments (you can't easily sell before maturity), carrying a higher risk of default or total loss than regulated products like deposits, and with less regulatory protection — although in the EU, financial crowdfunding platforms must be authorized under the European ECSP regulation.