Many of the largest foreign corporations began with one small idea - a project that was successfully implemented. Decades ago, its implementation required years of searching for interested investors. But today crowdfunding has come to the aid of young and talented guys.
You will learn the best sites, what crowdfunding is, how it works using examples of successful cases, and whether it is possible to make money on it in 2020 . So let's get started.
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What is crowdfunding?
Crowdfunding literally means "people's finance" in English. The essence of this concept is the collective collection of funds for the implementation of business ideas, political or social projects.
The subjects of crowdfunding are:
- donors (sponsors, investors) - people financing the idea;
- recipients (authors, startupers) - recipients of financial assistance;
- crowdfunding platform is an intermediary service through which the required amount is collected with the deduction of a commission.
Collections usually take place online. There are specialized crowd platforms that contain a lot of interesting cases dedicated to the implementation of a variety of goals - supporting startups, collective investment for profit, providing financial assistance to needy citizens, creating software and much more. The first such web resource in Russia was the Kroogi.ru portal, which appeared in 2007. An example is the fundraising for the preparation and publication of the book of film reviews “3500” by the author Sergei Kudryavtsev.
For providing financial assistance, authors can promise sponsors ownership of shares, as well as various gifts, shares and intangible bonuses. Moreover, many even managed to get rich from such shares when the company developed and promoted. Therefore, real estate crowdfunding is of interest to many investors who are looking for where to invest their funds.
Crowdfunding resources pursue the following goals:
- testing the idea for strength;
- advertising (attracting the interest of sponsors, patrons, media, people interested in implementing the idea, co-authors);
- search for financing.
AtomInvest
An advanced Russian crowdinvesting platform, created by a private and subsidiary of JSC NIIGRAFIT. The purpose of the platform is to create an infrastructure for collective lending to small and medium-sized businesses in Russia, as well as to search for high-tech projects for integration into the Rosatom State Corporation.
Three financial products are available to investors:
- investments under a loan agreement to replenish current assets;
- investments under a loan agreement for the execution of contracts, including state tenders;
- purchasing bonds of startups and fast-growing companies.
After verification, the investor enters his personal account, where he can select a specific company, familiarize himself with its activities, the terms of the loan, and, if he is satisfied, invest in the company using the platform.
Each site is assigned its own rating depending on the business analysis; you can also download and analyze all relevant documentation.
If you need bonds, you will have to call the manager and ask him to conduct an over-the-counter transaction to purchase securities, i.e. AtomInvest in this case acts as a dealer.
At the time of writing, there were 5 projects available for financing on the site, 4 of which implied loans for the execution of contracts and one for business expansion.
And here’s another interesting article: Invest money at interest: where, why and at what rate
As you can see, the site is more than serious. The entry threshold is from 50 thousand rubles. The declared profitability depends on the project; at the time of writing, the maximum remuneration was 30% per annum.
Scheme of work of crowd projects
Crowdfunding for personal needs and for business appeared in 2006. The author of this technique was Jeff Howie.
Fundraising has several goals:
- Implementation of an innovative or socially significant idea.
- Marketing promotion of innovators.
- Help those who need it.
- Support for legal entities and individuals.
People who need help collect the necessary amount for personal needs, launching social and business ideas. In the public funding system, authors are called recipients. As for those who provide these funds, they are called donors.
The following points must be clearly stated in the crowd project:
- the main goal and essence of the idea;
- required amount for financing;
- remuneration;
- cost calculation for the implementation of the case;
- open information about the progress of the collections.
ModuleMoney
The ModulMoney online platform has been operating since 2021. He is a member of the Skolkovo group - in fact, this project originated within Skolkovo and was funded at the state level.
Like Penenza, ModulDengi specializes in issuing loans to companies that have won government contracts. Interestingly, some entrepreneurs manage to receive financing on both platforms - naturally, under different contracts.
Here are some statistics on what kind of loans were issued on the platform.
The declared profitability of the site is 25-35% per annum, the investment period is from 1 to 6 months. The minimum investment amount is not limited - you can start with at least 1 ruble. You choose the investment sites yourself. The platform recommends investing in an investment portfolio of 50-100 projects.
Here's another interesting article: How to choose undervalued stocks in the stock market
You will have to pay taxes on your profits yourself.
Types of crowd projects by methods and form of financing
Crowdsourcing
Attracting the intellectual and creative abilities of volunteers to work together on an innovative project. A classic example of crowdsourcing is the electronic encyclopedia Wikipedia.
Charity (free donation)
There are completely free platforms where the required amounts are collected free of charge. Russian sites are used very often for this, but the amounts you can get here are relatively small. Most often, capital is collected to provide material assistance to those in need (those affected by natural disasters, sick people who require expensive treatment), as well as to implement socially significant projects.
Equity crowdfunding (For a share in a business)
You can donate funds now so that the company can offer you a share in the form of shares in the future. Accordingly, if the organization develops, then you can get rich.
For bonuses (advertising in the media, name mention)
This type of cooperation involves providing donors with remuneration in exchange for funding. Bonuses can be both tangible and intangible. The first type includes branded T-shirts, calendars, props from filming, and the second type includes company advertising, mentions in the media, invitations to concerts or excursions, holding master classes, a personal meeting with a famous person, etc.
Crowdinvesting (for a share of profits)
If the business idea is successfully implemented, donors receive a percentage of the company's profits. In principle, this option is convenient for both sides. Some receive funds to launch a startup, while others receive profits. Crowdinvesting has become most widespread in Russia in the field of real estate construction. Such projects allow investors to start investing with small amounts, investing in the construction of commercial and residential real estate with the aim of further profit from rental or resale at a higher cost.
Crowdlending
Crowdlending is a service for mutual private lending of projects under the P2P (for individuals) or P2B (for businesses) scheme at a fixed percentage.
Top 7 large Russian crowd sites
Russia about the existence of such a phenomenon as crowdfunding and what it is not so long ago. But nevertheless, Russian services are gaining popularity and demand among users every year.
"Planet"
This is the largest and first in the history of Russian crowdfunding platform. It focuses on creative, charitable, social, cultural and educational endeavors. But besides this, it has its own online store with a wide variety of products.
Advantages and disadvantages
huge list of startups
presence of a store
opportunity to take part in a philanthropic project
ban on commercial and political proposals
"Boomstarter"
Crowdservice is suitable for creative people interested in technical innovations . To a greater extent, it is “tailored” for developers of mobile applications and various games.
Advantages and disadvantages
numerous “highlights”, such as crowdgifting - gift financing
user-friendly interface
curator support
“all or nothing” type work; if the author does not raise money for his idea, then all funds will be returned to the backers
Kroogi
Not quite standard crowdfunding. It is intended for musicians and works according to the following algorithm - anyone can pay any amount and download the necessary content for themselves.
Advantages and disadvantages
simplicity
no need to make large investments
opportunity to organize a concert of your favorite musicians
very narrow focus
"Alpha Stream"
An interesting crowd platform created by Alfa-Bank works to finance promising business startups and existing companies. This is her big plus.
Advantages and disadvantages
works to finance promising business start-ups and existing companies
lack of other directions
establishing a minimum investment contribution (50,000 rubles)
StartTrack
Also one of the first crowdservices. Initially it was aimed at serious business investments. Therefore, it works according to two schemes:
- acquisition of a share;
- issuance of collected funds in the form of loans.
This mechanism is convenient for entrepreneurs and founders, but the high financial threshold of 100,000 rubles significantly limits the number of people willing to take part in raising money.
Advantages and disadvantages
possibility of acquiring a share
convenient for entrepreneurs
high financial threshold - 100 thousand rubles.
"City of Money"
It bears little resemblance to a traditional crowdfunding platform, but this does not prevent it from being popular. At its core, “City of Money” acts as an intermediary between investors and entrepreneurs of different levels. In its vastness they come to agreements with each other, discuss all the terms of cooperation and make deals. Therefore, everything here is simple and transparent, which is an undeniable advantage of the service.
Advantages and disadvantages
simplicity
transparency of transactions
business focus
refusal of charitable projects
threshold of 50,000 rubles
"Penenza"
The actively developing crowdservice, like the previous one, is aimed at business development. Specifically, companies participating in various kinds of tenders.
Advantages and disadvantages
active business support
major projects
serious investment
narrow focus
restrictions for individuals
Successful cases
Let's look at several successful cases for which a sufficient amount was raised and they really developed.
Pebble Time Waterproof Watch ($20,338,986 via Kickstarter)
This project was developed through the Kickstarter website. On his first day on the site, he raised more than a million dollars. Within a month, we managed to finance the project for $20 million.
Exploding Kittens Card Game ($9 million)
Funding also came through Kickstarter. The game broke all records and grossed $8.7 million, which is even more than the Ouya microconsole.
3D pen 3Doodler ($2.5 million)
This 3D printing device has also received high praise and has raised an amount of 2.5 million through crowdfunding.
World's Best Travel Jacket Bau Bax (over $9 million)
This jacket was invented by BauBax and is equipped with many compartments and other practical features. Fundraising took place on Kickstarter. It seems that the jacket manufacturers have thought of everything, right down to the inflatable pillow and maxi for sleeping.
Electric bicycle wheel Geo Orbital Wheel ($1.3 million)
Manufacturer GeoOrbital was able to raise $1.3 million by offering to convert a regular bicycle into an electric bike.
City of money
One of the first crowdinvesting platforms in Russia. “City of Money” is a member of the working group at the Competence Center for regulatory regulation of the digital economy of the Skolkovo Foundation and the working group of the Central Bank of the Russian Federation for the regulation of crowdfunding.
Investments on the site are made in approximately the same way as at AtomInvest. The investor selects one or several projects, analyzes them, and if he likes the business and the terms of the loan, he transfers any amount to the account, no less than the minimum.
Projects for the “City of Money” are mainly from the sphere of real business - production of boiler equipment, construction of a logistics center, supply of equipment for utility networks, etc.
The investment amount is from 50 thousand rubles, the investment “step” is also 50 thousand. Profitability – 25-30% depending on the project.
How it works?
Let’s say you decide to launch a project “A hotel for animals for a while, the owners go on vacation abroad.” To launch an idea, you can use funding from various sources - ask friends and relatives for money, take out a bank loan, find a private investor. But don't rush into debt. You have an alternative option - place the project on a crowdfunding site.
To do this you need to follow these steps:
- Select a crowd platform and register;
- Get free training;
- Draw up and calculate a business plan;
- Post the project;
- Indicate the required amount for investment, describe the essence of the idea;
- Offer investors a reward in return (a bonus, free advertising, a share in the business, or a percentage of profits).
After the crowd campaign is launched, sponsors will begin to raise money to implement the idea. Information on the progress of collections will be displayed in real time. If within a given period of time (usually 3 months) at least 50% of the required amount is collected for the project, then the money will be transferred to you with the service commission and taxes withheld (For example, on the planeta.ru service 10-15% is withheld from the amount received). If the required capital is not raised, the money will be returned to the sponsors. After receiving funding, the author of the idea can begin to implement the startup. At the same time, you are obliged to report to sponsors about the money spent and transfer the reward.
Alpha Stream
This crowdinvesting platform allows you to invest in small and medium-sized businesses with a yield of up to 22.3% per annum. Alfa Stream was created under the auspices of Alfa Group, which also includes Alfa Bank, Alfa Insurance and the management company Alfa Capital.
Business borrowers (mainly small individual entrepreneurs and LLCs) who urgently need a loan are selected for the site. According to Alfa Stream managers, only 4% of potential clients pass scoring. But why the bank itself does not give them money is a question. Perhaps because such borrowers do not have collateral, and therefore the bank does not want to take the risk of shifting the risk onto the shoulders of investors.
At the end of 2021, the average return on investors was 17.3%; in April 2021, it was raised to 22.3%. The minimum amount for investment is 10 thousand rubles.
You cannot directly select investment objects. Alfa Stream independently collects companies into pools (at least 20 companies in one pool), which it finances at once from investors’ funds. On the one hand, this is diversification of investments, on the other hand, the investor cannot manage the risk himself, being forced to trust the crowdfunding platform.
There is automatic reinvestment. There is no commission for depositing or withdrawing funds.
Reviews about Alfa Stream are very different and contradictory. Some people manage to make money, others remain at a significant disadvantage. But crowdinvesting in general is a very risky enterprise.
A full review of Alpha Stream is in this article.
Basic Rules
- In order to attract potential investors, you need to adhere to certain rules developed empirically:
- Make a plan. It should clearly indicate the path to implementation of the project.
- Be convincing, because you are asking complete strangers for help.
- Choose the platform that best suits your goals.
- Offer gratitude for assistance provided. This could be providing investors with the final product of the campaign or some kind of souvenir.
- Attract promoters. The most difficult task is to tell as many people as possible about your campaign. This is where the help of relatives, friends, and people who have invested in this startup comes in handy.
- Learn from successful startups.
- Look professional.
Pros and cons of crowdinvesting
For investors, this method of investing has many advantages:
- practically unlimited profit (some startups bring up to 100% per annum);
- you can distribute funds between several projects, reducing risks;
- low entry threshold - on some sites investments start from literally 1,000 rubles (but mostly from 50,000);
- there is no bureaucracy, all investments are made online and using an electronic contract;
- You can invest through different payment systems and in different currencies.
But there are also significant disadvantages that need to be taken into account:
- no one guarantees profitability, startups may not justify themselves;
- the risk of fraud or bankruptcy of the crowdinvesting site itself is added;
- there is no transparency of investments, in particular, the investor does not have direct control over the expenditure of raised funds;
- large commissions that have to be paid to intermediaries (crowdinvesting sites);
- In general, companies that raise money through crowdinvesting have a low credit rating.
Thus, crowdinvesting, on the one hand, is fast, simple and profitable, but on the other hand, this speed and simplicity is fraught with additional risks that you will have to put up with.
StartTrack
Another large domestic crowdinvesting platform. It was created in 2013 with the support of the Internet Initiatives Development Fund. At the initial stage, it received funding for 90 million rubles. Over the years of its existence, the platform has attracted investments amounting to over 2.85 billion rubles.
I signed up to see what projects StartTrack was offering to fund and was surprised by its no-nonsense approach. You cannot gain access to the terminal and projects until you pass a test to understand the risks of crowdinvesting. The questions were something like this.
After passing the test (I won’t publish the answers - do it yourself
