4 types of crowd
14 February 2019
In the last few years, various crowds have emerged. There is crowdfunding, there is crowdlending, there is peer-2-peer, and so on. We can understand that you can get lost in all these different types. Through this article we want to provide some guidance.
Let’s start with crowdfunding. Crowdfunding is actually the umbrella term for alternative financing where an organization or a person is financed by others, without the intervention of a bank. Crowdfunding connects those who need financing with those who have the money to fund. The way in which they fund depends on the form of crowdfunding. Below we highlight 4 types.
For instance, there is crowdfunding through donations. In this case, the donors donate money to the person who requests the financing, because they support the goal or are in a good mood. The donor gets nothing in return, except a good feeling.
On the other hand, there is crowdfunding with rewards. In this case, the backers give money in exchange for a reward. Often it includes small amounts for which the backer receives something other than money in return. The best-known example is Kickstarter, where backers can receive a special first edition of a product as a reward, for example.
A crowdfunding campaign can also be set up based on loans. Then the lenders provide a loan to the one who sets up the crowdfunding campaign. Over time, the borrowed money is repaid together with interest. This form of crowdfunding is also called crowdlending.
Finally, crowdfunding can also be done by means of equity. Investors then invest in a company, often a start-up, for which they receive a share in the company and thus become partial owners.
P2P or not?
Furthermore, it is important to distinguish between peer-2-peer crowdfunding and crowdfunding of companies. With peer-2-peer crowdfunding the money flows between peers. For example, someone can ask for a loan for the purchase of solar panels or make a donation for the operation of a cat. When crowdfunding a company, you logically do not finance a person, but a company.
What does October do?
Through October lenders finance SMEs. Together with the lenders, we have already financed more than 500 projects. The projects vary from the purchase of cars to the acquisition of another company. On our platform we only offer loans.
As a reminder: through October you can lend from €20 to a company, for which you will be repaid monthly and receive between 2.5% and 9.9% interest. Loans to SMEs through October are free; there are no additional costs when taking out a loan or depositing or withdrawing money. This makes SME financing easy, accessible and fast.« go back to posts list