Crowd investing is the term used now a days in which people invest and earn shares.
Equity crowdfunding is a form of financing , in which numerous individuals (micro-investors, investors, investors ) with typically rather small amounts of money over the Internet to mostly young companies ( start-ups involved), in most cases, dormant holdings , profit participation rights or participating loans . The incentive for the micro investor is to hope for high returns. However, the risk is also high in crowd investing. As with any equity investment The micro investor may lose his stake if the company is unsuccessful.
In principle, the silent participation is, according to the legal regulation, a debt claim and not a participation in equity .Shareholders’ equity, however, exists if the silent partner is to bear the same risk of loss and insolvency as a limited partner on the basis of the partnership agreement.
Profit-sharing rights or shareholder loans are also known as mezzanine capital , which is a credit relationship linked to profit-sharing. The influence of the micro investor on the company is regulated in a contract between the micro investor and the company.
The rights of a crowd investor in Germany have been protected since 10 July 2015 by the Retail Investor Protection Act.
Crowdinvesting is equity-based crowdfunding
In the case of equity-based crowdfunding – the type used on Companisto – users invest in a start-up and receive shares in return. Investors become shareholders of the start-up and benefit from the profits of the start-up and from the possible sale of the start-up to a large investor (also called “exit”).
There are many different motivations to participate in equity-based crowdfunding. While some people simply want to support a good idea and its implementation, other micro investors primarily focus on financial aspects, especially participation in the sale of the company.
In a very general sense, it was not possible for private individuals to invest in start-ups in the early stage before equity-based crowdfunding was introduced. This has now changed because of equity-based crowdfunding on Companisto. Equity-based crowdfunding also enables private individuals to participate in start-ups by means of small (or large) investments.
Transaction value in the Crowdinvesting segment amounts to US$4,794.9m in 2019. Transaction value is expected to show an annual growth rate (CAGR 2019-2023) of 13.7% resulting in the total amount of US$8,014.6m by 2023.
The average funding per campaign in the Crowdinvesting segment amounts to US$104,115 in 2019.
From a global comparison perspective it is shown that the highest transaction value is reached in China (US$1,021m in 2019).