I felt for myself what kind of beast crowdfunding is. Being engaged in the questcity project and searching for investors, I chose the Fundwise platform for partners, which allowed me to buy a “share” (in fact, a share) of your / project of the company and thereby take part in the life of the company and, of course, expect that the company’s value will increase. Several similar sites have already accumulated, one of them, for example, is funderbeam - direct competitor fundwise.
Risks in crowdfunding
For investors on the platforms of Funderbeam and Fundwise and others like it, you need to understand the risks. Although the history of these sites is not so long, there are already many examples where the expectations of investors are not justified (unfortunately, my project was no exception). When investing money, investors expect that with an investment of 1 euros, they will receive 000, because they own part of a young company that has not yet become a joint-stock company and potentially has a good growth opportunity.
frank.ai
Over the past year, several funded companies on Funderbeam and Fundwise have experienced great difficulties. Some even closed their doors. The last big news was the closure frank.ai, which has raised almost 450 euros through crowdfunding funding.
Hooves ApS
Hooves ApS, which has been raising money through Funderbeam, announced last week that it was shutting down, which was offered €140 by investors in August. Then it was a company whose plan was to bring horses into the sharing economy. It is through the solution that horse owners and horse users could be united. If the enterprise was successful, the owners/investors could become real rich.
Siidrikoda
Company Siidrikoda, which raised almost a million euros from investors on Funderbeam, was able to turn over only 50 euros in six months. Of course, it is clear that there is a corona crisis and the situation in the economy is difficult. But such numbers may seem ridiculous to investors and cause them to ask questions about the future of the company.
My story and conclusion about crowdfunding
In Questcity, we had a smaller amount, and the lion's share (about 80%) was financed by partners. Our project also did not burn out, although we achieved good success in the field of grants. They also succeeded in implementing a business model in the tourism sector.
Funding through platform crowdfunding remains a very risky undertaking. Even with a good idea, a team and opportunities, it is very difficult to implement the idea. Luck, timing, randomness remain the determining factors for success, and in more detail about our experience you can read here.