Without any introductions, we continue our Where to Find Crowdfunding Platforms series with issue #2, in which Europe's largest economy, Germany, will be put under the magnifying glass from a crowdfunding-platform perspective.
But before jumping to the list, let's just review for a moment the legislation present in this country.
Germany has adopted in April 2015 the German Retail Investor's Protection Act (“Kleinanlegerschutzgesetz”), which entered into force on 10 July 2015. The country's crowdfunding law took into account requirements from different stakeholders within the market, covering the majority of investment types present on the national crowdfunding platforms. However, in order to keep the decision flexible for both investors and investees, a crowdfunding exception has been approved. More on it here.
As for the promotion of the phenomenon, the German Crowd-Funding Network is responsible for representing the interests of campaign creators. The directions that are here championed are the creation of a legal framework, the explanation of how crowdfunding works for web entrepreneurs, the promotion of successful crowdfunding cases, and the creation of a good overview of crowdfunding platforms, according to Jegelevičiūtė & Valančienė's comparative study. Still little has been undertaken in the direction of explaining how crowdfunding works for potential investors and supporting a quality label for crowdfunding platforms.
Now that an overview has been provided, let's examine which are the most important crowdfunding platforms in Germany.
At the moment of writing, Germany's leading equity crowdfunding platform claims to have raised over €28 million from 54.000 investors in only 61 projects. Two models of financing are available: investors can either buy shares in a fast growing start-up, or receive regular interest payments up to 8% on a period of 3-4 years in return for the sums they lend. Interesting to notice is that company shares on Companisto have raised 15,32% in value on average over the past 3 years. Great tip for investors! They are also incentivized by the Companisto ranking, which ranks them according to how large their investment portfolio is and the money invested over the past 12 months, with the top 10% being included in the exclusive Companisto Business Club. As for the start-ups, these ones have to undergo a tough scrutiny, with only 1% of the applying ones being accepted for the online"listing".
This is Germany's largest creative platform, available also for the Austrian and Swiss market, with almost €30 million raised in funding and 635.000 users at the moment of writing. The Berlin based company has scored so far 3.587 successfully funded projects, i.e. a 55% success rate, which places it among the international leaders in the crowdfunding arena. Campaign creators can benefit from personalized support and advice, with the platform offering regular workshops on efficient campaign design in Berlin, all while having at their disposal a wide variety of payment methods. Noticeable is the fact that there is no standard platform fee, as creators are encouraged to donate a voluntary commission based on their own judgement.
Inspiring name for this financing vehicle, the platform is a combination of equity-, rewards, and donation-type crowdfunding, enabling both KIA and AOL models simultaneously. The integration of 100 distinct social media networks is granted, as well as access to 192 different geographic areas, while penalties are absent. However, campaign creators and start-ups will have to put in the extra hustle, as backers can withdraw their pledge within 16 days. Luckly (or not) enough, creators can do the same with unwelcome pledges.
A P2P platform, Kapilendo focuses on lending credits to German SMEs. Interest rates, between 2,49% pa and 11,99% pa, are superior to the ones practiced in banking, while investors can choose from a range of 5 different asset classes. The minimum investment raises up to €100, with possibilities to extend even beyond the €250.000 level. As for the companies listed, Kapilendo charges €795 as an administration fee at an AA rating, plus the loan amount set (there's a calculator on the site which helps companies to compute it according to their loan value).
Another lending platform, this time with a gist: as the name suggests, cross lending is possible, due to the active collaboration with banks from the UK, the Netherlands and Spain. Basically, investors are capable of diversifying their portfolio across different EU markets, in investments with different risk categories - A being the least risky and HR being the highest risky - with the lowest investment being situated at only €25. The advantage of the platform lies exactly in this feature.
Since Germany is a country that adheres to strong environmental policies, I couldn't neglect energy crowdfunding platforms. Bettervest is the first German platform of its kind, which focuses on the development of green projects forwarded by enterprises, NGOs, and local municipalities. The mechanism in use allows for loan agreements with annual fixed interest rates plus dividends over a period of 3-10 years, with the minimum loan being €50. Projects are charged 10-12,5% of their total funding plus an annual handling fee. Cool enough, they also track how many CO2 emissions have been prevented through the projects.
This is the German version of Experiment, dedicated for supporting science and research through the aid of the crowds. The projects have to survive the Starting Phase (Startphase), in order to start gathering funds, which translates into getting a specific number of fans according to their funding level. The platform employs an AOL model and doesn't charge any platform fee.
That was it for Germany. I tried to include one platform from each of the crowdfunding models. I hope this gave you a more than general approach regards what I consider to be Germany's most relevant crowdfunding platforms at the moment.
For general information about other German platforms, simply access the link here.
*Disclaimer*: I have no interest in any of these platforms. The choices are based solely on my own judgement.
Jegelevičiūtė, S., & Valančienė, L. (2015). Comparative Analysis of the Ways Crowdfunding is Promoted. Procedia-Social and Behavioral Sciences, 213, 268-274.