Crowdinvesting: Growth With the Crowd
Crowdinvesting has become an exciting financing option for founders in the DACH region. In recent years, the model has seen significant growth. While real estate projects were the main beneficiaries in the past, more and more startups and small businesses are discovering the advantages of this form of capital raising. For many young companies, crowdinvesting can be the first major step to building a community, gaining visibility, and raising capital—without immediately giving up equity to investors.
How Does Crowdinvesting Work?
With crowdinvesting, you present your company and your financing project on a specialized online platform. There, you explain how much capital you need, what you plan to use it for, and what terms you’re offering. Interested private investors can then invest in your company, often starting with small amounts.
The capital raised usually flows into your company as so-called mezzanine capital. This is a hybrid form of equity and debt capital that offers more flexibility. The crowd’s participation typically takes the form of subordinated loans or silent partnerships. Alternatively, convertible bonds or real equity participation may be possible, depending on the platform and legal framework. This means that while you are granting participation rights, in many cases investors do not receive voting rights or influence.
Advantages of Crowdinvesting
A major advantage is that you can raise capital without having to involve traditional venture capital investors or banks right away. The crowd takes on the risk, and you usually retain control of your company.
Crowdinvesting is especially suitable if you’re offering a product or service that appeals to a broad target audience. The investors can also become your first customers, advocates, and brand ambassadors. This way, you achieve both visibility and financing at the same time. Particularly in early stages or during market entry, the model offers a great combination of fundraising and marketing.
Another plus is flexibility: you can often choose between different types of participation and find the model that best fits your business. Crowdinvesting can also be combined with other forms of financing, such as equity capital or bank loans.
Disadvantages of Crowdinvesting
Despite all the benefits, you should realistically assess the risks and challenges. The effort required to prepare and execute a crowdinvesting campaign should not be underestimated. You’ll need a convincing presentation, transparent documentation, and clear answers to questions from the crowd.
The legal framework also brings obligations. Depending on the amount of funding, you must fulfill certain disclosure requirements and are liable for any incorrect information. In addition, the capital raised is often expensive: the interest or profit shares paid to the crowd are usually higher than those for traditional bank loans.
If the campaign fails, there is no funding. If the target amount is not reached, investors get their money back and the company receives nothing. All the effort for planning and communication will have been in vain. That’s why you should prepare thoroughly and realistically assess whether there is enough market interest before launching a campaign.
Crowdinvesting in Germany and Austria
Germany and Austria have introduced specific legal frameworks for crowdfunding in recent years. In Germany, the Small Investor Protection Act allows financing of up to €2.5 million without a full securities prospectus. In Austria, the limit is even €5 million per year. In both countries, depending on the funding amount, you must provide an information sheet and observe certain investor limits.
As a founder, this means you can use crowdinvesting in a legally secure way—as long as you know the rules. Many platforms support you in the process and provide the necessary templates and procedures. When choosing a platform, pay attention to its location, focus, and investor target group to ensure it fits your company.
Our Conclusion
Crowdinvesting is an exciting financing model for founders who want to combine capital, visibility, and community building. It’s particularly well suited for businesses with a scalable model and a compelling story that resonates with a wide audience.
However, you should invest time in preparation, understand the legal framework, and be transparent about the opportunities and risks. If you do that, crowdinvesting can be a valuable building block on the path to growing your company.
