Crowdfunding is an alternate approach to get investments for a start-up. Wikipedia defines crowdfunding as "an approach to raising the capital required for a new project or enterprise by appealing to a group of people (figuratively, "the crowd") for contributions from one or many. When such an appeal is global it is mass funding." It's not actually a new idea as it has been developed over the last decade, mainly in the film and music industries. Unlike traditional models which rely on large contributions from one or two institutions, crowdfunding is based on raising small sums from many people. Instead of raising 300,000 EUR from three angels (100,000 EUR each), you collect 10,000 EUR from 30 private investors. Crowdfunding isn't going to replace venture capital, private equity, debt finance or stock-markets. In many ways it's an evolution of "friends and family" and "angel" models, just operating with greater transparency and on a larger scale. It may even turn out to be an essential and complementary part of the financing tools needed to cultivate and grow new businesses. But What's the Actual Problem? Number of traditional investors interested in start-ups who are looking for money in the range of 50,000 EUR to 500,000 EUR, has decreased rapidly. It is also true that in today's world more can be done with less money ("the old 5 Million euros is nowadays 500,000 EUR"). Investments in this category are high risk investments with potentially high return. But most of the companies will fail. That is only one reason why traditional investors are moving (and have already moved) away from this category. When alternate investment vehicles are invented to fill the gap, also the traditional investors will benefit as they can this way have more companies in the funnel for additional investments. Is Crowdfunding The Solution for this? A successful crowdfunding solution has to solve many problems in order to be a feasible alternative for the start-ups and investors alike. There is an obvious need for process simplification (de-mystification) and standardization concerning documents such as Term Sheet and Shareholders' Agreement. An initiative in this field already introduces a Standardized Term Sheet acceptable by both entrepreneurs and investors. Trust and transparency are also probably some of the biggest issues. How do you create trust in the online world? How do you manage the communication with so many stakeholders? There will most likely be new innovative solutions for all of these challenges in the near future. The change is inevitable. Additionally, private investors can invest 5,000 EUR in ten start-ups, instead of putting 50,000 EUR to one single company, effectively decreasing their risk as well. How Can C2I Venture Capital Help You? C2I Ventures is an initiative by few European and China entrepreneurs to take action on this problem. It is a combination of tools which helps entrepreneurs to get attention from the investors, including both the Professional Investors, High Net-Worth private individuals as well as other individuals willing to invest 5,000 EUR or more on the growth of interesting companies. For those willing to invest money in private companies, C2I Ventures is the most trusted and reliable place to discover, follow and invest in those companies that one believes to be most successful in the future. Versatile communication tools help all parties make this possible. If you are interested (either as an Entrepreneur, Professional Investor, High Net-Worth Individual or a Privater Non-Professional Investor), please contact us and we can tell you more. |
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