What are crowd­fund­ing and crowd­in­vest­ing?

Growth is being rede­fined as a mix­ture of econ­o­my, ecol­o­gy and social com­mit­ment. Inno­v­a­tive approach­es are emerg­ing — so-called impact invest­ments. But what is that actu­al­ly?

Imag­ine you have an idea to make the world a bet­ter place, or let’s say more mod­est­ly, some­one has the idea to build a solar plant. Alone, you are just” an investor who wants to invest his mon­ey sus­tain­ably and a com­pa­ny that needs this mon­ey to start its project. Crowd­in­vest­ing brings you togeth­er. The prin­ci­ple of crowd­fund­ing has been around for a long time. It pools the finan­cial pow­er of indi­vid­u­als and also allows com­pa­nies, artists or even pri­vate indi­vid­u­als to raise cap­i­tal for their busi­ness ideas and projects. Crowd­in­vest­ing has the bonus of reward­ing you as a sup­port­er in the form of returns. Sounds inter­est­ing? But what are the oppor­tu­ni­ties and risks of invest­ing as part of a crowd? And how can you work with oth­ers to pro­mote sus­tain­able ideas? We’ll tell you.

What is the dif­fer­ence between crowd­fund­ing and crowd­in­vest­ing?

Crowd­fund­ing is the pos­si­bil­i­ty of dis­trib­ut­ing the financ­ing (fund­ing) of projects and com­pa­nies among a large num­ber of peo­ple (crowd). This reduces the risk for the indi­vid­ual and cre­ates new oppor­tu­ni­ties. Until now, com­pa­ny founders, for exam­ple, had to raise their start-up cap­i­tal through loans from a bank. Inno­v­a­tive ideas of small start-ups get the chance to devel­op into suc­cess sto­ries with­out this hur­dle. On the oth­er hand, crowd­fund­ing empow­ers you as an indi­vid­ual to par­tic­i­pate in build­ing a busi­ness. This makes finance more demo­c­ra­t­ic. Every­one can play a part with small amounts. In recog­ni­tion of your sup­port, you usu­al­ly receive a tan­gi­ble or intan­gi­ble asset. Depend­ing on the busi­ness mod­el you are sup­port­ing, this could be co-design of the project, pre-pur­chase rights, ear­ly access events or dis­counts on the prod­uct or ser­vice. This is where crowd­in­vest­ing dif­fers from crowd­fund­ing. The finan­cial help is also finan­cial­ly reward­ed. The fam­i­ly man, the twen­ty-year-old stu­dent, the pen­sion­er — they are all investors now. You get returns from the com­pa­ny’s earn­ings. These can be much high­er com­pared to some fixed deposit accounts. Nev­er­the­less, there are risks that you have to take into account as a crowd­in­vestor.

With the Wattify app, you and other investors can fund impact projects together.

Oppor­tu­ni­ties and risks of crowd­in­vest­ing

Good con­di­tions and the oppor­tu­ni­ty to sup­port projects that are close to your heart — that sounds won­der­ful. But if you decide to invest mon­ey with the help of crowd­in­vest­ing, there are a few things to con­sid­er. The some­times young com­pa­nies and their projects that need your invest­ment to gain a foothold don’t grow into large cor­po­ra­tions overnight. You would have to invest your mon­ey for the long term (often years) until prof­its are made. In that time, busi­ness goals may not be met and the com­pa­ny may go bank­rupt. Your invest­ed mon­ey would be gone. To pro­tect your­self from such a sce­nario, here are a few tips:

1. get informed about the projects

2. invest small amounts in many dif­fer­ent projects

3. pro­mote the projects you invest in.

Tip No. 1 reduces the risk of mak­ing a bad invest­ment. Knowl­edge is pow­er. So find out as much as you can about an inter­est­ing project. Sources of infor­ma­tion are, for exam­ple, the com­pa­nies them­selves or oth­er crowd­in­vestors. Stay in con­tact with each oth­er. Because you have a com­mon goal.

Tip No. 2 could also be: Don’t put all your eggs in one bas­ket. If you spread your invest­ments over a num­ber of dif­fer­ent projects, you can cope with loss­es and increase your chance of mak­ing a prof­it if a busi­ness idea you have financed goes through the roof.

Tip No. 3 helps projects grow. The more atten­tion a com­pa­ny gen­er­ates, the more new investors it can attract. Use your own reach. Tell fam­i­ly and friends about this cool new project you’re sup­port­ing. Share infor­ma­tion and posts on your social media chan­nels and become a brand ambas­sador. Your pub­lic­i­ty will be even more valu­able if the projects you pro­mote are an invest­ment in a more sus­tain­able future.

Wat­ti­fy — Crowd­in­vest­ing made easy!

Have you acquired a taste for crowd­fund­ing and would like to try it out? The way to do this is via a crowd­in­vest­ing plat­form. Here, com­pa­nies and oth­ers present their con­cepts, projects and ideas. The plat­form helps you select suit­able projects, guide you through the invest­ment process and track the progress of your invest­ments. Wat­ti­fy goes one step fur­ther. We want to give you the oppor­tu­ni­ty to inde­pen­dent­ly do some­thing against cli­mate change through your invest­ment. On Wat­ti­fy you will find many renew­able ener­gy projects that you can active­ly pro­mote the ener­gy tran­si­tion through their real­i­sa­tion. Wat­ti­fy makes it easy for you to use your mon­ey respon­si­bly and suc­cess­ful­ly.

You get trans­paren­cy about com­pa­nies, busi­ness mod­els, how your invest­ment is used and what return you get. Watt if you could gain con­trol over your invest­ments? Wat­ti­fy puts the reins in your hands. You can act inde­pen­dent­ly and make a big dif­fer­ence as part of the crowd, even with small amounts. Use your influ­ence — for your finan­cial future and for a more sus­tain­able world.

Share this arti­cle.

This might also inter­est you.

Opened suitcases in a living room and a person sitting on the floor with a map.

How can I trav­el sus­tain­ably?

Here you can find out which trav­el behav­ior is harm­ful to the cli­mate and how you can start your vaca­tion more respon­si­bly with our tips. For more relax­ation for you and the plan­et!

Read article

Fast through the iden­ti­fi­ca­tion process — KYC, eID and Co.

Read more about how Wat­ti­fy ver­i­fies your data, the dif­fer­ent iden­ti­fi­ca­tion meth­ods and why data secu­ri­ty is so cru­cial in the finan­cial sec­tor here.

Read article
A hand holds a mobile phone on which a blockchain logo can be seen.

Tokens — your dig­i­tal return

In this arti­cle, you will learn how tokens work and how Wat­ti­fy uses them to make your invest­ments as quick and easy as pos­si­ble.

Read article