Crowd funding vs. crowd investmentWhether Companisto, Indiegogo, Seedmatch or Bergfürst. They all offer different models for participation and support of start-ups in Germany. But where exactly are the differences? Colloquially the term crowd funding and crowd investment are considered the same. It is true that in each case there is a "swarm sourcing" through the crowd. Thus, many investors give a big input by comparatively small investment and provide young companies with new growth capital. The essential difference between the two concepts is, that the investors of crowd investment receive shares of the selected company and with that, are involved in profits resulting from future exits. Crowd funding however, the investor will usually receive a particular product or service depending on the volume of its investment. I.e. most of the crowd funding investors often invest more product than company specific.
Venture capital and business angels
For those who do not want to invest together with the crowd currently have only a few options to participate in German start-ups. One way is to sift companies itself, analyze, contact and then go through an extensive due diligence process. A process for professionals. Business angels are they called in professional circles and usually have build up themselves or even consulted countless businesses.
Alternatively, there is venture capital, provided by companies, successful entrepreneurs or startup experts. For individual investors, it is usually very difficult to enter appropriate funds and participate in investments. Lock-up periods and large investments restrictions are usually the hurdles that must be overcome. Of course there are also deviations.
A new high-tech stock market in Germany
Much has been reported and discussed in recent weeks. Even the German Startups Group with its financial market specific background is involved in this discussion about the "Neuer Markt" and is clearly positioned in favors for the new market segment. For institutional and informed private investors, this could be the opportunity for a straightforward and transparent participation in established later stage companies. Not only that companies getting more in the focus of domestic an foreign investors, it would likely simultaneously strengthen German job market and create growth.