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The dramatic proliferation of CFP (Crowd Funding Platform) is due not just to technological developments but also, in part, to the aftermath of the recession. Banks, VCs and other institutions are still loath to lend to pre-revenue businesses. Angel investors are inundated and reject 99% of the applications they receive and demand a big slice of equity from the 1% in which they are interested. “Friends and Family” are wary and have little if any spare cash. The continued financial depression and lack of growth plans on both sides of the Atlantic are making the difficulties of funding more acute. However, life is also tough for high-street investors as banks continue to offer unattractive rates of interest to savers. At the same time, the development of the internet and social networks has reduced degrees of separation from six to fewer than two, and considerably increased potential marketing reach for new businesses. Crowdfunding may offer a potential escape from both of these key issues.

There is much ignorance in the marketplace regarding both CFP and entrepreneurs setting up CFPs, and those intending to enter the market should seek guidance from professionals who deal with these issues on a daily basis.


To date there are three fundamental models which prevail, namely Reward, Equity and Loan. The terms “Alternative finance”, “Peer to Peer Lending” and “crowd investing” are often used to refer to the Equity and Loan models, indicating that the investor expects or, at least, hopes to receive a financial return on its money.





Issues those are really threatening for above crowd funding models

  • Financial Regulatory Compliance
  • Aml
  • Legal Exposure, Terms And Conditions (“t&c”)
  • Jurisdiction For License
  • Business Structure Vs Legal Exposure
  • Taxation
  • Platform Usage Rights, Intellectual Property Rights (“ipr”) And Branding

Worldwide Crowdfunding Statistics
by Category

Since crowdfunding is still a relatively new phenomenon, there is not always consistency in how different terms are used and defined within the research. However, crowdfunding can generally be divided into four main categories:

Debt based Crowdfunding
Equity based Crowdfunding
Reward based Crowdfunding
Donation based Crowdfunding

Where last year’s worldwide crowdfunding statistics showed a market in rapid growth in all regions of the world, a recently published report displays a more varied situation. The three countries dominating the world’s crowdfunding market are still China, the United States, and the United Kingdom, but where the US and the UK still show impressive growth rates of 42.4% and 30.7%, respectively, the Chinese funding volume has dropped by -39.9%. However, China is still the market leader worldwide with a market share of 70.7%, followed by the US with 20.0%, and the UK with 3.4%. Next on the list, we find countries like the Netherlands, Indonesia, Germany, Australia, Japan, France, and Canada – all with significantly smaller market share.

Business Model Stakeholders

  • P2P/Marketplace Consumer Lending - Individuals and/or institutional funders provide a loan to a consumer borrower.
  • P2P/Marketplace Business Lending-Individuals and/or institutional funders provide a loan to a business borrower.
  • P2P/Marketplace Property Lending-Individuals and/or institutional funders provide a loan, secured against a property, to a consumer or business borrower.
  • Balance Sheet Consumer Lending-The platform entity provides a loan directly to a consumer borrower.
  • Balance Sheet Business Lending -The platform entity provides a loan directly to a business borrower.
  • Balance Sheet Property Lending - The platform entity provides a loan, secured against a property, directly to a consumer or business borrower.
  • Invoice Trading Individuals or institutional funders purchase invoices or receivables from a business at a discount.
  • Debt-based Securities - Individuals or institutional funders purchase debt-based securities, typically a bond or debenture, at a fixed interest rate.
  • Mini Bonds - Individuals or institutions purchase securities from companies in the form of an unsecured bond which is ‘mini’ because the issue size is much smaller than the minimum issue amount needed for a bond issued in institutional capital markets.
  • Equity-based Crowdfunding-Individuals or institutional funders purchase equity issued by a company.
  • Real Estate Crowdfunding-Individuals or institutional funders provide equity or subordinated-debt financing for real estate.
  • Profit Sharing-Individuals or institutions purchase securities from a company, such as shares, and share in the profits or royalties of the business.
  • Reward-based crowdfunding-Backers provide funding to individuals, projects, or companies in exchange for non-monetary rewards or products.
  • Donation-based crowdfunding-Donors provide funding to individuals, projects, or companies based on philanthropic or civic motivations with no expectation of monetary or material.

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