Crowdfunding instead of credit

Menschen sitzen und stehen um einen Tisch herum. Es sieht wie eine Projektarbeit aus.

Many founders rely on banks and public funding pots to get them started in self-employment. Crowdfunding platforms help to raise the necessary money. At the same time, they publicise the company or project – an added value that should not be underestimated.

Whether Startnext, Betterplace, Seedmatch or Crowdfunding Berlin – there are now over 50 crowdfunding platforms in Germany. Many specialise in specific events or areas, but it is still worthwhile for founders to take a look at all of them in order to make a targeted selection. Most founders know how crowdfunding platforms work. Basically, they are like a bridge – they bring people together. On the one hand, there are those who would like to invest their money in good projects or support a start-up. On the other side are the founders with their ideas and potential. When the two meet, good innovations, new ideas or valuable knowledge can come into the world. This benefits not only the founders, but also the consumers.

The path to crowdfunding

How the process works, i.e. how the project is presented and what procedure you have to go through, is usually well explained on the respective platforms. You usually present your project in a video, write a good text about it and invite people to take a closer look at the idea or project. The aim is for viewers to identify with the project and be happy to donate or invest money.

In the second step, you should consider what you are offering donors or investors in return. There are crowdfunding platforms where investors simply buy shares in companies. In other cases, the founder himself/herself determines what he/she offers the investors in return. This can start with a thank-you email for those who donate 5 euros and end with an investor party for major donors. There are no limits to the imagination. It’s best to think about what would create a win-win situation for donors/investors. For this part, it’s worth taking a stroll around the platform to see how others are doing it.

What if crowdfunding is not the solution?

Of course, crowdfunding is not the solution for all founders and those with the necessary creditworthiness should consider the option of applying for a loan. There are currently a number of micro-loans in Germany, but not all of them are suitable for Berliners. Nevertheless, here is a brief overview:

  1. Microcredit Fund Germany:
    • The Microloan Fund Germany is a programme offered by KfW Bankengruppe. It is aimed specifically at start-ups, small companies and freelancers with low capital requirements. The loan amount can be up to 25,000 euros. The conditions are generally favourable and people with a weaker credit rating are also considered.
  2. StartGeld from NRW.BANK:
    • NRW.BANK offers the “StartGeld” programme, which is aimed at start-ups in North Rhine-Westphalia. This is a microloan for start-ups and small companies with a loan amount of up to EUR 50,000.
  3. Start-up loan from KfW:
    • KfW offers various loans for start-ups, including the “ERP Start-up Loan – StartGeld”. This loan supports start-ups and young companies with up to 100,000 euros for investments and working capital.
  4. Mikrokreditfonds Hessen:
    • In Hesse, there is the Hesse Microcredit Fund, which supports small companies and start-ups with loans of up to 20,000 euros. The programme is implemented by the Wirtschafts- und Infrastrukturbank Hessen (WI-Bank).
  5. Mikrokreditfonds Sachsen:
    • In Saxony, there is the Saxony Microcredit Fund, which specifically supports micro-enterprises and start-ups. The funding here comes from the Sächsische Aufbaubank (SAB).
  6. Mikrokreditfonds Thüringen:
    • In Thuringia, the Thuringia Microcredit Fund supports small companies, the self-employed and start-ups with low-interest loans of up to 20,000 euros.

What founders need to consider when applying for a loan will be the subject of another blog article.

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