Crowdfunding allows organisations or small and medium companies to be financed directly by the a large group of people, the "crowd", without resorting to the services of a traditional bank or other financial institution. In crowdlending a large number of unrelated people lend directly small amounts in exchange for a financial return through a commercial loan agreement. Advantages for companies are achieving funds where banks don't finance, diversification of funds, or marketing. For small lenders advantages are higher returns, complete transparency and the possibility to have direct impact.
Crowdlending has grown rapidly in recent years due to several factors:
The rapid development of Internet and new online technologies and the fact that people feel increasingly comfortable making online transactions
The lost in trust in the traditional banks because of the financial crisis and all the scandals that have emerged
Investors demand for more economic, ethical and transparent products, especially since the onset of the global financial crisis
Crowdfunding is a model that started in the 90s as an alternative way to finance cultural projects through donations. However, since then it has developed strongly and currently 4 types of crowdfunding exist:
Equity: investment directly in the equity of companies or projects. For example, an entrepreneur seeking money to set up his business, starts a crowdfunding campaign and people who trust in the business, invest and become shareholders. Examples of such plataforms in Spain are Crowdcube.
Loans: lending to companies or individuals (crowdlending). People invest their money as a loan and acts as a micro-bank. This is generally considered to be less risky than equity, since there is an obligation to pay back the funds, with a pre-agreed payment calendar. Examples of such plataforms in Spain are ECrowd!, Comunitae, Loanbook, Arboribus y Growly.
Reward: contributions to a project, like the production of a book or a movie, in exchange for a small compensation, such as a copy of the book or a ticket to see the movie. Examples are Goteo, Verkami, Ulule.
ECrowd! belongs to the second type (lending) specialized in financing low-risk investment projects, and is leader in Spain in this segment. ECrowd! connects companies and investors in a fast, transparent and easy way, providing affordable financing to local impact projects and higher returns to investors. No intermediaries, no banks, and fast and efficient operations.
ECrowdInvest is a crowdlending platform(crowdfunding for loans) for causes with social or environmental positive impacts. A “classic” win-win situation where good projects get funds, investors receive a higher interests to those obtained through banks and there is a positive impact on environment for instance in funding projects with reduction in Carbon Dioxide emissions.