In this article I want to reflect on the fundamentals of Crowdfunding , and what meaning its use would have in the hypothetical case of Crowdfunding for bankrupt companies .
The Financial Crowdlending
Crowdfunding emerges as a financial alternative through P2P networks or loans between individuals, it is an Anglicism that refers to collaborative patronage.
We jumped p2p lending loans to loans between individuals and we have finally fallen into Crowdfunding bounced to the Crowlending sounds better.
In the end, everything is based on the type of crowdfunding we are talking about: rewards, donations, investment or loans.
As a result, the idea is very simple, we have a virgin project of which we offer information to a crowdfunding platform and we await its approval and rewards based on what we can offer.
This is fine and in many cases it works, but what happens when we try to finance an existing project through crowdfunding and this bypasses the theory of this type of financial solutions.
Is anything fair in Crowdfunding?
On this occasion I want to comment on a situation in which you intend to carry out collaborative Crowdfunding financing for a bankrupt company.
This arises from an article on the website elperiodicodelemprendedor.com , in which it is said that the Spanish company EuroMark, in order to avoid a bankruptcy, tries to resort to Crowdfunding as an alternative financing method to solve its financial problems.
As a guarantee, a work of art is offered according to the money requested, it is more if someone donates the total amount, a painting with a value comparable to that amount and even more will be offered (olé).
I have a couple of questions:
In the event that the financing is collective, that is, 100 people make the contribution, how is the value of a painting distributed among 100 people?
In the case of having a work that exceeds the amount contributed, why not sell it to obtain liquidity?
Leaving the particular issues of this request that I find very commendable and everything that is looking for solutions is very good, is this proposal worthy of a Crowdfunding project?
The risks of bankrupt companies
When an investor goes to finance Crowdfunding projects, what reasons can attract him to participate in this type of business?
Currently there has been a stir with the law for Crowdfunding , on Friday February 28, 2014 the Council of Ministers approved a Draft Bill to promote business financing that regulates, among other issues, the CrowdLending platforms of collaborative financing for Business.
All this comes with the intention of putting a regulation in an activity that escapes the hands of governments and, where appropriate, public collection agencies.
The companies that are dedicated to the business of loans between individuals, Crowdfunding and Crowdfunding saw our business model shake with the appearance of limits that are difficult to digest.
But within this current framework and the future limits that may arise, this type of project, such as the one we are discussing, is a burden for the future in this type of business.
- How does a company with a bankruptcy plan to access financing of the Crowdlending type?
- Is the business model of this company finished?
- Has your management been a disaster?
- How can a Crowdfunding platform manage the risk of financing its investors?
The abuse that can be carried out on this type of platform may be its future closure and mistrust by its investors.
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More Crowdlending guides
- Everything you wanted to know about loans between individuals
- The moment of SMEs and the self-employed: alternative financing
- Are loans between individuals regulated?
- What will become of the P2P platforms in Spain when the bank opens the tap?
- Learn everything you need about loans between individuals
- crowdfunding in Spain
- Financing models, Loans between individuals, crowdfunding and Business Angels.