Why Is Crowdfunding on the Rise? – Analysis by Ullrich H. Angersbach
Crowdfunding as an alternative investment: types, risks, opportunities, legal framework, and a practical due-diligence checklist for investors.
Crowdfunding as an Alternative Investment
Ullrich H. Angersbach, financial expert and marketing coach for financial products, outlines why crowdfunding has become increasingly popular. The prolonged low interest rate policy of the European Central Bank has made traditional savings unattractive. Many investors now look for alternatives with higher return potential. At the same time, demand is growing for sustainable and socially responsible investments. More and more platforms are offering “green” or community-focused projects.
Surveys show that over 60% of German adults have heard of crowdfunding — but only around 10% have actively invested.
What Is Crowdfunding?
Crowdfunding means financing projects through contributions from a large number of individuals, each providing relatively small amounts. Online platforms connect project initiators with investors.
Types of Crowdfunding
- Reward-Based Crowdfunding — supporting creative or tech projects in return for non-financial rewards (e.g., early product access).
- Donation-Based Crowdfunding — charitable projects funded by donations without compensation.
- Equity Crowdfunding (Crowdinvesting) — investors take stakes in start-ups or real estate projects in exchange for financial participation.
Crowdfunding as an Investment: Opportunities and Risks
Real Estate as a Driver
Real estate has become the dominant sector in crowdfunding. While in 2015 it was level with start-ups, by 2017 twice as much money was raised for real estate projects.
Returns and Risks
- Returns: typically 4–8% annually, often higher than bonds or savings accounts.
- Risks: subordinated loans, potential total loss.
- No voting rights: investors have little to no influence on projects.
Legal Framework in Germany
The Retail Investor Protection Act (KASG), introduced in 2016, set clear rules:
- Maximum €1,000 per project for private investors
- Up to €10,000 if it does not exceed twice monthly net income
- Projects may raise up to €2.5 million without a prospectus requirement
What Should Investors Check?
For real estate projects in particular, 10 points are crucial:
- Creditworthiness of the developer
- Equity ratio
- Experience with comparable projects
- Land ownership or purchase option
- Location and demand
- Planning and building permits
- Pre-sales or pre-letting figures
- Platform reputation and transparency
- Track record of past projects
- Loan structure and subordination risks
Conclusion: Attractive but Risky Investment Vehicle
Crowdfunding provides access to innovative and high-yield projects. However, risks are considerable. As bond expert Bill Gross once said: “I’m not so much concerned about the return on my money, but the return of my money.”
Especially in real estate, market fluctuations can lead to losses, since crowdfunding funds often replace equity.
FAQ on Crowdfunding
Why is crowdfunding booming?
Because low interest rates push investors to seek alternatives with higher returns.
What types of crowdfunding exist?
Reward-based, donation-based, and equity-based (crowdinvesting).
What returns are realistic?
4–8% per year — with the risk of partial or total loss.
What are the biggest risks?
Subordinated loans, lack of investor control, and dependency on project developers.
What should investors always check?
Developer creditworthiness, project approvals, and platform reliability.
Leading Crowdfunding Platforms (German-speaking region)
| Platform | Link | Focus |
|---|---|---|
| Startnext | startnext.com | Creative, social & sustainable projects |
| Seedmatch | seedmatch.de | Start-up financing |
| Companisto | companisto.com | Investments in young companies |
| Exporo | exporo.de | Real estate crowdinvesting |
| Bettervest | bettervest.com | Renewable energy financing |
| LeihDeinerStadtGeld | leihdeinerstadtgeld.de | Municipal crowdfunding |
Further Reading
- Advances in Crowdfunding: Research and Practice (2020) — Shneor, Zhao, Flåten
- Crowdfunding in Europe: State of the Art in Theory and Practice (2015) — Brüntje, Gajda
- Crowdfunding — The New Era of Fundraising (2014) — Gierczak et al.
- Crowdfunding: A Literature Review and Research Directions (2017) — Wetterstrand, Broström
- Crowdfunding und Kreditfinanzierung (2020) — Fraunhofer IMW
Further Articles by Ullrich H. Angersbach
- ullrich-angersbach-aktien.de — Stocks
- ullrich-angersbach-aktienoptionen.de — Stock Options
- ullrich-angersbach-anleihenblase.de — Bond Bubble
- ullrich-angersbach-boersencrash.de — Stock Market Crashes
- ullrich-angersbach-goldpreis.de — Gold Price
- ullrich-angersbach-grenzgaenger.de — Extreme Sportsman
- ullrich-angersbach-griechenland.de — Greece Debt Crisis
- ullrich-angersbach-kursverluste.de — Stock Price Losses
- ullrich-angersbach-managed-futures.de — Managed Futures
- ullrich-angersbach-portfolio.de — Portfolio Strategies
- ullrich-angersbach-schach.de — Chess
- ullrich-angersbach-schacheroeffnungen.de — Chess Openings
- ullrich-angersbach-schuldenschnitt.de — Debt Restructuring
- ullrich-angersbach-verkaufsabschluss.de — Closing Sales
- ullrich-angersbach-verkaufsfehler.de — Sales Mistakes
- ullrich-angersbach-wohnimmobilien.de — Residential Real Estate
- ullrich-angersbach-zentralbanken.de — Central Banks
- ullrich-angersbach-zinswende.de — Interest Rate Reversal
Disclaimer
The information provided by Ullrich H. Angersbach in this article is intended for educational and informational purposes only. It does not constitute investment, financial, tax, or legal advice. Crowdfunding investments carry risks, including the potential for total loss. Past developments are not reliable indicators of future outcomes. The author is not liable for decisions made based on this content.
© 2025 Ullrich H. Angersbach. All rights reserved.