What You Need to Know Before Getting Started with Crowdfunding

Crowdfunding is an increasingly popular investment option among individuals. However, before getting started, it is important to understand the challenges and risks associated with this type of investment.
 

First, it is important to distinguish between the different forms of crowdfunding. Crowdequity involves acquiring an equity stake in a company, while crowdlending is a loan granted to a company that is repaid in installments with regular interest payments. Crowdfunding is an umbrella term that encompasses both of these forms of investment.
 

The sectors funded through crowdfunding are diverse. Retail and services account for 19% of funds raised, the environment for 8%, and real estate crowdfunding is the fastest-growing sector, accounting for 46%. It is therefore possible to fund projects in many sectors of the economy.
 

The reliability of crowdfunding platforms is an important factor to consider. To operate, crowdequity and crowdlending platforms must hold either the Participatory Investment Advisor (CIP) license issued by the French Financial Markets Authority (AMF), or the status of Participatory Financing Intermediary (IFP) issued by the Organization for the Registry of Insurance Intermediaries (ORIAS), or Investment Services Provider (PSI) status granted by the Prudential Supervision and Resolution Authority (ACPR). You can therefore verify a platform’s reliability by ensuring that it is registered with ORIAS.
 

However, crowdfunding involves risks. If you lend money to a company, it may run into difficulties and be unable to repay you. Similarly, taking an equity stake in a company can result in a partial or total loss of your investment. It is therefore important to think carefully before getting involved in crowdfunding and to diversify your investments to reduce risks.