Younger founders, whose social circles provide co-financing, particularly benefit from crowdfunding. This initial funding from friends and family gives other investors greater confidence in the idea.
This is one of the current research findings that Crowdfunding Conference of the Institute for Small and Medium-Sized Enterprises (IfM) in Bonn and the Working Group on Start-up and SME Financing of the Founding Research Support Group (FGF) was discussed in mid-April.
Not only is the number of startups receiving funding continuously increasing, but so is the amount of investment. According to the study, investments in crowdfunding rose from €8.3 million in the first three quarters of 2013 to over €12 million in the same period in 2014. Thus, another topic addressed by experts from politics and academia was: To what extent can crowdfunding develop into a serious financing alternative?
Hotly debated: The Small Investor Protection Act
On the one hand, in addition to the necessary capital, crowdfunding offers additional benefits such as crowd support in product development, marketing, or access to important network partners. On the other hand, the Small Investor Protection Act was also discussed. It appears to be moving in the right direction – young growth companies will continue to receive support, and small investors will simultaneously receive greater protection.
Because according to information provided to the daily newspaper “The world", the law will now not require a far-reaching advertising ban. Furthermore, young entrepreneurs will not be required to prepare a comprehensive securities prospectus at €1 million, as previously planned, but only at a targeted amount of more than €2.5 million.
