Investing money in a promising idea makes your money work for you
Crowdfunding is a suitable form of investment for everyone. Do you want to support local SMEs? Are you interested in investing in construction projects? Do you want to contribute to realizing a sympathetic business plan? Or are you looking for a good return on your savings or assets? Whatever your motive or goal may be, the versatility of crowdfunding means there is always an investment opportunity that suits your personal preferences. Investing money in crowdfunding is therefore highly attractive for both novice and experienced investors.
Capital Circle is the platform where you will encounter a wide variety of investment opportunities. Here, you can invest your money in various industries.
Table of Contents
Why invest money in crowdfunding?
Types of crowdfunding
The specialist in SME financing
Advantages of investing in crowdfunding
Investing in various projects
Expected returns when investing
Facts & figures about investing money in crowdfunding
Certainties and risks of investing money
What are the costs of investing in crowdfunding?
How can I invest through Capital Circle?
Frequently asked questions about investing money
Why invest money in crowdfunding?
You can invest money in various industries. We bring investors and entrepreneurs together to optimally address the needs of both the borrower and the investor.
From bonds to buying stocks, and from real estate investments to investing in various small funds, the possibilities are endless. The best investment is one in a project you believe in. For this reason, it's important to conduct research on the potential return beforehand. With crowdfunding, you open up a world full of diverse opportunities.
The advantage of this? You choose the investment object in which you invest. There is a suitable investment for nearly every financial situation. The minimum investment is flexible, information from previous years is available, and you can select an investment opportunity that aligns with your interests or field of expertise.
Types of Crowdfunding
There are approximately four different types of crowdfunding. For instance, you can choose to donate money to a business with a good cause. In this case, you give up the money but still have visibility on where it is going. A second option is to agree to sponsor a project, where you invest in an interesting project and receive a (non-financial) return.
When you, as an investor, are looking for interesting investment objects that yield a return, there are two other options. These are the options on which Capital Circle focuses. One popular option is loan-based investing. Here, you invest in exchange for interest on the loan. Financial returns are particularly attractive here. You can also choose equity-based crowdfunding, where the promise is made that you will receive dividends and capital appreciation on the share or bond. Again, the return on investment is important.
At Capital Circle, we mainly focus on the loan-based model. We are happy to provide you with the necessary information when you decide to invest. The added benefit is that you won't have to search endlessly for profitable investments, as it simply revolves around crowdfunding with return potential.
Capital Circle – The specialist in SME financing
Since the launch of the Capital Circle platform in 2016, more than 160 projects have been successfully funded. More and more entrepreneurs are discovering the benefits of crowdfunding. As a result, we are increasingly approached by entrepreneurs who want to explore crowdfunding and by those who have worked with us before. At the same time, investors benefit from an attractive return.
Why crowdfunding can be a good investment is explained on this page. In addition, we can always provide you with the necessary information on crowdfunding, buying shares, the risk of losing your investment, and investment tips.
Advantages of Crowdfunding
- The minimum investment amount can be determined by you;
- You can choose in which projects you want to invest;
- You are not dependent on banks or investment companies;
- By investing in crowdfunding, you are investing in the (local) economy and engaging within the region;
- Investors can be part of the decision-making in the company;
- Continuous cash flows, as you receive monthly interest and repayments;
- Expected return of 6% to 12%.
Note: Investing money carries risks, and you may lose your investment (partially).
Investing in Various Projects
At Capital Circle, you invest in a wide variety of projects across many industries. These range from real estate projects to company acquisitions, and from seed capital to growth or working capital. Any entrepreneur can submit a proposal for financing from €50,000 to a maximum of €5,000,000.
On the platform, you will find a description of each project, including both projects open for investments and those already funded. Capital Circle works with a clear risk classification for each project. This classification is based on a risk score based on profitability, solvency, liquidity, the entrepreneur, and guarantees. This makes the investment risk transparent. It is also advised to diversify your investments across multiple projects and industries. At Capital Circle, you can invest both privately and through a business. We apply a minimum investment amount of €100.
An entrepreneur looking for funding for a business ambition has the opportunity to submit their project on the Capital Circle platform. The project can be offered to the Public Crowd or the Closed Crowd. The differences are explained below.
Public Crowd Projects
A project offered to the public crowd is accessible to all investors of Capital Circle. When a new project is published, all investors with an account at Capital Circle will receive notification via email.
Closed Crowd Projects
An entrepreneur may choose to initially offer their project to a selected group of investors. These may be (specific) investors who already have an account with Capital Circle or a selected group of potential investors from their own network. These investors can review the project proposal but can only invest after they have registered.
In a Closed Crowd project, only invited investors can invest. Currently, the selection is determined by Capital Circle in collaboration with the entrepreneur based on historical investment behavior or loyalty. In the future, we will guide this further based on the investment profile.
Average Interest Rate of 7% When Investing
The investment term we offer varies from at least six to a maximum of sixty months. The idea is that after a maximum of five years, your investment will be returned with interest. Interest is paid starting from the first month, possibly with partial repayments. The interest rate depends on the risk classification assigned to the project. The average interest is significantly higher than the current interest rate on your savings account. We regularly adjust the interest rates of the risk categories based on the current market interest rates.
Facts & Figures About Investing Money in Crowdfunding
Crowdfunding is becoming increasingly popular today because people are recognizing its benefits. Apart from the potential return on investment, many investors enjoy being able to choose which industry they want to invest in. Additionally, it is possible to make multiple investments through a single overarching platform.
More and more investors are turning to crowdfunding. According to figures from the Consumer Association, crowdfunders invested in 12,764 projects in 2020, with a total amount of €417 million. This growth has continued in recent years, with the €1 billion mark being reached in 2022.
Investing, in general, is becoming more popular. In 2020, the number of households that invested grew by 17% to 1.75 million people. The main reason for this is the low savings interest rate and rising inflation.
Within crowdfunding, there are various possibilities. According to data from www.crowdfundingcijfers.nl, the vast majority of crowdfunding investments are aimed at businesses. The remaining 10.6% is primarily invested in social projects, consumer loans, and creative projects.
The total amount raised via crowdfunding is growing rapidly:
2014: €64 million
2015: €128 million
2016: €170 million
2017: €223 million
2018: €329 million
2019: €424 million
2020: €417 million
2021: €730 million
2022: €1.08 billion
Source: Crowdfundingcijfers.nl
Certainties and Risks of Investing Money
At Capital Circle, you invest in SMEs, which carries some risk. We make this risk transparent by evaluating each funding request. Only projects that meet our acceptance criteria are eligible for publication. We also communicate this as transparently as possible with a risk qualification for each project. Part of this involves the guarantees offered by the entrepreneur. These guarantees come into play if the entrepreneur fails to meet the repayment obligations.
A separate entity, the Stichting Security Trustee KOM Group, manages the security rights on behalf of Capital Circle's investors. This foundation is also the formal contracting party for every loan agreement. The foundation is actively involved in:
- Collecting and distributing monthly payments;
- Following up on payment delays;
- Making alternative payment arrangements;
- Collaborating with collection agencies, bailiffs, lawyers, and trustees.
What Are the Costs of Investing in Crowdfunding?
As an investor at Capital Circle, you pay 1% per year on the actual outstanding funds. This means that registering an account and onboarding with the Stichting Derdengelden Online Payment Platform is free of charge. These costs are only charged when monthly payments are made to you. No fee is deducted when you invest in a project.
How Can I Invest Through Capital Circle?
On the “How It Works” page, you will find general information about the platform and our process. Below is an overview of the investment process:
- Create an Account: First, register an account at Capital Circle and go through the onboarding procedure with the payment service provider OPP.
- Review Project Offerings: After onboarding, you will have access to all projects available on the platform. You can review relevant information, such as risk analysis and business plans.
- Ask the Entrepreneur Questions: If you find an interesting project, you can communicate directly with the entrepreneur via the platform.
- Invest: Once you are sure, you can invest in the project. You have two options:
- Commit: Reserve a spot in the project for a certain amount. Payment can be made later.
- Invest: Pay your investment directly and be 100% certain you're participating.
- Make Your Payment: You can pay directly from your dashboard via iDeal or manually with a payment reference.
- Successful Funding?: You can track the funding progress on the website. If the project is successfully funded, the interest payments will start. You can view transactions and contracts in your account. If the goal amount isn't reached and the funding fails, you will get your investment back within three business days.
Frequently Asked Questions About Investing Money
What is crowdfunding?
Crowdfunding is the act of investing in or lending money to companies through a publicly accessible information platform. For entrepreneurs seeking investors, using a platform is an effective way to provide relevant information to potential investors so they can make an informed decision.
How can I contact Capital Circle?
For any questions related to investing in crowdfunding, we recommend contacting our staff. We are happy to assist you with more information. You can reach us via email (info@capitalcircle.nl) or by phone (015-7600019).
What does it mean to provide guarantees?
In financing, a borrower can limit risks for the investor by providing guarantees. This can be executed if debtors fail to meet their obligations. In practice, this means that the secured asset must be sold so that creditors can claim the proceeds.