CONDA: Crowdinvesting as a financing instrument
For this reason, crowdinvesting might as well become the new buzzword not only among the millennials, but also among a much wider array of "investors". In short, anyone with the barest digital skills, who is curious and needless to say, economically savvy, can become an investor. How does it work? CONDA's Co-founder and Managing Director, Paul Pöltner, states that it is enough to know that everyone in CONDA has an interest in business success: the penniless entrepreneur, the investor and, of course, CONDA which provides support through the execution process. As he puts it, a win-win situation!
Crowdfunding or crowdinvesting: is it just a different suffix or is there something else? It seems that investing requires more commitment from the investor and perhaps more risk than with simple funding.
Crowdinvesting and crowdfunding are two different services. With crowdfunding, you donate money to a company or you give money to a company to receive a future product. With crowdinvesting, you make an investment in the company. This means that you not only receive some incentives from the company, but also participate in the future development of the company.
What is CONDA's business model?
CONDA's responsibility is to provide a platform for investors and companies to find each other and have a standard framework to allow investment into companies. Our business model is transaction-based, we charge the companies a fee based on the money invested.
What has been the most difficult obstacle to overcome: social barriers, cultural differences, financing hurdles---?
A little bit of all of these. It is about setting up a financing instrument for companies which has to be known and understood by all stakeholders in the ecosystem.
How many applications do you receive and how many do you accept?
We receive more than 500 applications per year, from ideas to full business plans. During the pre-investment phase, we get in touch with the companies and explain to them how crowdinvesting works. We describe what it means to use crowdinvesting as a financing instrument. Following this, partners, the company and CONDA have to agree that crowdinvesting is the best fit for their business strategy. Less than 10% of the applications finish this process.
Why should someone use crowdinvesting?
Crowdinvesting gives everyone, starting from EUR 100, the possibility to invest into companies and participate in the growth of these companies. But, it must always be pointed out that it is a risky investment. So if the company goes into bankruptcy, the money is gone. However, on the other side, if the company is successful you can participate in the future activities of these companies.
How do you select your projects?
We have an internal process where we select the companies to work with. However, it is up to the investor to make the decisions by which companies have the potential to become successful.
Judging from your website, projects have been over-financed which is a rare thing in the current circumstances.
We always present a minimum and a maximum financing threshold. Depending on the collected amount of money, the company can grow in different ways. Over-financing therefore means that the company is able to start more activities based on their business plan.
Money is like water, it always finds its way to reach out to valuable ideas. And talent attracts capital more strongly than capital attracts talent: so is CONDA's crowdinvesting just the first step for start-ups to get off the ground or is CONDA an angel investor?
CONDA wants to give a little additional finance to the companies in order for them to get additional financing from business angels, funding agencies or banks. This is why CONDA is not only for start-ups, it can also be used by SMEs that want to expand to other markets or establish new products.