Crowdinvesting and enhanced finance solutions: opportunities and risks in the world of alternative investments

The world of investments is constantly evolving, with new forms of financing gaining importance. One of the most exciting and innovative developments in this area is crowdfunding. Erik Simon, CEO of Enhanced Finance Solutions, explains what crowdfunding is, how it works, the opportunities and risks associated with it, and how Enhanced Finance Solutions, under Erik Simon’s leadership, views this form of financing.

What is Crowdfunding?

Crowdfunding is a subset of crowdfunding where a multitude of investors – also known as a „crowd“ – pool their capital to finance projects or companies. Unlike traditional crowdfunding, where supporters often receive only symbolic rewards, crowdfunding platforms offer investors returns in the form of interest or profit sharing.

A common application of crowdfunding is financing real estate projects. Investors can already invest in various platforms with small amounts and thus become part of larger financing. This is particularly attractive for individuals who do not have the capital to finance large real estate projects themselves but still want to benefit from the returns.

How Crowdfunding Works

Crowdfunding involves providing bullet loans, meaning that the loan is only repaid at the end of the term. During the term, investors typically do not receive regular payments. The terms vary, with startups often having longer terms of at least five years, while real estate projects typically have shorter terms of one to five years.

Capital is raised through various platforms focusing on different market segments. Some specialize in startups, others in real estate or sustainable projects. This diversification allows investors to invest in different industries and diversify their risk.

Erik Simon - Crowdinvesting for farmers projects

Crowdfunding 2024: Where is it Heading? Insights into Growth, Trends, and Future Potential

Demand for crowdfunding has steadily increased over the past years, up until the COVID-19 pandemic. In 2019, the total investment volume in Germany was approximately 400 million euros. Despite a slight decline during the pandemic, studies like Statista predict that the investment volume will rise again.

The crowdfunding market will continue to show solid growth in 2024, with an estimated transaction volume of 1.56 billion euros and an expected annual growth rate of 5.19 percent until 2028. By then, the total transaction volume is expected to increase to 1.91 billion euros. The United Kingdom leads the market, with a transaction volume of 556.30 million euros in 2024. The average funding per crowdfunding campaign is expected to be around 23,000 euros in 2024.

Current trends in crowdfunding include specialized platforms for industries such as renewable energy and real estate, as well as the increasing use of blockchain technology to improve transparency and efficiency. Growth in the crowdfunding market is driven by several factors, including the growing number of startups and small businesses, regulatory changes facilitating access to capital, and increased awareness of crowdfunding as an attractive investment option. The COVID-19 pandemic has also increased the need for alternative financing methods, further supporting the future growth of the crowdfunding market.

Risks of Crowdfunding

While crowdfunding can promise high returns, it also carries significant risks. One main issue is the subordination of loans. In the event of project or company insolvency, small investors are compensated only after all other creditors, often resulting in the loss of their invested capital.

Therefore, it is important to carefully examine the entire financing structure. A low equity behind the crowd capital increases the risk for investors. Platforms that do not provide all relevant information should be avoided. An investor should always review all necessary documents, such as the investment information sheet, current financial statements, and detailed project planning, before investing.

Enhanced Finance Solutions: Consulting and Expertise

Enhanced Finance Solutions Ltd., under the leadership of CEO Erik Simon, is a company specializing in consulting and deals in the world of crowdfunding. The company offers comprehensive advice on business, financial, and regulatory issues. It helps companies find the right path and generate sustainable growth.

The experts at Enhanced Finance Solutions help companies define their strategy and optimize cash flow. Their approach is based on a deep understanding of alternative financing and a broad network in the industry. The mission of Enhanced Finance Solutions is to create innovative financing pathways while minimizing risks.

Conclusion: Opportunities and Risks in Focus – What Investors Should Know

Crowdfunding offers an exciting alternative to traditional investment forms. It allows small investors to invest in larger projects and benefit from high returns. At the same time, it carries risks that must be carefully weighed. Enhanced Finance Solutions plays a crucial role in guiding companies and investors along this path, ensuring that they make informed decisions.

Investors should always be aware that crowdfunding is risky and requires adequate risk diversification. With the right advice and a clear understanding of the risks, however, crowdfunding can be an attractive way to invest in innovative projects and achieve returns.

Contact: Erik Simon, CEO – Managing Director, Enhanced Consulting Solutions Ltd.

About Enhanced Finance Solutions CY Ltd:

Erik Simon is an accomplished professional in the banking and business sector with global experience. After training as an insurance salesman and studying economics at the University of St. Gallen, he specialized in accreditation and alternative finance at Bear Stearns in London. Today he is CEO of Enhanced Finance Solutions Ltd. and is committed to providing independent, qualified advice to countries and institutions in order to achieve sustainable improvements for people by realigning financial structures.

This is what Farmers Future stands for:

Farmers Future is an innovative project that has set itself the task of combining sustainability and profitability in agriculture. Farmers Future offers people the unique opportunity to participate as partners in various sustainable agricultural projects and benefit from the sales proceeds. The aim is to make a positive contribution to the future of agriculture by promoting environmentally friendly farming methods and involving partners directly in the value creation process. At Farmers Future, transparency, sustainability and shared success are at the heart of our joint activities.

Enhanced Finance Solutions CY Ltd.
Nikos Nikolaidis 19, Office 201 – 202
8010 Paphos, Cyprus

Phone: +35797786080

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