Crowdfunding refers to raise small amounts of capital from a bunch of people like family members, friends, customers, and individual investors to finance a start-up. But it’s not always about a start-up. Crowdfunding is comparatively a firmer idea to invest in a new business than the traditional business approach. People seeking crowdfunding use social media, and crowdfunding websites to collect funds for their businesses. This is a different approach from crowdlending where lending takes place in the form of business loans which are to be paid back whereas in crowdfunding investors provide funds to have equity or some other rewards. Crowdestor is a crowdfunding platform. Consider our Crowdestor review to dive deep into its details.
What is Crowdestor?
Crowdestor, a combination of ‘Crowd’ and ‘Investor’, is a P2B (peer to business) crowdfunding platform devoted to granting earning opportunities to investors and businesses. Founded in Estonia in 2017, Crowdestor maximizes the financial improvement of investors and helps business organizations develop and expand their business objectives. Crowdestor provides quick and easy funding for companies directly from over 17,000 registered investors from all over the world. Hence, the role of banks, brokers, lenders, etc. is abandoned because Crowdestor believes in the power of the crowd.
What is Crowdestor?
With 325+ financed projects and 39M borrowed amount, Crowdestor has gained immense popularity in Baltic states. It focuses on every type of investor including risk-takers as well as button-down investors. On Crowdestor, you can invest from as little as €50 and can earn up to 28% or more per annum. Crowdestor’s vision is to turn the crowdfunding industry into a principal business financing solution. With the mission to speeding up business growth and offering unique opportunities to investors across geographical boundaries. Crowdestor is reflecting consistency in its core values: Simplicity, Transparency, and Professionalism.
Crowdestor Project Categories
Crowdestor offers the following categories where investors can invest.
- Small and Medium Enterprise Projects (SME Projects)
- Specialized Projects
- Movie Production
- Gaming and more
- Real-Estate Projects
How Crowdestor Works
How to Sign up on Crowdestor
Registering on Crowdestor is easy and simple. Just go to www.crowdestor.com and click the Login – Register button in the upper right corner. To register your account, you will provide your name, surname, email, and password. Facebook or Google account is also available.
Once you provide all the required details, Crowdestor will send you a confirmation email. To comply with Anti-Money Laundering regulations, Crowdestor has launched the KYC procedure. You have to provide proof of identity (ID or Passport) to use Crowdestor. Crowdestor also requires to create a PIN code to invest in the platform.
How to Invest in Crowdestor
To invest in Crowdestor projects you must:
– Be 18-year old
– Have a bank account within the EU or EEA
Steps to Start Investing
- Register as an investor
- Completer the KYC process by providing identification documents (ID or Passport)
- You will get an email with an ID number and a confirmation link
- Transfer your decided investing amount
- Select from the available active business projects and invest
- Your investor’s profile will keep you updated about your gained profit
Steps to Withdraw Funds
- Log into your investor’s profile
- Go to the ‘overview’ section and press ‘withdraw’
- Enter your desired withdrawal amount and provide your PIN code
- Verify your identity
- Withdrawal will be transferred to your Crowdestor-linked bank account within a few hours to 3 business days
How to Borrow on Crowdestor
Crowdestor allows you to raise the capital for your business in a fast and simple way.
Steps to Follow
- Getting registered your company on Crowdestor is free of charge
- Apply for credit assessment for €200
- Crowdestor will provide you with a credit decision and the Credit Report within one working day
- Get offers with maximum loan amounts, interest rates, loan terms
- Sign a loan agreement and pull your funds within 1 – 7 business days
Crowdestor allows you to calculate your interest rate right from the day you make your investment. In this way, Crowdestor ensures quick returns with fixed interest rates.
When your borrowing requirements are evaluated once, Crowdestor ensures to deliver the funding within a week.
Before issuing loans each borrower’s repaying ability is evaluated deeply. For this purpose, the Crowdestor expert team examines the information about the borrower, his reputation, financial background and current commitments, business plans, financial reporting, and loan security.
Minimum Investing Amount
As an investor, you can invest on Crowdestor with a minimum amount of €50.
Loan Amount and Term Months
On Crowdestor, you can borrow from €10,000 to €500,000. The interest rate starts from 15% per annum while the terms range from 3 to 18 months.
Diversification Level Ruler
On the new Crowdestor Dashboard, there is a Diversification Level Ruler to show you how well you are coping with your risks. Each level on the Ruler shows how much of your invested amount is distributed to one single project.
On your investor’s account, the Account Balance tool demonstrates your invested and not-invested funds.
Allocation Pie Charts is a useful tool to let you know the project type, industry, and SME credit rating for which your investments are allocated.
Crowdestor Dashboard shows you your earned interest rates through the Actual Return tab.
Crowdestor considers security as an important concern in fintech solutions. Crowdestor’s security measures include:
- Virtual machines
- Duplicated and backed-up databases
- Modern firewall and encrypted passwords
- Verification is done through Veriff
- Use of modern technologies such as vueJS, nuxt, nodeJs, symphony 4 and 5
Crowdestor platform supports English, German, and Spanish languages.
Crowdestor accepts only SEPA (Single Euro Payments Area) payments.
- BuyBack Guarantee Fund
Crowdestor has introduced BuyBack Guarantee Fund to maximize the financial security of its investors if the borrower is subject to default. BuyBack Guarantee Fund safeguards the investors’ proper return. It functions in a similar way to the Deposit Guarantee Funds of credit platforms. Crowdestor initiated the Fund with an amount of EUR 50,000. 1 – 2 % of the loans are contributed to the BuyBack Guarantee Fund. The current value of the Fund is above EUR 320,000. If the borrower defaults, Crowdestor compensates all investors using the Distribution Rules.
- Credit Scoring
It is a mathematical model that automatically examines the creditworthiness of a potential borrower. It measures two aspects of businesses.
- Financial aspect
- Non-financial aspect
The financial evaluation considers the following:
- Financial health of the company
- Observing the metrics like profitability, liquidity, and leverage
The non-financial analysis includes:
- Experience of the company’s management
- Personal credit history
- Industry situation
After a careful analysis, the Scoring Model decides to offer the investment or reject the proposal. Whatever the result is, the borrower is provided with an automatically generated Credit Report.
The Credit Report is a 10 – 15-pages document to make you understand the logic behind the credit decision.
It includes the following:
- Evaluation of Financial and Non-Financial features of the company
- Financial strengths and weaknesses
- Credit risk assessment
- If the application is entertained the report shows the loan amount, interest rate, loan term
- You will get recommendations to improve your financial performance if your application is rejected
- The company must be active
- At least 2 annual reports submitted to the local IRS
- Minimum one year fixed ownership
- Assets value more than EUR 20,000
- Applicant’s ID/Passport
- Information about the borrower and the possible guarantor
- KYC and AML questionnaire
- Bank statement
- Project description
- Purpose of the loan
- Minimum and maximum required amount
- Funds collection deadlines
- Project pictures
- Risk-assessment payment
Model Output after Scoring
- Company rating
- Company score
- Personal score
- Probability of default
- Loss given default
- Expected loss
- List of rejection reasons
- List of things to improve
- Credit limit
- Loan term
- Interest rate offer
- Secondary Market
Through its secondary market, Crowdestor creates a new kind of supply and demand and helps investors sell their investment to another Crowdestor client before the maturity date thus making the investors’ life easier. On the Crowdestor secondary market, you can get your discounted or premium principal back before the end of the project. It operates like a stock market as there are demand, supply, discount, and premium on Crowdestor.
Crowdestor is focused on bringing the best interests for its investors. To put the power in the investors’ hands, Crowdestor introduced a democratic principles-based voting function. The voting product is particularly launched to deal with hostile circumstances that create threatening conditions for the Crowdestor investors. With the voting functionality, investors hold the power to decide on the fate of the project. The voting option serves on the majority principle as one investor cannot decide about the future of the project.
Voting applies to those projects only that are severely affected by pandemics. The ultimate power will be in the hands of those investors who have invested more than others. It is based on One Euro = One Vote rule.
Types of Voting
- The majority determines the project fate
- Each investor chooses a preferred option
- Crowdestor Pay
Crowdestor launched Crowdestor Pay where the users i.e. borrowers and investors can transfer payments without the involvement of the Crowdestor platform. The investors can send money for investment on Crowdestor and receive the interest and repayments on their Crowdestor Pay account. It is also beneficial for the borrowers to get loans.
- Fast transfers
- Loyalty programs
- Special deal offers
- Easy withdrawal
- Investment management in one place
- Conversion of foreign currencies to Euro
- No sign-up fee
- No account management fee
- No investment fee
- No contract fee
- Bank transfer fee depends on the service provider
Secondary Market Fees
- The seller’s commission is 2%
- The buyer’s commission depends on the discount but it is not more than 2%
- Risk assessment fee – €200
- Structuring fee – from 3%
- Management fee – 0.10%
- Restructuring and prolongation fee – €500 or 2%
- First Mortgage release fee – €350 + VAT
- Second Mortgage release fee – €100 + VAT
- Notary fees depend on notary services pricelist
- Debitum Network
- TFG Crowd
- No investment fee
- High-interest rates
- Skilled management team
- Lower investment amount
- Wide range of projects
- Investors’ security is preferred
- Deep assessment before issuing loans
- Credit report
- Secondary market
- No auto-invest
- Delayed projects
- High risk
- Insufficient customer support