Just a few years ago, no one would have given the concept of crowdfunding a second thought. After all, why would random people you have never met be interested in investing in a project or company you are involved in. Low and behold, crowdfunding has evolved from being a niche market to a powerful tool in terms of raising funds. So much so, that even Belgian bank, ING, wants to get involved in the process.
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ING Partners With KissKissBankBank and Seedrs
Crowdfunding without the involvement of traditional financial institutions is next to impossible, as funds have to reach the recipient in one way or another. Even though bitcoin offers a great alternative to solving this problem, most individuals and companies will stick to the system they know, despite all its flaws.
ING, one of Belgium’s major banks, wants to connect people and companies in need of funds with the platforms which can help them raise their targets. Crowdfunding is not just one way of obtaining finance, as there are multiple genres of crowdfunding. Finding the right platform for the right project is a key element in this approach.
By partnering with two major crowdfunding platforms, ING bank wants to establish itself as a partner in the crowdfunding ecosystem. For the person or company looking to create a campaign, they will have to decide whether they want to adopt a donations, compensation, investment, or loan type of crowdfunding. Every form has its different perks – or lack thereof – and each model has its benefits and drawbacks.
For example, many people get involved in crowdfunding projects because they want to obtain a share of a company or receive a physical reward for doing so. Platforms such as Kickstarter and IndieGogo focus on the latter category, whereas other platforms are for more “advanced” investors who are actively managing and diversifying their portfolios.
KissKissBankBank is a crowdfunding platform focusing on the compensation principle, which will reward contributors if the campaign reaches its funding objective. Should the required amount of funds not be reached, all of the contributors will be reimbursed, and the project will be closed. Using this platform is subject to a 5% commission on the funds raised, and a 3% fee for transaction costs. The minimum donation amount is 1 EUR.
Seedrs, on the other hand, embraces the traditional investment principle associated with crowdfunding. Campaigns must have a minimum target of 30,000 EUR, and project owners will pay a maximum commission of 7.5%. Every campaign on Seedrs must reach 100% of its goal within 60 days. Investments start at 10 EUR, and if the campaign is successful, all contributors become shareholders in the company.
Bitcoin Crowdfunding Follows Investment Principle
So far, the number of successful crowdfunding platforms for Bitcoin users is fairly limited. Despite the best efforts of various individuals and teams, there are still some kinks to work out in the world of crowdfunding with Bitcoin. But that doesn’t mean there are no successful platforms in existence.
All of these Bitcoin crowdfunding platforms seem to follow the investment principle as well. Any contributor can become a shareholder in the company looking to raise funds and, in most cases, earn dividends as well. Physical rewards are not necessarily required in this space, albeit that heavily depends on the project in question.
Whatever role ING might play in the future of traditional crowdfunding, having a bank act as an intermediary is both a blessing and a curse. On the positive side, there’s a team of experts who will guide businesses and individuals to the right platform. On the other hand, people should be able to choose freely between platforms, and decisions should not be influenced by third parties like ING.
Source: ING Belgium
Images courtesy of ING, KissKissBankBank, Seedr, Shutterstock