Equity crowdfunding, Debt crowdfunding, and Lending crowdfunding are three different types of crowdinvesting, very different from each other.
Digital platforms operating at a European level as crowdfunding service providers must be authorized by the competent authority in each EU member state under Regulation (EU) 2020/1503.
Real estate crowdfunding, also known as Real Estate Crowdfunding (RECF), consists of applying all the tools that fall under the umbrella of crowdinvesting to the real estate sector.
Equity crowdfunding
This product allows subjects to invest in a capital company through a digital platform that acts as an intermediary. The company that decides to finance itself through crowdfunding will thus be able to cover its capital needs by offering investors aggregated by the platform the opportunity to subscribe to its shares. In this way, investors become shareholders, and thus enter the company's venture capital.
In the case of real estate Equity crowdfunding, the investor subscribes shares in a company that carries out a specific real estate project, becoming a partner in all respects. Upon successful realization of the operation, the investor receives the invested capital plus a return, ROI (Return On Investment), which will depend on the outcome of the operation.
Lending crowdfunding
This instrument provides a loan to a company or individual to realize a specific project, typically by signing a standardized financing contract. The contract gives the subscriber the right to receive at one or more maturities the invested capital, plus a predetermined return.
In the case of real estate Lending crowdfunding, the investor lends money by signing a standardized loan agreement, which is disbursed in favor of a company that carries out a specific real estate project. In return, one acquires a credit right under which, upon maturity, one receives one's principal plus a predetermined interest rate. Upon successful realization of the operation, the company will repay the amount collected together with the accrued return (APR).
Debt crowdfunding
This instrument allows subjects to subscribe to a debt instrument in exchange for the return of the money lent, plus accrued and contractually defined interest. The most classic debt instruments are the so-called Minibonds.
The case of real estate Debt crowdfunding, on the other hand, is based on a form of investment in which the investor subscribes to a debt security or bond (minibond) issued by a company that carries out a specific real estate project, thus becoming its creditor/bondholder. When the instrument matures the investor gets back the invested capital plus a predetermined interest rate.
