Loan vs. Convertible loan

Two different forms of investment are possible, through a loan and a convertible loan. In most cases, a loan is provided to companies that already generate revenue, that can predict cash flows, that enable future repayments and interest payments, and that can provide collateral. The term is between one and ten years and the interest rate varies from four to ten percent. Most loans are repaid on a straight-line basis, but an annuity loan and bullet loan are also possible.

The difference with a convertible loan is that no repayment is required in the first years. The loan will be converted into depositary receipts at a later date. This way you become a co-owner of a company. Young, fast-growing companies in particular often opt for this form of financing.

Advantages of crowdfunding

Crowdfunding offers many advantages for investors:

• You decide how much money you want to invest
• You can spread your risk by investing in multiple projects
• You invest in projects that have a positive impact on both people and the environment
• You receive gross interest every month for your financial contribution

The 10 out of 10 rule

The 10 out of 10 rule means that you should not invest more than 10% of your freely investable capital in crowdfunding projects. In addition, it is wise to spread your investment over at least ten projects.