Germans warm to Crowd funding

   

 

Millionaire Jan Henric Buettner wanted to expand a luxury resort on the Baltic coast he’d built with some of the money he’d made over 20 years as a technology entrepreneur, first as head of AOL Europe and later as a venture capitalist.

Buettner had plenty of his own money, or he could have asked a bank or friends for a loan. Instead, he went to strangers on the Internet, Bloomberg reports.

So far, he’s raised €3.3m ($4.4m) from 800 investors on crowdfunding website Companisto.de, more than three times the minimum he was seeking and, according to the website, the most by a European for-profit organization.

“Nobody knows where to put their money at a time when interest rates are low and people are worried the stock market’s going to crash,” said Buettner, 49, whose Weissenhaus resort north of Hamburg has secluded cottages, private white sand beaches and rooms starting at £400 per night. “It’s a chance to lift crowd financing to the next level.”

Crowdfunding, which allows companies and people to raise money via online pitches, is a small yet growing alternative to traditional finance. Crowdfunding platforms around the world are expected to raise $10.7bn this year for businesses, arts and charitable ventures, law firm Goodwin Procter LLP said, citing research firm Massolution. That’s up from $5.1bn in 2013, Goodwin Procter said.

In Germany, crowdfunders seeking cash for business ventures raised a total of £8m euros in the first half, 60 per cent more than a year earlier, according to Frankfurt-based startup portal FuerGruender.de. Because Germany’s crowdfunding industry is small, Buettner’s campaign will probably account for a big chunk of the total for 2014.

Crowdfunding has been around since the late 1990s, when fans raised money online to finance a US concert tour for British rock band Marillion.