Crowdfunding is usually understood to mean any form of attracting funds via the internet from a large group of people. Crowdfunding therefore generally involves a large group of investors/lenders, a borrower and an internet platform.
The borrower collects an amount from the group of investors/lenders via the crowdfunding platform. In order to be able to raise an amount, the borrower provides information on the platform about, among other things, the intended use of proceeds (the project) and about the borrower. Investors can register via the platform for an investment in the relevant project. Once a sufficient number of investors have been found - the project is "fully subscribed" - an agreement is reached between the borrower and the investors. The borrower has a direct relationship with the investors and the investors run a direct risk in relation to the borrower. The role of the platform can vary, but usually consists of bringing parties together, organising the contracts and the cash flows (e.g. through a foundation). The platform also indicates a risk class per project.
It is important that - depending on the design of the crowdfunding activities - crowdfunding is often regulated. Crowdfunding then falls under the Financial Supervision Act (Wet op het financieel toezicht) and the platform has to obtain approval from the Netherlands Authority for the Financial Markets (AFM). If, for example, loans are granted to companies via the platform, in most cases an exemption (ontheffing) from the AFM is required. A licence may also be required for the provision of investment services. This means that the operations of the platform will have to comply with legislation and regulations.
The borrower collects an amount from the group of investors/lenders via the crowdfunding platform. In order to be able to raise an amount, the borrower provides information on the platform about, among other things, the intended use of proceeds (the project) and about the borrower. Investors can register via the platform for an investment in the relevant project. Once a sufficient number of investors have been found - the project is "fully subscribed" - an agreement is reached between the borrower and the investors. The borrower has a direct relationship with the investors and the investors run a direct risk in relation to the borrower. The role of the platform can vary, but usually consists of bringing parties together, organising the contracts and the cash flows (e.g. through a foundation). The platform also indicates a risk class per project.
It is important that - depending on the design of the crowdfunding activities - crowdfunding is often regulated. Crowdfunding then falls under the Financial Supervision Act (Wet op het financieel toezicht) and the platform has to obtain approval from the Netherlands Authority for the Financial Markets (AFM). If, for example, loans are granted to companies via the platform, in most cases an exemption (ontheffing) from the AFM is required. A licence may also be required for the provision of investment services. This means that the operations of the platform will have to comply with legislation and regulations.