Crowdfunding projects create opportunities for investors and those with a great idea or purpose. There are benefits on both sides of the equation, so it is no surprise that an exciting and extraordinary thing is happening in the world of crowdfunding projects: Those 
who received money and became successful are giving back and becoming part of the crowd. This is a significant development, given that while there will likely be no shortage of people who have worthwhile crowdfunding projects, there could be a lack of funders.
Our process can help no matter which side you are on, but first, here is a brief overview. If after you read this, you feel like you’d like help contacting people who might invest in your crowdfunding project, or you are an investor who wants to give back because you were once an applicant, feel free to contact us.
There are three ways all of this happens, as follows:
Crowdfunding Projects: Investors Turned Applicants
The most common scenario regarding changing roles within crowdfunding projects is that those receiving crowdfunding for their project become investors later. Whether out of wanting to give back to the system that created their success or just because they became successful and, like anyone else, want an investment with a reasonable payback, this scenario is happening more and more. Of course, there is also the less common crowdfunding occurrence when the investor is the one who wants crowdfunding for their project.
Why Crowdfunding Projects Investors Become Applicants
Of course, there are clear reasons why those who invest in crowdfunding projects would later want funding themselves. However, by definition, investors have money to invest and may have capital for their projects. Logic says that instead of giving to an outside crowdfunding project the next time, they could keep their own money. In addition, the crowdfunding projects investor is getting a return on their investment and could use that return.
Then again, there are obvious reasons why an investor in a crowdfunding project might want to get money through the same process. The most common reason is that it can be favorable from an accounting perspective for businesses to get crowdfunding for specific needs. It may be preferable for the owners to use crowdfunding instead of putting their money at risk – it sounds strange because they are funding the crowdfunding projects of others. Still, they may have a lower risk tolerance. Finally, the investor may need more money than the smaller projects they have supported, and knowing the potential of this investment, they may turn to the crowd.
Crowdfunding Projects: Applicants Turned Investors
We hope that if you read this post and consider funding crowdfunding projects, you both get the funding and are incredibly successful. We also hope that if those two facts are true, you return to crowdfunding projects as an investor. Choosing your investments carefully is a great way to give back and make a good return. You’ll feel great about funding the next “you” out there. This cycle of former applicants becoming investors could grow and become an important part of the process.
We wonder whether some investors will write this possibility into new crowdfunding contracts. Maybe the last few payments of your money could be forgiven if you invest an equal amount for the sake of someone else. This would allow investors to set up a “pay it forward ” situation, where they start an excellent ongoing funding chain.
Crowdfunding Projects: Investor and Applicant at the Same Time
The least likely yet still possible combination for crowdfunding projects is that someone could receive money and be an investor for someone else. Yet this combination can happen under several circumstances, such as:
Crowdfunding Projects and Cost of Credit
The person receiving the money for their crowdfunding project applies because the cost of this credit is cheaper than getting a bank loan, and getting a loan in general and taking on debt is a good decision for their business. In these cases, the reason did not have to do with necessarily being low on cash so that money could be left over for investment in someone else’s project through a person-to-person loan. This can create a source of helpful revenue, but be sure that your initial investors are okay with this form of repurposing.
Separate Entities
Related to #1, a person and their business are two separate entities, and while the individual may have money, they may not want to invest any more in the business. They may prefer crowdfunding because they know quality businesses are in the pool. But that is with their money, and they may want to separate personal and business finances. It is important to consult a lawyer or tax accountant before investing in ways that create or tap into separate entities.
Related Businesses
In some less common circumstances, it can be advantageous for one business to help another. So, while the first business may need a significant amount of money from crowdfunding, it still may be worthwhile for the people behind the business to support another business that is part of their infrastructure in some way. There may be tax and other advantages of doing things this way.
Time to Payback
Finally, it may be that a person who receives educational crowdfunding or a business that gets a crowdfunding loan may become successful before the payback is complete. In this case, the person or business may want to become an investor in crowdfunding projects before their payback is finished. Again, there may be tax or another financial advantage to this approach.
These are how investors and applicants can play complementary and even similar roles during the crowdfunding process.
Conclusion
It is easy to see why some people who receive crowdfunding and become successful want to give back and fund others and how people who have invested decide that it is their turn to run with their big idea. As this type of funding becomes more widespread, this phenomenon may happen even more frequently. Could we even see this happen within the same crowdfunding project? What if an entrepreneur receiving commercial real estate crowdfunding decides to invest in another entrepreneur for the business going into the building? What if the investor in a start-up business finds a way to help that business through their idea that needs start-up capital?
Here are some examples of successful crowdfunding ventures. Can you see how there could be room for people to be both investors and entrepreneurs?
Crowdfunding Projects: Our Services
Crowdfunding projects are exciting, and we expect to see the possibilities grow; at the same time, more people may become involved in both sides of the equation. In fact, we could see investors actually writing into their contracts that the person or people they are investing in agree to a deal where the payback rate is lowered after a period of time if the person they are investing in agrees to pay it forward.
The bottom line: Consider all your possible roles for your crowdfunding projects now and in the future. There may be benefits from playing different roles. Of course, our primarily free services and the connections we can make can be helpful on both sides. Please feel free to contact us at any time.
