What is crowdfunding?

There are many ways of raising funds for your business. An increasingly popular method is crowdfunding. What is crowdfunding, exactly, and how does it work?

Crowdfunding literally means: raising money from the crowd. You must tell as many people as possible about your plans and ask if they are willing to invest in it. You can do this through an online crowdfunding platform, where you can create a campaign.

Why choose crowdfunding?

  • You require money for your business and would like feedback on your service or product.
  • You can use a crowdfunding campaign as market research for a new product or service, or as a marketing campaign for your existing business.
  • Crowdfunding is easily accessible for investors: there are some platforms where they can get on board for as little as a few tenners. Crowdfunding serves as an alternative to savings accounts or investment accounts. The investors often take an interest in your business.
  • Crowdfunding creates a special bond between your business and the people who invest in it: they become fans, sometimes ambassadors, and are loyal customers.
  • The criteria of crowdfunding platforms are clear and generally fairly efficient.
  • With crowdfunding finance you are less dependent on a bank as a business owner.

What do you need to watch out for?

Raising funds takes time, and crowdfunding is no exception: preparing your campaign is a complex and time-consuming process. For example, you will need to prepare a short pitch, a video, and contact members of your network (digital or otherwise). You must also be transparent about your numbers and your business’s strategy. Make a point of keeping your investors informed after the campaign is over. Every platform has its own set of requirements and uses its own approach. You should therefore ask what approach best suits you and your business.

  • Start out by comparing the terms and conditions of several credit providers, to avoid making the wrong decision.
  • Carefully read the fine print of the credit proposal before deciding on anything. A comprehensible contract and recommendations by trustworthy consultants will help you choose a loan.
  • Estimate in advance when your business is likely to encounter cash flow problems. Are your own resources sufficient to cover this? You can also plan an appropriate form of financing in a timely manner.

Video: Crowdfunding -you really have to sell it yourself

In the video Crowdfunding– you really have to sell it yourself, Jasper of start-up Seepje, a manufacturer of environmentally friendly detergents, shares his experiences and tips. Note: This video does not yet have English subtitles. You can apply automatic translation using the settings wheel.

Crowdfunding - Je moet het echt zelf aan de man brengen

How much money can I raise?

You decide how much money you would like to raise through crowdfunding. Platforms often specify a minimum amount of €25,000 on account of the time and costs involved in a campaign. Business owners raised an average of €250,000 in 2021.

How to get started?

It is easy to get started with crowdfunding. Complete the 7 steps of the Crowdfunding step-by-step plan.

What are the various types of crowdfunding?

When people invest in your business, they will usually expect something back. You can personally choose how to repay the financial contribution from the crowd. There are four options:

  • Equity capital

The investors acquire shares in your business and receive dividends (compensation depending on the profit earned).

  • Loan capital

The investors provide a loan. You determine the interest rate and term of the loan, within a specific range. Start-ups have high-risk profiles, which automatically means you will need to offer the investors a higher interest rate. The crowdfunding platform will be able to advise you on this.

  • Convertible loan capital

This is loan capital you can convert into equity: a convertible loan or bond loan. This is a loan you can convert into shares at a future date.

  • Rewards or consideration

You offer the investors something in return in the form of a product or service. You can come up with an original, playful idea if you like. Note: the value of that product or service is subject to value-added tax (VAT).

  • Donation

The investors give you the money and do not expect anything in return. You should keep in mind that gift tax may be imposed in this case (this tax will be imposed above a certain amount).

Crowdfunding and taxes

The Dutch tax authorities regard the four forms of crowdfunding as a form of income. While you may be required to pay tax, every situation is different and is therefore also subject to different tax rules. Contact the Dutch tax administration (in Dutch) to find out if, and how much, tax you are required to pay. Alternatively, you can also consult a bookkeeper, administration expert or tax expert (in Dutch), an accountant through NBA or SRA or a tax advisor (in Dutch).

Crowdfunding in numbers

In 2022, €1.08 billion was raised in the Netherlands via crowdfunding for 18,600 projects. This is evident from figures from Crowdfundingcijfers.nl. That is 48% more than in 2021 when €730 million was raised. 

In 2022, companies raised €972 million through crowdfunding, with an average successfully raised amount of €350,000. 

For creative projects, such as film, music and theatre, the total amount raised is €12 million. The average amount per project was €12,000. For social projects such as a playground or school project, the total amount raised is €25 million and the average amount per project is €3,000. 

Crowdfunding amount per year

The total amount raised through crowdfunding annually is growing rapidly. In 2014, this amount was €64 million, and subsequently increased to €730 million in 2021.

  • 2014: €64 million
  • 2015: €128 million
  • 2016: €170 million
  • 2017: €223 million
  • 2018: €329 million
  • 2019: €424 million
  • 2020: €417 million
  • 2021: €730 million
  • 2022: €1.08 billion

Help with financing

Help increases your chances of obtaining financing, and with the right advisor and a good financial rationale, you will get your finance application approved in no time. These advisers will help you get started.

If you have a question about loans or other financial issues, you can contact the KVK Financing Desk: 0800 10 14.