Fractional fortunes

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The term ‘crowdfunding’ is pretty much self-explanatory. But let's get to the heart of what matters most to us:

1. Is this safe?
2. Is this beneficial?
3. Is this relevant to real estate in India?

The answer to all three questions is a resounding yes!

First off, crowdfunding is a method of raising money from investors in an unconventional way—primarily through the power of the internet. It's a modern twist on an age-old concept, and here's why it matters.

Did you know that crowdfunding has experienced exponential growth in the past decade? In fact, according to industry reports, the global crowdfunding market was valued at $13.9 billion in 2020 and is projected to reach $28.8 billion by 2025, with real estate crowdfunding playing a significant role in this upward trajectory.

Businesses require capital to thrive, and crowdfunding provides an easy and effective way to raise funds. On the flip side, investors are drawn to crowdfunding projects due to low minimum investment requirements. It's a win-win scenario—businesses get the funds they need to flourish, and investors diversify their portfolios.

But what about safety? You might think crowdfunding sounds too good to be true, but it's actually a safe and valuable investment option. In fact, a survey conducted by Crowdfunding Professional Association (CfPA) found that 85% of investors who participated in crowdfunding projects reported positive experiences and satisfactory returns on their investments.

In India, there are several top-notch crowdfunding platforms that provide a secure environment for businesses and investors alike. Check out these leading platforms:

• TheHotStart
• Indiegogo
• Start51
• Milaap
• ProperyShare, and more.

These platforms organize crowdfunding efforts, instilling a sense of security for both businesses and investors.

But how they exactly do it?

Well, a dedicated body that oversees the progress of the project rests on three main pillars – sponsors, trustee, and managers.

• The sponsor can be an individual or a company depending upon the size of the project. Their role is to set up the purchase or investment process, and look for individuals interested in crowdfunding via an established crowdfunding platform.
• Next up, the trustee is in-charge of all the legalities involved in the crowdfunding procedure. Besides overlooking the compliance of all legal standards, the trustee also plays a consultancy role in the project.
• The third pillar is in the form of the manager who directly manages the investments of the individuals. You can also find a manager conducting certain operational tasks at the site, while ensuring that everything is sailing smoothly.

Now, let me address the big question: Are the rewards worth it?

Don't be fooled into thinking that easy investments equal lacklustre returns. Real estate crowdfunding offers enticing benefits for investors:

• Real estate crowdfunding projects have delivered impressive average annual returns of around 8% to 12%, outperforming traditional real estate investment avenues
• Even if you're a non-accredited investor, real estate crowdfunding opportunities are within your reach

On the flip side, if you're a real estate developer seeking funds, crowdfunding is a treat:

• Access a large pool of investors, minimizing the risk of funds drying up.
• Raise funds conveniently through social media and the internet