This is the future of crowdfunding
The mission of platforms
Fellow Funders is immersed in a process of analysis and reflection on the current and future situation of the PFP(crowdfunding platforms) sector. Is the sector truly fulfilling its assigned role? Are platforms providing real added value for investors and project promoters? Should the role of platforms go beyond a pure marketplace where investors and projects are put in common and platforms are limited to charge a brokerage fee?
Recent news about the “anomalous” operation of a competitor has made us go even deeper into the analysis we were already carrying out.
The law that regulates our activity
The law that regulates our mission in platforms (Law 5/2015, of April 27, on the promotion of business financing) is clear. However, it is also subject to some discretion:
- “Participatory Financing Platforms shall carry out their activity in accordance with the principles of neutrality, diligence and transparency and in accordance with the best interest of their clients.”
- “Crowdfunding Platforms may carry out the analysis of the projects, the determination of the risks involved in each project for investors and the determination of any other variable that is useful for their investors to make the investment decision.”
Fellow Funders believes that given the increasing development of crowdfunding, the time has come: the investor and the promoter of the project must be aware that not everything is valid. Regarding Crowdfunding, given the assumed risk, we must begin to discriminate between the good and the bad, always applying professional instruments.
Fellow Funders has applied professional tools from the beginning. These tools allow us to present the best projects. We try to reduce as much as possible the risks inherent to this type of financing activity. These include, among others, the following:
- Scoring. All projects that enter our platform must have a minimum score of 65 out of 100. Our scoring is based on econometric and statistical models, leaving no room for discretion.
- Adequate valuation of the company. In our opinion, it is a basic aspect to make a correct valuation of the company. This valuation is based on mathematical models and we believe that it is one of our most distinguishing factors. A correct valuation makes a fair price possible and allows the promoters to apply for new financing in the future when they meet the corresponding milestones.
- Long-Term Investment Tracking. When investing in a project, regardless of the size of the project, an investor is not making a bet, but rather an investment. As a consequence, we believe that it is our duty to provide the means for the project and its investors to keep in touch, so that they do not need to search the Internet to find out what has become of their investment. A 3/5 year contract is signed for the projects that are placed on the platform, so that all the information generated by the project is made available to the investors through our platform.
Fellow Funders Standards
Fellow Funders believes in Trust, Transparency, Security and Tracking. Our operating standards must be more than just words. They must be translated into effective commitments to investors and project sponsors. These operating standards, supported by the use of professional valuation and scoring models, is what should allow us to generate enough added value to allow Fellow Funders to have a relevant role as an alternative financing instrument for startups and SMEs.
Fellow Funders continues to believe that equity crowdfunding investment is an interesting product. However, we must be clear at all times about the need to diversify your portfolio and the risks that are assumed.