What is Crowdfunding? Definition and Process

funding gap emerging markets

Crowdfunding enables individuals, companies, or specific projects to raise funds directly from a broad audience, the 'crowd'. It is an online financing method without the involvement of traditional financial intermediaries. Literally, crowdfunding means: ‘funding’ by a ‘crowd’, creating a direct line between investors and initiators.

How Does Crowdfunding Work? 

The principle of crowdfunding is simple: a project or business presents itself on a crowdfunding platform, and people who want to support the initiative can invest or donate directly.

Each project has a specific funding goal and a deadline by which the amount must be raised. A project only proceeds if full funding is achieved within the set timeframe. If it fails, investors get their full investment back. 

There are different forms of crowdfunding, but the two main types are:

  1. Donation: Supporters receive a small token or product in exchange for their contribution.
  2. Financial: Investors provide loans or purchase shares in a business or initiative.

How Does Crowdfunding Work at Lendahand? 

Combine both forms, and you get Lendahand, a crowdfunding platform for impact investments. It is THE platform for those who want to invest ethically and profitably. You invest alongside 16,000 others in entrepreneurs in emerging markets and receive interest in return. 

Starting from €10, you become an impact investor. The financial return can be up to 8% per year. On average, investors can expect an interest rate of 6.28%. Find out here how this interest is determined.

Lendahand: An Example of Impactful Crowdfunding

What Types of Projects Do You Invest in at Lendahand? 

The crowdfunding platform allows European investors to provide loans to two types of businesses in developing countries: financial institutions with a social mission and impactful medium-sized enterprises. These financial institutions, in turn, lend the money to local SMEs in the form of microfinancing or growth financing. The companies, active in the clean energy sector or agriculture, use the funding to create jobs and expand their activities.nbsp;

Investors receive an attractive interest rate, while entrepreneurs pay a fair rate for the financing. A true win-win situation.

Is Investing in Crowdfunding an Alternative to Saving?

Crowdfunding investment offers an alternative way to participate in financial projects with potentially attractive returns. The concept has seen explosive growth worldwide in recent years, partly because banks have become more hesitant to provide loans. Additionally, crowdfunding often offers a higher return than the average savings interest, making it an attractive alternative for long-term investment.

How Big is Crowdfunding Investment in the Netherlands?

The Netherlands is one of the leaders in crowdfunding. According to recent data, the total amount invested in crowdfunding projects in the Netherlands has more than doubled in the past five years. This growth highlights the increasing relevance of crowdfunding as a major player in the financing market.

Dutch crowdfunding platforms mainly focus on investing in innovative concepts or startup companies, with a clear structure of the investment and the expected returns.

Why Choose to Invest Through Crowdfunding?

+ You're in Control: You choose how much money you invest in which projects.

+ Transparancy and Trust: Make an informed and well-considered decision about your investments.

+ Make Impact: Directly contribute to social and economic progress in developing countries.

+ Returns: Potential to achieve a financial return on your investments.

+ Diverse Investment Opportunities: Invest in various sectors such as renewable energy, microfinance, and agribusiness.

+ Accessibility: Start investing in meaningful projects from as little as €10.

Crowdfunding is a Collective Effort

Why Choose Lendahand?

Founded in 2013, Lendahand stands out as a pioneer in the Dutch crowdfunding market. As the first platform in the Netherlands to receive the new European Crowdfunding Provider Licence in August 2022, and by being named ' Crowdfunding Platform of the Year' by IEX three times. 

How to Start Investing in Crowdfunding?

  1. Visit lendahand.com/projects and choose a project that suits you. At Lendahand, we launch multiple projects seeking funding each month.  
  2. Create your free account with your computer or smartphone. By registering, you will be informed of new projects. You decide when and how much you invest each time.
  3. Easily invest in different projects and receive your investment, including interest, back in your wallet. From there, reinvest in another project or withdraw to your bank account.  
  4. Prefer to automate your investments? At Lendahand, you can use the Auto-Invest feature. Set your project preferences and build an impactful portfolio 24/7

With just a few clicks, you and 16,000 engaged crowd investors worldwide can make a real difference with your money. 


Crowdfunding offers a powerful option for those who want to contribute financially to the development of innovative ideas and enterprises. With crowdfunding platforms like Lendahand, you can achieve a profitable financial return while also making a positive impact on the world.


Crowdfunders Wanted: Start Today

Discover the power of crowdfunding and make your first impact investment in one of the open projects along with our 16,000 investors.


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