Crowdfunding in Europe Legal Framework

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1. Overview of crowdfunding and its manifestations in Luxembourg

Rather than opting for a traditional financing through banks for example, the idea of crowdfunding is to democratise the financing of a project by allowing many diverse and varied players to participate in it, for amounts that can be either modest or high. Particularly appreciated by start-ups as well as small and medium-sized companies, this type of financing is growing. In order to attract donors, in most cases projects are presented on platforms specially designed for this purpose. The first crowdfunding platforms were created at the end of the 2000s and have since grown considerably. In Luxembourg, however, the market is still relatively small compared to other countries.

Usually, crowdfunding is categorised into four types:
• Donation-based Crowdfunding (“Crowddonating”);
• Reward-based Crowdfunding (“Reward-based Crowdfunding”);
• Credit-based Crowdfunding (“Crowdlending”) and
• Equity-based Crowdfunding (“Crowdinvesting”).

In Luxembourg, Crowddonating platforms (aimed at financing social or charitable projects), Crowdlending platforms (particularly popular in real estate) and Crowdinvesting platforms are the most popular. This third category allows the lender to receive a share of the future Read more

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