Crowdfunding: What Is It and Which Platform Should You Choose?

Have you ever considered how you could easily increase your capital? One way to earn money is by investing. You can invest in stocks, bonds, other securities, specific real estate properties, choose to invest on your own or become one of many investors. Perhaps the safest and simplest way to earn additional income from investments is crowdfunding. Compared with other investment instruments, it is a relatively new yet truly effective way both to lend and to borrow. In this article, we would like to explain in more detail what crowdfunding is, what types there are, its advantages and risks, and how to choose the right platform.

The most important things worth knowing about crowdfunding:

• Through dedicated platforms, investors can finance business, real estate or other projects and, in return, receive interest or another form of financial return.
• Platforms differ depending on the type of projects they finance: some focus on real estate, while others focus on businesses, agriculture or start-ups.
• It is important to choose only a legally operating platform, carefully analyse the information about the project you want to invest in and assess what portion of the invested money you could afford to lose in the worst-case scenario.
• In most cases, you can start investing with a relatively small amount. However, the minimum investment, term and potential return depend on the chosen platform and project.
• A higher return generally also means higher risk, so it is important to consider not only the interest rate but also the project owner, the purpose of the financing and the security measures provided.

What is crowdfunding?

Crowdfunding is one of the fundraising models in which funds are provided (invested) by a large number of people. The main principle of crowdfunding is to give people the opportunity to lend their money in small amounts and relatively safely to support the implementation of selected projects or ideas. For people investing funds, this can be an excellent way to earn additional income from interest, while for recipients of funds it can provide an opportunity to borrow more quickly and easily than from traditional financial institutions.

Today, crowdfunding in Lithuania is available online both to those who want to borrow through alternative financing methods and to investors. Those who want to borrow for various business purposes or projects can do so without leaving home - all they need to do is complete an online application. There is also no need to leave home to invest - it can be done very quickly and easily using either a computer or a smartphone, and you can invest from just a few dozen euros!

Investors and project owners seeking financing are connected by the chosen crowdfunding platform (CFP), where projects are published, information about their terms is provided and the investment process is administered. In short, the CFP acts as an intermediary and helps align the interests of investors and those seeking financing. Although most platforms carry out project assessments responsibly, this in no way means that an investment is completely risk-free. For this reason, before investing it is important to read the key information about the project, assess its terms and security measures, and take into account your own ability to tolerate potential losses.

Is there a difference between crowdfunding and crowdinvesting?

Is there a difference between crowdfunding and crowdinvesting? Yes, crowdfunding and crowdinvesting are different concepts. Crowdfunding describes the overall fundraising model in which many people contribute to a particular project. Crowdinvesting refers to the investor's own action of allocating money to a selected project through a CFP and expecting a financial return. In short, crowdinvesting is one way of participating in the crowdfunding process.

Types of crowdfunding

Crowdfunding can provide investors with more than just financial benefits. In other words, people do not necessarily receive a financial reward for the amount they invest. Worldwide, crowdfunding is divided into four main types according to the nature of the reward.

1. Debt crowdfunding - a type of financing in which investors lend funds and receive a fixed investment return (interest) in exchange.

2. Equity crowdfunding - a type of financing in which investors receive an ownership stake in the financed project as a reward.

3. Reward crowdfunding - a form of crowdfunding in which the reward for investing is usually non-financial (a service or product is provided).

4. Donation crowdfunding - a type of financing in which no reward is received for the funds provided. This type of financing is typical of non-profit organisations.

Different financing platforms may use different types of reward, so before investing always check whether you will receive any benefit for the money you provide and, if so, what that benefit will be.

Crowdfunding platform: what is it?

A crowdfunding platform is a company that provides crowdfunding services and acts as an intermediary between two different parties: businesses seeking financing and investors who want to put their money to work. Currently, the greatest attention is attracted by online platforms offering investments in loans for real estate development and other businesses. These platforms act as intermediaries: they search for, select and offer investors promising business, real estate or other projects that appear reliable and have a relatively low risk level. On such platforms, people can contribute to a project or idea from as little as EUR 100 and earn a return. However, platforms also attract experienced investors who invest several hundred thousand euros in projects.

Investing through a CFP is reliable and relatively safe and, most importantly, you can choose the amount you want to invest, the investment term, the interest rate and even the project you want to invest in! Crowdfunding platforms may differ depending on how projects are financed. For example, on the "Profitus" platform, you can invest in loans for specific real estate (RE) properties at annual interest rates of 8-12%. You can invest selected amounts from as little as EUR 100, secured by real estate. Other platforms may offer investments in different types of businesses or even ideas. In exchange for their investment, all "Profitus" investors receive a real estate pledge based on the mortgage principle. A mortgage is a type of loan security in which the amount lent is secured by the project or idea developer's assets, in this case real estate (this pledge is useful if the borrower fails to meet its obligations and becomes insolvent. in such a case, the pledged property is recovered and sold, and the proceeds are used to settle with investors).

Crowdfunding platforms in Lithuania and abroad

The crowdfunding market in Lithuania has grown noticeably in recent years. Although there are not very many operating platforms, they offer different investment and alternative financing models and specialise in different areas. For example, some focus on financing real estate or business projects, while others focus on agriculture or peer-to-peer lending.

One of the best-known crowdfunding platforms in Lithuania is "Profitus". Funds invested here are used to finance business loans and real estate projects. The platform provides detailed information about the project owner, financing terms, risk assessment and security measures, allowing investors to compare projects and choose the option that suits them best.

"InSoil Finance" offers a different direction in crowdfunding. This platform uses investors' funds to finance European farmers and agricultural projects. "InSoil Finance" assesses the financial position of farms and project risks, administers loans and regularly provides information about project implementation.

Another well-known platform in Lithuania is "SAVY". It primarily focuses on peer-to-peer lending, offering an alternative financing model. The platform allows investors to invest in consumer, housing, business and real estate development loans, enabling them to distribute their funds across different types of loans.

Abroad, there is an even wider variety of crowdfunding platforms. For example, "Crowdcube" enables people to invest in private companies and receive shares in return. Such investments can offer the possibility of higher returns but are considered a risky choice. Another well-known platform, "GoFundMe", is generally used to collect donations.

Types of crowdfunding platforms and how to choose the right one for you?

CFPs can differ in their financing model, the projects they finance, risks and potential returns. The table below provides a brief comparison of crowdfunding platform types with examples:

When choosing the right crowdfunding platform, it is important to consider several aspects:

• Investment area. Decide which area interests you most - real estate, business loans, agricultural projects, start-ups, etc.
• Risk level. Assess what potential losses you are prepared to tolerate.
• Expected return. A higher potential return generally also means a higher investment risk.
• Investment period. On some platforms, funds may be invested for just a few months, while on others they may be invested for several years.
• Minimum investment amount. This varies depending on the platform, so it is essential to make sure that your choice matches your planned budget.

Advantages of crowdfunding

The growing popularity of crowdfunding is no coincidence. It is an excellent way not only to invest but also to borrow when needed. Both recipients of funds and lenders can gain many benefits by choosing this method of investment and financing. Crowdfunding can provide real estate projects or other businesses with an opportunity to expand, while also enabling investors to earn from it. Below, we present the main advantages of crowdfunding.

Benefits of crowdfunding for investors:

• provides an opportunity to participate in a variety of projects and contribute to the financing of unique projects;
• it is a relatively safe investment (when investing through crowdfunding platforms, your investment is often secured by real estate or other assets);
• it is a stable investment that allows you to invest and earn as much as you want;
• allows you to choose the term;
• provides an opportunity to choose the investment asset you prefer and the expected profit (interest rate);
• you do not need substantial capital, as you can invest from as little as EUR 100;
• it is an excellent form of passive income;
• provides a steady return secured by certain assets.

Benefits of crowdfunding for recipients of funds:

• helps you borrow up to EUR 5,000,000 easily and simply;
• provides favourable borrowing conditions;
• ensures financing;
• allows you to obtain the required amount quickly;
• makes it easy to solve financial concerns or implement projects;
• helps predict the viability of a project idea (investors usually allocate their funds to the projects they believe are most worthy);
• provides a fast financial solution.

Risks of crowdfunding

Like other types of investment, investing through crowdfunding platforms involves certain risks. None of us can be guaranteed that a particular project will be implemented successfully - sometimes the opposite happens. Nevertheless, crowdfunding is intended for small and medium-sized businesses, so considerable attention is paid to it. Under the regulation, the amount of financing that may be provided to small or medium-sized businesses or to a single owner of several businesses is limited. This means that crowdfunding legislation protects investors from major risks and helps avoid failures. It should also be remembered that certain crowdfunding platforms secure investments with real estate or other assets, shares or bonds, so even if a project fails, it may still be possible to recover your investment.

Crowdfunding in Lithuania

Crowdfunding in Lithuania is becoming increasingly popular not only among those who want to invest but also among those looking for the most suitable borrowing opportunities. As stated in an article on 15min.lt, in 2025 as much as EUR 379.4 million was financed through the country's crowdfunding service providers, while the number of projects reached almost 3,000 and was more than one-tenth higher than a year earlier. Lithuania is also among the 5 largest crowdfunding markets in the EU by the amount of capital raised through platforms.

As crowdfunding volumes increase, investors have more options to choose from. At the same time, not only the number of projects financed by platforms but also the risk management principles they apply are becoming increasingly important. Investors are paying more attention to the quality of project selection, the platform's track record of loan repayments, transparency and clearly presented information about the sources from which the invested capital will be repaid. In the long term, these aspects may become some of the most important criteria when choosing the right platform. Fortunately, licensed crowdfunding platforms in Lithuania are supervised by the Bank of Lithuania, and the platforms themselves must comply with the requirements set out in European Union regulations. This helps ensure greater transparency of operations and investor protection.

Although crowdfunding in Lithuania is most commonly used to finance business expansion and real estate projects, it is also suitable for the following purposes:

• artistic or creative activities;
• cultural projects;
• starting a new business;
• providing funding to non-profit organisations when needed;
• raising money for other purposes or to implement ideas when needed.

Examples of crowdinvesting

Crowdinvesting can be used to finance both large real estate projects and much smaller business needs. In addition, the benefit received by the investor may differ - in some cases, predetermined interest is paid, while in others, investors acquire shares in a company whose value may increase or decrease in the future. Let us look at a few real examples.

One of the more notable examples in Lithuania in recent years is the "Nemunas by CITUS" project developed in Druskininkai. A EUR 4.5 million loan was raised for it through the "Profitus" platform to reconstruct a former sanatorium into apartments and commercial premises. The financing term of the project was 12 months, and investors were offered annual interest rates of 8-11.5%. This example illustrates how crowdinvesting can be used to finance large-scale real estate projects.

Crowdinvesting can also be used to finance company growth. One such example is the technology accessories company "Mous", which raised more than GBP 3.5 million through a financing campaign on "Crowdcube". A total of 4,728 investors provided investments, and the price of one share was GBP 5.55. The funds raised were used to develop new products, increase inventory and expand the team. In this case, investors did not receive predetermined interest - they became shareholders in the company, so the potential return depended on the growth in the company's value and the ability to sell the shares in the future.

How to start investing through a crowdfunding platform?

Starting to invest through a CFP is not difficult, but before allocating funds it is important to assess all possible risks. Although the way different platforms operate may vary slightly, the main stages generally remain quite similar. Below are the main steps for starting to invest through a crowdfunding platform:

1. Choose a licensed platform. Remember to make sure that the platform operates legally and is supervised by a competent authority. In Lithuania, the activities of crowdfunding service providers are supervised by the Bank of Lithuania.

2. Create an account and verify your identity. When registering, you usually need to provide personal data and verify your identity.

3. Analyse the projects on offer. Pay attention to the purpose of the loan, term, interest rate, the project owner's experience, the security measures provided, etc. Remember that a higher return generally also means higher risk.

4. Diversify your investments. Instead of allocating the entire amount to one option, it is best to divide it among different projects. This helps reduce the impact of a single failure on the entire investment portfolio.