Oneplanetcrowd offers four types of crowdfunding, each with its own risk and return profile.
Oneplanetcrowd strives to publish only responsible and viable projects and enterprises online. Oneplanetcrowd does not offer any guarantee that entrepreneurs will honour their obligations. The risk profile depends on the type of enterprise (startup or growing) and the type of crowdfunding (loan, convertible loan, rewards or donation). As an investor, it is important to realise that crowdfunding - even with the more established companies - has a high risk profile. After all, you are funding innovation or rapid growth. For innovation to succeed, the entrepreneur will have to take the necessary risks. Oneplanetcrowd is based on the principle that an investment should have a double return, social and financial, and that the risk profile of an investment should be appropriate for the return offered. We think that a high risk should be rewarded with a chance of a (very) high financial return. The Oneplanetcrowd team assesses projected financial returns by venture capital standards.
It is advisable to read the information provided about the projects and enterprises carefully. Oneplanetcrowd also believes it is advisable to invest no more than 10% of your investable assets in crowdfunding projects and to spread your risks by dividing your total investment among multiple projects.
Oneplanetcrowd is the intermediary between you and the entrepreneur, but is not a party in the agreement between crowdfunding and entrepreneur. In order to act as effective intermediary we have of course done the necessary research, but we have not conducted full due diligence. Read in frequently asked questions: how does Oneplanetcrowd assess the projects and entrepreneurs? Despite not being a contracting party, we do feel that, as intermediary, we have a duty of care. This duty of care means that we oversee whether your and the entrepreneur’s rights and duties as per the agreement(s) are honoured. This means that we stay involved even after the agreement has ended. The way in which we put our involvement into practice is described in the frequently asked questions: what does Oneplanetcrowd do if an entrepreneur does not fulfil their obligations?
Loans are a suitable instrument for existing enterprises which are already generating turnover, which forecast sufficient positive cash flows to be able to pay future interest and repayments, and which can provide securities. In the case of a loan you lend an amount of money at an attractive interest rate.
The duration of the loan usually lies between one and five years for companies. The duration of loans for (energy) projects is usually longer.
Repayment of a loan can take place in several different ways:
The Interest varies between 4%-10%. This partially depends on the type of loan chosen and the risk associated therewith.
A loan can be subordinated. This means that the lender is subordinated in the case of bankruptcy of the entrepreneur: in the order of creditors, the subordinated lender thus falls behind other lenders in case of bankruptcy. If a loan is subordinated, this will be clearly marked within the project. This will usually involve subordination to only a bank.
In most cases, Oneplanetcrowd will ask the entrepreneur to provide securities. This can be in the form of collateral put up by the enterprise and/or of the entrepreneur or another legal person acting as guarantor. The applicable guarantees are always indicated for each project.
Oneplanetcrowd requires the entrepreneur to submit a budget which shows sufficient future cash flow to repay the loan. In addition to the minimum funding goal set by the entrepreneur, Oneplanetcrowd also determines a maximum total amount which can be borrowed responsibly. When this amount is reached, Oneplanetcrowd will suspend the lending option of the crowdfunding project.
It is possible for an enterprise to fall short of the projected results during the duration of the loan. It is even possible for the company to go bankrupt during this time. Since it is often the case that the entrepreneur puts up collateral from the company when taking out a loan and (personal) security will be granted for the remaining part, the loan can in principle be repaid in the case of bankruptcy. There is however still a chance that (part of) the loan cannot be repaid, since full economic value cannot always be recouped when securities are sold off. It is particularly likely that insufficient funds will remain to compensate the lenders when personal sureties of the entrepreneurs, who have by then often already invested a large amount of personal assets in the enterprise, have to be drawn upon.
In contrast to savings held by banks, the loans granted by crowdfunders are not protected by the deposit guarantee scheme (depositogarantiestelsel) or any other guarantee scheme. The interest offered is therefore higher than savings interest rates offered by banks. Granting loans entails risks.
Any project page on which loans are sought contains a clear description of the specific loan terms. Oneplanetcrowd sees to this. Always read this description carefully before investing.
A subordinated convertible loan is suitable for a rapidly growing company. These are often young companies, which means that the turnover generated is non-existent or limited, and there are no forecastable cash flows in respect of repayment and interest payments. Because products are often still in the development stage, company securities are moreover usually lacking.
The choice for a convertible loan is made so as to become a (minor) shareholder in a potentially rapidly growing company in the future. This also entails the possibility of a high return.
The subordinated convertible loan is a loan which incorporates the right to convert the loan into share certificates in the company at a later date. The total duration of the loan is usually 5 years.
The crowdfunder is given the option of converting the outstanding loan balance plus accrued interest into shares once during the duration of the loan. This opportunity will arise when a substantial new investor acquires a stake in the enterprise. Oneplanetcrowd will determine the height of this minimum substantial investment amount per enterprise. The crowdfunders can then convert their loans plus interest into share certificates on the same terms as negotiated by this new investor, but at a discounted share price. Crowdfunders receive this discount because they were first to entrust the entrepreneur with their money, prior to this new investor. The discount is usually 15% if conversion is offered in year 1, and usually 30% in year 2 or 3. The only case in which no discount is offered is if conversion takes place within two months of completion of the crowdfunding campaign.
If no new investor is attracted within the first three years of the duration of the loan, an independent registered accountant is appointed to determine the market value of the enterprise. A discount will then also be offered. In this way, the crowdfunders can rest assured that the price of certificates upon conversion of the loan is in both cases determined by an independent party: either by an investor or by a registered accountant.
The Crowdfunder can also choose not to convert, and to have the loan repaid. The repayment can take place either in bullet form, meaning all at once at the end of the duration of (usually) 5 years, or in linear form, from the moment of conversion to the end of the duration.
Crowdfunders who do choose to convert are bundled to form one legal person, a so-called Trust Foundation (Stichting Administratiekantoor, or STAK). This STAK is the direct shareholder in the enterprise and will be managed by the entrepreneur. The STAK issues non-voting certificates to the crowdfunders. The managing board is obligated to ensure that all economic rights of the crowdfunders are asserted. If a significant portion of the shares in the enterprise is for instance sold, a corresponding portion of the STAK also has to be sold, so that the crowdfunders also profit therefrom (‘tag-along right’). This creates an ‘exit’ for the crowdfunders and, if the entrepreneur is successful, they will achieve a return on investment.
As a result of the conversion option the convertible loan thus in fact consists of 2 stages:
During the first stage you will receive interest. The interest rate varies between 4%-10%. This is a relatively low interest rate, considering the risk you run. The reason for this is that you have the option of converting the loan and acquiring your return in this way.
Because convertible loans are usually granted to young, potentially rapidly growing companies it is possible that the forecast of the entrepreneur is not met, or the prognoses materialise at a different pace. During the first stage, a start-up company is often also still dependent on other early stage investments, such as subsidies and other contributions, to generate sufficient income from sales. There is a significant risk of investors losing their investment, for instance because the company is faced with delays or fundamental setbacks during the development of its products and markets. It is also possible that the company is unable to realise sufficient follow-up investments to reach the next stage. Many innovative start-up companies ultimately fail, and have to be dissolved.
The risk of investing in the form of a subordinated convertible loan is high. Then again, there is a chance of achieving a high return if you have converted your loan and the company subsequently becomes very successful.
Any project page on which convertible loans are sought contains a clear description of the specific loan terms. Oneplanetcrowd sees to this. Always read this description carefully before investing.
Read the Subordinated Convertible Loan FAQs here.
An entrepreneur who for instance wants to introduce a new product to the market but is required to purchase a large minimum order from his or her supplier or wants to finance a marketing campaign for this purpose can greatly benefit from presale of this product. The first investors to receive the product often profit from a considerable discount or attractive extras.
Oneplanetcrowd asks the entrepreneur to submit a budget including all fixed and variable costs necessary to be able to deliver to the crowdfunders. Deals with suppliers should already be finalised as much as possible. The time between investment in the crowdfunding project and delivery of the product or service is kept as short as possible. The chances of unexpectedly higher costs or the company going bankrupt before delivery takes place are kept as small as possible by the measures taken. It is however possible for realisation of a product or service to fail unexpectedly, whereby you run the risk of losing your investment. If delivery of the product or service will take place over a long period of time, the risk of non-delivery may increase.
Projects seeking donations will in some cases also offer a small reward. In addition to the costs of realising the project, the initiator also has to indicate the costs for delivery of the rewards in the project budget. It must also be made clear what the donated money will be spent on. Oneplanetcrowd will further see to it that the initiator informs the crowdfunders about the outcome of the project.