Crowdfunding in Norway

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Crowdfunding helps small companies and startups grow

Crowdfunding is a method of raising funds for a project, venture, or cause by collecting small amounts of money from a large number of people, typically via online platforms. It allows creators, entrepreneurs, or charities to bypass traditional funding sources like banks or investors and directly engage with supporters or backers.

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Crowdfunding — The Big Four

The four main categories of crowdfunding are donation, reward, equity, and debt.

Donation

Donation-based crowdfunding is a very effective way for people to support a good cause.

It can, for example, be a fundraising campaign to create a hiking trail in a neighborhood. Some enthusiasts create a crowdfunding project, and then anyone who wants a hiking trail can support the cause by donating a little money based on their ability.

It can also be to support a person in need of help in some form or, for example, to contribute to a band trip.

The key point is that donation-based crowdfunding is about supporting a good cause without receiving something in return that you can take ownership of.

Reward

Reward-based crowdfunding is a great way to fund a new product.

The funding happens when the creator pitches the product and showcases a prototype, such as a new drone. If the customer pre-orders the product, thereby providing the company with enough money to finance production, they often receive a special discount or a unique edition of the product.

The result of a successful campaign is that the creator confirms there is a market for the product and makes enough pre-sales to fund the production.

Equity

An equity-based crowdfunding platform allows businesses to reach a large number of potential investors by making their prospectus digitally available on the platform.

By using video and images, along with text and financial information, it becomes much easier to communicate who they are and what the company will use the funds for.

It’s relatively affordable, generates significant engagement and attention, and the investors often become customers and supporters as well.

Debt

Crowdlending works by many people coming together to provide a loan to a company or individual. It starts with the company or person applying for a loan through the crowdlending platform. The platform then conducts a thorough analysis of the company or individual and sets an interest rate based on the risk.

Once the loan is posted on the platform, people like yourself can choose to lend to the company or individual. Some may invest a few thousand, while others may lend more. When the total of all the loans matches the amount the company or individual wants to borrow, the full amount is paid out.

The company or individual then starts repaying interest and installments to the lenders. The crowdlending platform acts solely as a loan facilitator, meaning it does not take part in the loan but helps lenders provide loans to the company or individual.

FTN’s ambition is for crowdfunding to become as widespread and accepted in Norway as it is in the UK.

Fintech Norway’s crowdfunding vision is that all companies should have access to all types of financing at all times, and that investors should receive a good risk-adjusted return on their investments.
Daniel Isdal Furset
Secretary General @ Fintech Norway

Need advice on Crowdfunding?

Don’t hesitate to reach out to our resident Crowdfunding expert!

Linn Hoel Ringvoll

General Council @ Kameo Norway

linn@kameo.no