by Michèle Laird, swissinfo.ch
Mar 21, 2013 – 11:00

Switzerland is home to several crowdfunding platforms generating millions of francs from peer-to-peer financing. swissinfo.ch looks at how the online phenomenon is taking root.

Recent projects in Switzerland, such as the revival of a legendary watchmaking company, the building of a humanoid robot or the recording of a Frank Zappa-inspired album have revealed the power of the internet to generate the funding that traditional means might not provide, or no longer provide.

In just five years, the number of crowdfunding platforms has increased by 600 per cent according to crowdsourcing.org, the industry website of crowdfunding and is set to expand several-fold in the coming years.

There are presently an estimated 550 crowdfunding sites in the world that generated CHF1.42 billion in 2011 (US$1.5 billion). In Switzerland, there are at least six, four of which are less than two years old.

But crowdfunding is a generic term that covers two very different kinds of enterprises.

Donation crowdfunding allows people to microfinance causes, ideas, artists or projects that appeal to their beliefs and values. In return, crowdfunders receive symbolic or sentimental rewards, like signed albums, entrance tickets or the pride of helping a child in Africa.

Equity raising or lending platforms, on the other hand, perform like start-up incubators or capital injectors and are open to investors looking for financial or material rewards. In the absence of clear regulations (see infobox), there is however mounting concern about the naivety of neophyte investors, as well as the possibility of fraud.

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http://www.swissinfo.ch/eng/business/Swiss_join_the_crowdfunding_craze.html?cid=35258938&link=tdj