Crowdgrowing is a novel system of financing for agricultural producers. It is a type of crowdfunding, similar to crowdlendingbut with its own characteristics.
In this article you will discover what Crowdgrowing consists of, how it contributes to the development of agri-food projects and how the collaborative economy is capable of driving innovation.
What is Crowdgrowing or Crowdfarming?
The term Crowdgrowing or Crowdfarming is a modality of crowdfunding. It is a collaborative approach for the development of projects, initiatives or companies in the agricultural or livestock sector.
Guard Similar to crowdfunding since it is based on crowdfunding (small contributions from a multitude of people). However, it adapts to the needs of the agri-food sector. For example:
- There are several formulas for the inflow of money to occur. For example, through the purchase of a crop, the purchase of a basket of products, sponsoring a tree or simply medium-term loans. There is great flexibility in this regard.
- Remuneration to the investor can be monetary or in kind.
- The loans can be guaranteed with the properties and equipment of the activity (land, agricultural machinery, etc.).
This financing method, in addition, make a positive impact on the environment. Normally, companies use Crowdgrowing to align their strategies with sustainable development and the compliance with ESG criteria (saving water, reducing carbon emissions, avoiding overexploitation and waste, etc.).
In short, Crowdfarming tries to align the interests of consumers and farmers. Livestock is also adopting this model to obtain resources.
How does crowdfarming work in Spain?
As with Crowdfunding and Crowdlending, there needs to be an intermediary platform that puts agricultural companies in contact with a specific project or initiative with interested investors or consumers.
This type of financial intermediation is consolidated in the field of small and medium-sized companies. Their relevance is growing and, for this reason, they are regulated.
Due to their growing importance, Participatory Financing Platforms have been subject to regulation in several countries of the European Union.
Specifically, in Spain they are governed by the Law for the Promotion of Business Financing (Law 5/2015, of April 27) and are under the supervision of the National Securities Market Commission (CNMV). All this in favor of the transparency and security of crowdfunding.
However, by virtue of article 46 of said Law, they do not have the consideration of Participatory Financing Platforms those whose purpose is the sale of goods and services, as is the case of Crowdfarming intermediaries in Spain
Besides some of the Spanish platforms dedicated to the sale of seasonal products and sponsoring a tree, such as CrowdFarming, investors can make participatory loans in agricultural projects through specialized intermediaries.
Such is the case of the crowdgrowing platform Lande, based in Latvia and licensed by the Latvian regulatory body.
Lande is specialized in financing the agricultural sector and before the end of its first year of operation it issued loans worth 10 million euros.
Another option is Heavy Finance, Lithuanian platform dedicated to contributing to the fight against climate change.
Both intermediaries help small and medium farmers to implement and develop their ideas. However, there are other financing formulas complementary to Crowdgrowing.
The agri-food sector has the great challenge of achieving environmental, social and economic sustainability. Efficiency and respect for natural resources require investments in capital goods.
In Alter Finance We offer alternative options to bank financing focused on the specific needs of the agri-food sector, always studying each particular case by our team of experts. You can find the formula you need to develop your agricultural business by contacting us.