CROWDESTOR’s mission is to act in the best interests of our investors, and we have successfully accomplished that since the beginning of the operations. The current situation that is caused by the outbreak of COVID-19 has disrupted business operations worldwide and consequently has had an effect on the repayment schedule of some of the projects that are placed on our platform.
One Project, Different Opinions
Some of the businesses operating in the most vulnerable sectors of the economy, mainly involving cross-border operations, was put on pause. As a result, some projects maturing in 2020 are facing difficulty in repaying principal and/or interest. We are actively communicating with investors regarding these projects, explaining the situation. We have come across various requests from investors in the same projects.
Some investors are optimistic, they believe that 2021 will be the year when businesses can restart their operations, and do not question the success of the proposed projects, and believe that the repayment will be smooth once the global economy recovers. The second group of investors, on the other hand, prefer to recover their funds immediately, disregarding the depressed prices in all sectors.
This has put CROWDESTOR in the situation between two conflicting desirable outcomes. Even though we have always taken our own business decisions, this time we think that an unusual situation requires an unusual solution. So, we have designed a solution that will give power back to the investors to choose the preferred outcome. We have introduced voting functionality on the CROWDESTOR platform based on democratic principles.
Existing Concept, New Application
The pandemic that has stalled the world economy is an unprecedented force majeure event, which requires a fast response for businesses in order to survive. CROWDESTOR has been adapting very quickly to the challenges that came our way, and even managed to launch a new product line during the lockdowns. We strongly believe that crowdfunding is demanded more than ever, by both businesses and investors, however projects that have been launched pre-pandemic need to be adapted to the current situation. We decided to give the investors the power to decide on the project fate, just like they have decided to fund the project in the beginning. This brings transparency to our decision-making process and gives more power to investors.
Letting investors speak up on the business decisions is not the new concept - it is used in the shareholder's meetings, where investors in equity can make a difference. Giving the right to influence the business decision to investors is an uncommon practice in crowdfunding, especially in debt-based.
It is important to mention that a single investor can’t influence the decision, but the majority can. This makes sense, as CROWDESTOR investors are the ultimate beneficiaries of the investment projects listed on the platform, so we have to make sure that the decision is preferred by the majority.
Below are the details about the process, functionality, and the most common questions that might arise.
Which Projects Will Have Voting?
Voting will apply only to a small number of projects operating in the industries that are affected more than others by the pandemics. Some projects were put on hold, due to the traveling restrictions and remote working in spring 2020 like tourism, entertainment, and construction.
Once the projects affected by the pandemics will be resolved, the voting functionality will serve as a useful tool which will increase our interaction with investors.
One Euro=One Vote
Only investors of a specific project subject to voting will be offered an opportunity to vote. Their voting weight will be proportional to the cumulative investment sum in the project- one whole euro invested will be equal to one vote. This gives more weight to bigger investors which is fair, as they are more involved.
How Will I Know I have to Vote?
If you are an investor in the project, that will be passed to voting, you will be notified via email. Additionally, you will see a pop-up window once you log in to the CROWDESTOR dashboard. All voting invitations will be visible in the “voting” tab in your investor’s dashboard. We will give the deadline for casting a vote, it will be a sufficient time for you to make a decision.
What Will Be the Options?
There will be two different types of voting.
1. The majority decides the fate of the project.
The voting will be held for projects that have only one possible further action. For example, extend the loan, or default the project. In order to make a decision, CROWDESTOR will count the total number of votes cast for option A or option B and will choose an option that will have 50%+1 votes minimum voted for.
A minimum number of voters to cast their vote is equivalent to possessing 50%+1 euro in the project subject to voting. If the state quorum is not achieved, the voting will be held for the second time until the quorum will be achieved.
After the voting has been finished, CROWDESTOR will notify all investors about the outcome via an email and will provide protocol.
2. Each investor chooses a preferred option.
Some projects will offer investors to choose a preferred option for themselves. The chosen option will not be affected by the decision of the majority. For example, to convert an existing investment into equity or keep the investment in the form of a loan. Every investor will get an outcome based on his/her vote.
How do I Decide?
When the project will be passed to voting, the voting section will have a description of the current situation, why the project has been passed to investor’s voting, and what are the outcomes of each option. We urge each investor to make thought-through decisions independently, and not be influenced by others.
What if the Project Was Bought/Sold on the Secondary Market?
If an investor has sold the loan on the secondary market, then the buyer will have the voting rights. The number of votes will be equal to the size of the initial investment in the primary market. When the project is open for voting it can't be sold on the secondary market. Alternatively, if the project was already placed for sale on the secondary market prior to voting, the "Buy" option will be disabled until the voting is over.
Voting functionality is introduced to increase transparency in our decision-making process, to move forward, and to serve our investors in the best possible way. We appreciate your involvement and hope you will enjoy the new functionality!
If you require more information, please do not hesitate to contact us at firstname.lastname@example.org