Investor information

Kensington Crowd places great emphasis on trans- parency, which is why we always strive to provide you with comprehensive information about all the opportunities and risks of your investment. If you have any questions about terms or processes, we have set up aglossary and FAQ or you. If some- thing is still not clear or unambiguous enough for you, please contact us - your advice could also help others! You can find our contact details here.
With crowd investing on the Kensington Crowd, projects and companies can be financed by subor- dinated loans. A subordinated loan agreement is concluded directly between the project executing agency or company in the legal form of a legal en- tity (e.g. GmbH, AG or GmbH & Co. KG) and the investor. Kensington Crowd acts exclusively as an intermediary between the investor and the projec- texecuting agency/company and at no time has the investors‘ paid-in money at its disposal, as this is transferred to an insolvency-secured trust account.
 
When investors invest in projects and companies on the Kensington Crowd, they grant a subordinated loan with qualified subordination. This form of subordinated loan has two special characteristics: The first is subordination and the second is qualified subordination.

Subordination concerns the order in which all creditors of the project company or company are satisfied in the event of insolvency. Creditors of a subordinated loan are serviced after all senior creditors (often project financing banks), but before the shareholders.

With the qualified subordination, the creditor and the project company agree that the debt service to be rendered (e.g. through payment of interest and/ or repayment of the loan) will be suspended for the time being and postponed if these payments would lead to the insolvency of the company. Only when the company is no longer threatened with possible insolvency due to the debt service is it resumed.
 
If investors wish to invest in projects or companies on the Kensington Crowd, they act on their own responsibility and in accordance with their risk preferences. Kensington Crowd cannot provide or offer any advice. In the case of a subordinated loan, investors are generally exposed to the risk of a total loss of the money invested in the project or compa- ny in question. If a project/company is affected by insolvency, this usually has no effect on other proj- ect promoters. Investors are not obliged to make additional contributions.
 
In addition to the possibility of financing selected projects and companies directly, the subordinat- ed loan also offers higher earnings opportunities due to the higher risk for investors. This means an interest rate that is usually higher than, for example, a call money investment. Kensington Crowd pays careful attention to the sustainability, transparen- cy and trustworthiness of the offers of the project promoters and companies.
 
Our goal at Kensington Crowd is to bring commit- ted investors together with entrepreneurs* and their innovative ideas. Investors should be able to choose from a variety of projects and companies and de- termine for themselves where and to what extent their money should have an effect. We can make this possible by granting subordinated loans of 250 euros or more from investors to project-executing agencies/companies.

However, the raising of capital is strictly regulated in Germany and is subject to supervision by the Federal Financial Supervisory Authority (BaFin). Investors in Germany are legally denied direct and transparent participation in the form of loans. As a rule, a loan constitutes a credit transaction and is reserved only for institutions licensed for this purpose. The subordinated loan with qualified sub- ordination is an exception and provides committed investors with a legally secure framework.

Other forms of financing, e.g. profit participation rights or bonds, would also be legally conceiv- able. However, the associated higher costs would in many cases make the financing of projects and companies economically unattractive. The subor- dinated loan with qualified subordination, on the other hand, offers a legally simple, cost-effective and easily understandable way of raising capital without the acquiring institution (company, coop- erative, association, foundation, etc.) or the lending investor having to hold a banking license.
 

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