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Crowdfunding in Mexico: the financial alternative of 2020

Crowdfunding in Mexico has been handled in a less obvious way for hundreds of years. Crowdfunding refers to any capital formation where financing needs are communicated through an open call to a large group of “crowds”. However, in the past, crowdfunding was mostly limited to personal and face-to-face campaigns. Today, new technologies have revolutionized crowdfunding.

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Crowdfunding, as a business model and financial alternative for those who wish to enter the world of investments, is a market that has registered positive growth in recent years.

According to the study “Crowdfunding: Strategies & Impacts for Technology Markets 2016-2020” by the consulting firm Juniper Research, investments made in technology through crowdfunding platforms will reach $8200 million in 2020, a figure seven times higher than the total invested in 2015.

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This form of project financing will see significant growth during this year. Against this backdrop, M2Crowd, Mexico’s real estate collective funding platform, highlights the following trends that people will be able to observe during 2020 in collective investments.

Micro investments

Crowdfunding is a model that has gradually allowed ordinary people to place their savings in different projects to save and obtain returns from them. Given the growth of supply in this market, micro-investments have opened the doors for more and more people to deposit capital from very small amounts. During this year we will see an increasing number of projects accessible to the general public.

Blockchain technology

Beyond cryptocurrencies, blockchain has been adopted by different markets to reinforce the security of its users’ data. In an industry such as crowdfunding, where the protection of personal data is fundamental, the use of this technology is becoming more and more frequent to guarantee that information will never be lost or altered. It will progressively become a standard within the industry.

Platform regulation

Mexico is one of the countries in Latin America where the regulation of new technologies and platforms is advancing faster to guarantee fair participation of all the actors involved. In the case of the fintech law, there is already a clear framework that protects users of collective funding entities and the operations carried out in the country. As the market grows and more people join the crowdfunding, regulations will adjust to the dynamics of the companies.

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Capital protection

Probably people’s greatest fear about collective funding is the fate of their money, and whether there is any mechanism to protect it. Crowdfunding platforms know about this situation, so there are increasingly comprehensive processes for assessing the risk and viability of the projects they make available to users for funding. Investment in project analysis and auditing will increase this year to ensure that the objectives of each funded project are met.

Real estate projects

Until a few years ago, investments in real estate were limited to large real estate funds and real estate trusts. Crowdfunding made it possible for smaller investors to access this market through projects that require much smaller amounts than the traditional industry. This segment of the market will grow an estimated 30% by 2020 and is expected to maintain this pace in the coming years.

Crowdfunding is handled with administrative structures and operational much less than those of the banks and other intermediaries such as the Savings and Loan Cooperatives – SOCAPs. It also supports the “micro patronage” of thousands of investors and campaigns that make it possible to have more low for some and higher for others attractive to others. As an emerging model, it shows exponential growth in the years and therefore bursts in markets that don’t even have relevant legislation.

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(Featured image by NORHTFOLK via Unsplash)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

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First published in TyN MAGAZINE, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.

Sharon Harris is a feminist and a part-time nomad. She reports about businesses primarily involved in tech, CBD, and crypto. She started her career as a product manager at a Silicon Valley startup but now enjoys a new life as a personal finance geek and writer. Her primary aim is to provide readers with a new perspective on the overlapping world of finance and technology.

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