How safe is my investment? Overview of securities at Invesdor 

Investing through Invesdor means actively participating in the growth of companies and sustainable projects. Many people ask themselves: How safe is my investment actually? In this article, you will find out what securities are available, how we handle them at Invesdor and what you should look out for as an investor. 

1. What is “collateral” at Invesdor? 

Not every project can offer the same securities. Depending on the sector, location, form of financing and legal framework, the type and scope of securities varies considerably. “Collateral” refers to assets or contractual agreements that are used to potentially limit losses for investors in the event of a default by the company. In this way, it might be possible to recover at least part of the investment or to offset it by realizing the collateral. 

What forms of securities are there – and how reliable are they?

Typical forms include such as right of pledge regarding machinery or mortgage on land/buildings, assignments of receivables, floating charges or guarantees. The role of these securities varies depending on the investment model: collateral is more relevant for senior loans than for subordinated loans, as in case of a subordination the senior creditors have a higher rank, meaning that the claims of the senior creditors will be fulfilled first and there might not be sufficient assets to meet the claims of the subordinated cretors. 

As the calue of collateral can fluctuate, under certain circumstances there might be no return at all. We recommend that you examine the key investment information sheet for each project individually in order to inform yourself on the relevant collateral related risks for each case. 

2. Examples of securities from practice 

What collateral has been used in various Invesdor campaigns in the past? The following examples from different sectors and countries show just how different these can be: 

Megin (medical technology): Second rank floating charge on the assets of the project owner.  
(https://www.invesdor.de/projekte/c244d249-74e3-4d89-a147-3b479f5cc49d#/)  

Bamboologic (Agriculture): A mortgage on a plot of land in Portugal serves as collateral.  
(https://www.invesdor.de/projekte/b57d633d-ee1c-49ba-8f44-ec75f95f25d9#/) 

Finnish projects: Use of the so-called “floating charge” – a form of collateral in which companies offer general security over parts of their assets. This type of collateral is widespread and legally regulated in Finland. 

The form of collateral depends heavily on the individual case. It’s worth taking a close look at which assets have actually been pledged and how plausible their realizability appears in a worst-case scenario.

How can I assess the security of a project myself? 

Read the terms of issue and information on the campaign page carefully. Check what type of collateral is mentioned – and whether this seems sufficient from the investor’s point of view.

3. What is a guarantee?

A guarantee for investment opportunities is an additional security for investors. With a guarantee, a natural or a legal person, in addition to the company, undertakes to be liable for the repayment of the investment. This means that if the company defaults, the guarantor is legally obliged to assume the outstanding liabilities.  

A guarantee offers additional protection and potentially reduces the risk for investors. However, it is important to note that the economic capacity of the guarantor is decisive in determining whether this security is actually valuable in an emergency. It is also advisable to scrutinize the guarantor’s creditworthiness and reliability in order to make an informed investment decision.   

The amount and type of guarantee vary from project to project and can be found in the respective project documents. 

Conclusion: Collateral in investments

Collateral in crowdinvesting is complex – and can never be assessed across the board. What we do at Invesdor is create transparency, clearly identify risks and always try to achieve the best possible level of security for our investors. Every campaign contains all relevant information on possible securities. And we are constantly working to make this even easier to understand. 

 
Find out now about our current investment projects and discover sustainable investments that match your values.