We chatted with crowdfunding expert Ronald Kleverlaan from CrowdfundingHub, the European Expertise Centre for Alternative & Community Finance, about their fresh report “The Current State of Crowdfunding” in Europe.
The report shows that in 2015 the crowdfunding industry in Europe has continued to grow and mature, but big differences across Europe remain (check out the graphic at the bottom of this article). The UK remains the most mature Alternative Finance Industry when it comes to volume as well as ecosystem. Also countries such as the Netherlands, Spain, Germany, Estonia and Austria have have the potential to lead to a strong alternative finance industry in the next couple of years. A positive stance from the government, enabling progressive regulation and tax reliefs, correlates with high volumes in the industry. Only in a few cases low volumes in countries are not related to regulatory issues and are low due to other reasons, e.g. the readiness for crowdfunding is low because the public is not accustomed to online payments. The report covers Peer-2-Peer businesses and consumers lending, donations, rewards and equity models.
And here is our short interview with Ronald Kleverlaan from CrowdfundingHub:
Is there room for cross border activity? What is your advise to a company from a country that does not support crowdfunding?
With Cross-border crowdfunding it is important to know if you look into it from a platform, investor or entrepreneur point of view. In our second report (Crowdfunding Crossing Borders) we did a research in 11 countries in Europe on liabilities in Cross-border investing. It shows clearly that it really depends what the origin is of the investor (protected by customer-protection in his/her own country) and the country the platform is hosted (local regulator). If it is not possible for an entrepreneur to use a platform in his/her own country, he can decide to raise funding on a platform in a different country. But he should always comply to local regulations. Most of the time this means opening a holding company (for example ltd in UK) in that country.
Lessons to learn from the UK, the European leader?
UK was very clear in regulations. This helped institutional investors to co-invest through new platforms. Also the funding and support of British business Bank was very helpful. Last good point was the tax-incentives for investing in companies that were using crowdfunding and peer-2-peer lending.
Where do you see crowdfunding in 5 years?
There will be more collaboration, mergers. There will only be a few big platforms left in Europe for lending and equity. Lending will move to online banking (EBA will be repsonsible for that). Equity will move up to include (stock) exchanges. ESMA will regulate that. Reward-based crowdfunding will be fragmented. A few large European/global platforms will be active, but also a lot of small niche platforms.
Optimism about the potential of alternative finance prevails. Although once put away as just a marginal trend being embraced only by early adaptors, CrowdfundingHub sees more and more serious interest in all levels of society. In the UK the alternative finance industry provides already a true alternative for traditional finance with over 10% of SME funding provided by alternative finance. Financial institutions play an increasing role in providing capital to be distributed.
The full report can be downloaded freely from: www.crowdfundingineurope.eu