2023 could be called the year zero of crowdfunding. Indeed, the introduction of the European Regulation marks an almost epoch-making change that broadens the audience and shifts the balance in an important way.
The application rules (RTS and ITS) of the Regulation have been issued and Parliament has approved the implementing Decree-Law also in Italy, attributing supervisory powers to Consob and Banca d'Italia. Crowdfunding platforms that do not yet have the necessary authorisations are actively working to obtain them by the fateful date of 10 November.
The European Regulation opens up the prospect of operating in a single market, with important novelties concerning both risk capital raising (no longer limited to SMEs) and lending, which will be subject to new requirements regarding transparency, marketing of offers and investor information. This gives rise to interesting opportunities and perspectives for crowdfunding operators and investors in Europe.
During the presentation of the 8th Crowdfunding and Crowdinvesting Report of the Milan Polytechnic Observatory, very interesting data were disclosed regarding the impact that the new European Regulation is already having and will have in the coming months. Over the past year, the market has contracted slightly compared to the previous 12 months, raising € 343.99 million. This brings the historical cumulative value to € 1.24 billion (excluding platforms that collect exclusively or predominantly not from the Internet).
Despite the contraction of about l1%, it is important to note that the drop was rather modest, especially considering that, as of July 2022, the European Central Bank ended its negative interest rate policy, bringing the refinancing rate above 4% from 0.5%.
In detail, equity crowdfunding raised € 86.64 million for non-real estate projects and € 56.42 million for real estate projects, a clear positive growth. Minibonds placed on portals decreased, reaching € 20.82 million. Lending portals contributed € 24.76 million lent to individuals and € 39.36 million to companies via generalist portals, in addition to € 115.79 million from portals specialising in real estate, which showed good growth in the last 12 months.
A relevant fact is that the number of authorised equity crowdfunding platforms decreased to 48 at the end of June 2023, and funding was less than € 87 million in the first half of 2023 for successfully closed projects, compared to € 186 million in 2022.
On the issuer side, there is a gradual decrease in innovative startups as the main players, down to 50% in the last 12 months compared to 62% overall, with an increase in the weight of SMEs.
The minimum investment amount for different crowdfunding campaigns was another interesting parameter collected by the Crowdinvesting 2023 Observatory. It was noted, in fact, that the strategies varied: only 1% of the total had a very low minimum threshold of less than €100, while the largest group (42%) had minimum amounts between €500 and €1,000, which have become more relevant in the last 12 months. 41% of campaigns had a minimum threshold between € 100 and € 499.99 (with a high concentration of € 250), but this percentage is decreasing.
Among the positive news is the extension of equity crowdfunding to all corporations, no longer limited to SMEs, innovative or traditional. These rules aim to unify the European capital market and increase its competition and efficiency through the alternative finance instruments of crowdfunding. This will allow a portal to offer both lending and equity services, thus expanding its offering. In closing, it was suggested that, in a Single Market, it might be advantageous for platforms to specialise by service or target in order to stand out and prosper.