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Still Nascent: Global Crowdinvesting

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October 30, 2014

Israel is easing its regulatory framework for crowdinvesting, while Austria is tightening the rules. The newsflow, although strong on this new form of equity financing, suggests that it is still at a very early stage.

 

Europe is the fastest growing region worldwide for crowdinvesting, and the US leads in volume according to a recently published study by Bruegel, a Belgian think-tank funded by the EU states, central banks and large corporations such as Pfizer, Samsung and more here. The study is comprehensive, arguing the pro’s and cons and concluding that one of the “main” limitations of equity crowdfunding is that it enables non-professional investors who might not have an incentive, or the capabilities, to adequately assess and monitor a start-up to make an investment.

 

Looking at more recent data than was used by Bruegel, the volume raised on crowdinvesting platforms is still very small. For example, Australia’s most established platform has raised less than AUD 200 mn since 2005, and the US market generated slightly more than USD 217 mn in the year ending September 2014, according to Equities.com. Australia was the first country worldwide to approve this form of financing.

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