The expected enabling of equity based crowdfunding in the US is, for good reason, a focus of a great deal of attention and chatter. With the largest reward based platforms based there and a track record of entrepreneurialism we can reasonably expect that when it is finally permitted the scale and pace of growth equity based platforms in the US will both overshadow other countries efforts and develop awareness of its possibilities globally. But whilst the political machinations and wrangling delay the SEC enabling of that piece of the JOBS act in the USA, it is worth noting some of the developments closer to home that demonstrates how the UK and Europe remain among the leaders in equity based crowdfunding.
The news this week that Crowdcube had received FSA accreditation demonstrates a further and welcome maturing of the market place in the UK. Joining Seedrs as an equity based platform with that formal stamp of approval, it develops the choices to entrepreneurs that want to take the equity based route and I can’t help but wonder if it demonstrates that the FSA themselves are increasingly recognising that that the model has validity.
Previously it has expressed “concern” about crowdfunding and opined that crowdfunding “may not have adequate protection”. Whilst I would not suggest that they have in any way relaxed their rigorous demands perhaps they are recognising that it is capable of offering those protections and that they are overcoming their understandable caution and conservative approach that was heightened by the shocks to the financial systems of recent years. It’s a bit like the first time you encounter an escalator, if your sole experience has been the stairs it can be a bit disconcerting, but once you have got used to the idea you can see it can have its advantages!
We are also seeing companies like Righteous going through second rounds of equity crowdfunding. This is a hugely important step and it seems to me is a testament to both the efficacy and benefits of the method as crowd validation and relationship based models sustain entrepreneurs through more than one funding round.
Perhaps more exciting still is the exit model that saw a claimed 44% ROI for crowdfunding investors in the sale of ANTABIO which had been equity funded on the French WiSeed platform. This is both proof that and crowdfunding investment can make a return in the traditional sense, but perhaps more importantly that it can be a route for entrepreneurs to seed their ventures and move on to the traditional capital markets effectively.
In the South, Italy continues to progress its crowdfunding legislation and the success of the Crowdfuture event in October demonstrated the high levels of interest there. The CONSOB open hearings have been continuing but are now concluding, and our very own Daniela Castrataro of twintangibles was invited to provide one of the opening contributions. With an anticipated enablement of the Italian legislation by 19th March I wonder if anyone is running a book on who will get there first Italy or USA. Given their weekend performance in the 6 Nations rugby who would bet against Rome!
So whilst we may celebrate the global impact of crowdfunding, let’s not forget to laud the more local success.
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