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Crowdfunding
European Union Electricity Market Glossary

 

 

 

 

Crowdfunding refers to the financing of a specific project or venture by raising money from a large number of people.

 

Interaction between fund raisers and the crowd (fund providers) is enabled by specific websites (crowdfunding platforms).

 

Fund providers are increasingly institutional (professional investors).

 

Recitals to the Draft Report of the Committee on Economic and Monetary Affairs of the European Parliament on the proposal for a directive of the European Parliament and of the Council amending Directive 2014/65/EU on markets in financial instruments (COM(2018)0099 – C8-0102/2018 – 2018/0047(COD), Rapporteur: Caroline Nagtegaal, 2018/0047(COD) describes crowdfunding as “a fintech solution that provides alternative access to finance for start-ups and other unlisted firms, in order to unleash innovative entrepreneurship in the Union, thereby strengthening the Capital Markets Union. That in turn contributes to a more diversified financial system and one that is less reliant on banks. Another consequence of unleashing innovative entrepreneurship through crowdfunding is the unlocking of frozen capital, leading to investors being able to invest their capital cross-border”.

 

European alternative finance market, which mostly consists of crowdfunding, grew by 92% since 2014, to reach a value of €5.4 billion in 2015.

 

Respective figures of the total online alternative finance volume for the Asia-Pacific region (mostly China) are in the range of €94.6 billion and for the Americas (mostly the US) of €33.6 billion (Inception Impact Assessment, Legislative proposal for an EU framework on crowd and peer to peer finance (Ref. Ares(2017)5288649 - 30/10/2017)).

 

The two distinct forms of crowdfunding are differentiated:

 

- debt-based crowdfunding (consumer and business peer-to-peer finance on the basis of loans) accounts for the largest share of the market; and


- equity-based crowdfunding, where the investor receives a share in the company, is particularly significant for the funding of business start-ups (it helps fill the gap in the funding escalator when start-ups go from initial stage financing through friends and family to attracting interest from business angels and venture capital).

 

 

  

 

 

IMG 0744

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Draft Report of the European Parliament, Committee on Economic and Monetary Affairs of 30 July 2018 on the proposal for a regulation of the European Parliament and of the Council on European Crowdfunding Service Providers (ECSP) for Business (COM(2018)0113 – C8-0103/2018 – 2018/0048(COD)), 2018/0048(COD), Rapporteur Ashley Fox

  

Draft Report on the proposal for a directive of the European Parliament and of the Council amending Directive 2014/65/EU on markets in financial instruments (COM(2018)0099 – C8-0102/2018 – 2018/0047(COD), European Parliament, Committee on Economic and Monetary Affairs (Rapporteur: Caroline Nagtegaal, 2018/0047(COD)

 

Inception Impact Assessment, Legislative proposal for an EU framework on crowd and peer to peer finance (Ref. Ares(2017)5288649 - 30/10/2017)

 

 

 

  

 

 

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Last Updated on Wednesday, 01 August 2018 12:09
 

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