The position that equity crowdfunding is in to establish itself as one of the foremost means of investment can be demonstrated by the overwhelmingly positive reception the practice has received across the globe. From country to country, equity crowdfunding has opened up investment opportunities to those who would never have previously been able to invest, bringing in a new wave of investors to a market that used to be dominated by a usual-suspects type list of financial professionals.
The US currently represents the largest crowdfunding market in the world. The recent passing of the JOBS Act and the implementation of Title III (allowing non-accredited investors to invest) marks a real step forward in the trajectory of equity crowdfunding in America, helping to reduce the monopoly on investment held by financial institutions.
In the UK, equity crowdfunding doubled its value from 2014 to 2015, reaching a worth of over £50 million. Sites like Crowdcube and Seedrs dominate the UK market, with Seedrs being the first equity crowdfunding platform to receive approval from the Financial Conduct Authority back in 2012. Seedrs and Crowdcube have raised over £125 million combined, with hundreds of successful projects funded.
According to The Institute of Financial Services Zug IFZ, the Swiss crowdfunding market is predicted to double in 2016, having jumped 73% in 2015. Equity crowdfunding (most notably for real estate) is to be the frontrunner for this growth, and the market is set to hit CHF 65 million later this year.
French legislators released their equity crowdfunding guidelines back in 2014, strongly backed by France’s previous minister for culture Fleur Pellerin, an outspoken advocate of crowdfunding as a means to boost the French economy; she praises crowdfunding’s innovation as one of the true vehicles for progress. Regulation is still an important part of French crowdfunding, and all investment platforms are required to register with the relevant authority and abide by certain guidelines.
In Italy, the Italian financial authority (CONSOB) released their guidelines on equity crowdfunding back in 2013; their aim was to use equity crowdfunding to boost innovation by allowing more funds to be available for start-ups, thus helping to reignite the Italian market.
Equity crowdfunding in Latin America is seeing its own small boom, with more platforms appearing on the scene. Brazil stands as one of Latin America’s premium landscapes for equity crowdfunding. In terms of legislation, a number of leftover rules from the 2003 Instruction 400 allow for some forms of online investment to occur, but the Comissão de Valores Mobiliários has been looking to authorise more platforms for equity crowdfunding in an effort to boost the market.
The World Bank estimates that the Chinese crowdfunding market will be worth $50 billion by 2025. Although Chinese equity crowdfunding is still in its infancy due to regulatory issues, there are signs showing that China (a country with an already healthy donations-based crowdfunding market) may be ready to embrace the potential of equity crowdfunding – namely that the China Securities Regulatory Commission is said to be in the process of implementing regulations pertaining to online investment platforms.
When a new practice influences legislation change in a string of countries across the globe, it’s usually because it is about to make a big impact – it means governments are taking notice. The global uptake of equity crowdfunding as an investment model will hopefully encourage more people to think about investing their money instead of allowing it to depreciate in unfavourable savings deals.
October 26, 2016
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