European Crowdfunding Platforms Licensed Under ECSPR

January 30, 2023 Equity Crowdfunding, Alternative Funding, FinTech and Alternative Finance, Fintech International, Fintech Services, Fundraising, Investing, Trading, Innovation and Resources, Legal Issues, Regulation, Consultation, Online Funding / Investing Portals, Venture Funding and Building No comments

Crowdfund Insider | JD Alois | Jan 24, 2023

In November 2021, pan-European crowdfunding rules became actionable after approval by the European Union in 2020. Under the new rules, or European Crowdfunding Service Providers Regulation (ECSPR), a platform may raise up to €5 million from investors in all member states. This opens up investment crowdfunding to over 300 million EU citizens.

The industry has heralded the new rules as a transformative event – a change in policy that took around 9 years of advocacy from industry insiders.
- At the same time, ECSPR is foundational to the concept of European monetary union – the ability for goods and capital to flow seamlessly across the EU.
- Under the new rules, a securities crowdfunding provider must be approved by the “relevant authority” within the country where it is based. This has led to some discrepancies between regulators as some have moved quicker to craft a process for ECSPR approval while others have moved more slowly. The disparity between countries led the EU to delay full compliance until November 2023 (originally set for last November).

See: Harmonized European Crowdfunding Rules Kickoff Allowing up to €5 million

After a two-year period, the updated rules are expected to be reviewed, and there is a possibility the funding cap will be raised.
The harmonization is expected to generate more competition as well as consolidation in the industry. Invesdor is one platform that moved quickly to merge with other platforms. ECSPR will also encourage international (or non-European) platforms to enter the EU.
- Wefunder, one of the largest Reg CF Funding Portals in the US, was only recently approved to provide securities crowdfunding service in the EU.
- Seedrs, once a top UK platform that has been active in Europe, was purchased by Republic in 2021.

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