European Crowdfunding Network | May 22, 2014

According to the final report of the Startup Europe Crowdfunding Network, a support services to foster the crowdfunding environment in Europe focused on web entrepreneurs by the European Commision, networking European crowdfunding platforms around a common understanding of the industry is vital.  The education of both, the crowdfunding platforms as well as funders and entrepreneurs was therefore a key part of the Startup Europe Crowdfunding.

Only with a crowdfunding environment that is marked by professionalism, transparency and coherent practices, it can be expected that potential crowd funders and web entrepreneurs will regard investment opportunities and access to finance through crowdfunding as a viable solution for their needs.

In our research, both desk research and online consultation, we focused on identifying specific issues for web entrepreneurs with regard to crowdfunding in Europe. You can see the overall results in our infographic. Our desk research identified 230 crowdfunding platforms  (we understand that this must be indicative in a fluctuating market and due to language barriers) of which some 13% (or around 30 platforms) have a focus on web entrepreneurship or similar activities, with France, Italy and Germany representing the largest share of the latter. The majority of all reviewed crowdfunding platforms offered a mixed approach of funding models (a hybrid of either two of the following reward and equity and debt). Reward based platforms were the largest single group with 19%, and we did not identify any donation based platform with a focus on web entrepreneurs. Some 68% of crowdfunding platforms had a multi country approach. Reward based crowdfunding platforms operating in multiple countries used to 55% two or more languages. We see a clear trend toward cross border operation within web entrepreneurship focused crowdfunding platforms, mostly reward but increasingly also equity.

The average fund raising for web entrepreneurs is around €12,500 for reward and €113,000 for equity, which is line with expectations. The largest number of successful crowdfunding campaigns by web entrepreneurs were realised in Germany (24%), followed by Spain (17%) and France (16%). In total, 72% of web entrepreneurs’ campaigns that were successfully funded exceeded the funding goal. In our online consultation, we found that the reasons for web entrepreneurs to use crowdfunding are easy access to money (71.4% of respondents) followed by the difficulty/impossibility of obtaining funds from traditional financial actors, such as banks and professional investors, positioning crowdfunding as an alternative source of finance, the marketing “side benefit” of crowdfunding and the association with an innovative form of funding and communicating (all 57.1% of respondents). Some 30% of respondents did not use existing crowdfunding campaigns for their crowdfunding, but opted for a do it yourself or alternative model. Some 50% choose a crowdfunding platforms due to its legal structure and none of the respondents choose a crowdfunding platform because of prior success storied, links to government institutions or other business partners or indeed, transparency. Of the surveyed web entrepreneurs, none was seeking amounts higher than €250,000, but two thirds managed to run successful crowdfunding campaigns and 86% of respondents are expecting to use crowdfunding again in the next five years.

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